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Tuesday, June 29, 2010

Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation

Karl Marx was right—sort of. He was right in saying that society is riven by class warfare, but he got the classes wrong. It’s not the case that capitalists exploit workers, but rather that tax consumers exploit taxpayers.

That truth has long been kept hidden from the average American by deceptive propaganda about the workings of democracy and the supposed nobility of “public service.” But people are starting to comprehend. Articles in major newspapers have recently disclosed the crucial fact that government employees are generally paid substantially more than comparable private-sector workers and enjoy more generous and secure benefits. And now Steven Greenhut’s Plunder! will no doubt fan the flames of resentment against the political class for its constant and stepped-up picking of the pockets of productive people.

Greenhut, a California-based writer (whose previous book, Abuse of Power, I reviewed in the July 2005 Freeman) shows that government employees, especially unionized ones in states where unions have great political clout, are living it up on wealth extracted from the rest of the population via taxation. To make matters worse, politicians keep granting them pay and benefit increases even when the current levels clearly will lead to unmanageable deficits.

For some places the wolf is already at the door. The city of Vallejo, California, recently declared bankruptcy because tax revenues no longer cover its extremely heavy personnel costs, including a city manger whose total compensation package is $400,000 and a 190-person fire department, half of whom earn more than $170,000 per year. The city is decrepit, but the “public servants” go on bleeding the taxpayers white.

Not only are these people paid astoundingly high salaries, but they also can retire at an early age and collect 90 percent of their final salary for life. On top of that, many claim purportedly work-related disabilities, shielding half their generous benefits from taxation. There are public boards to evaluate those claims, but (naturally) they are dominated by the public unions and rubberstamp nearly every one.

Politicians of both major parties go along with the plunder. Democrats, who receive vast campaign “contributions” (unionized workers actually have no choice; their money goes wherever union officials dictate) have long favored schemes to redistribute wealth as long as it leads to votes. Republicans have more recently gotten aboard. Most of them can’t resist the “law and order” cachet that comes from helping police, firefighter, and prison-guard unions get what they want. Both parties treat the rare politician who dares to buck the system like a leper.

Greenhut gives his readers a superb lesson in Public Choice theory. The subject of overpaid, coddled government employees is a pure case of concentrated benefits triumphing over dispersed costs in a democracy.

Whenever the gravy train comes under attack, the unions and their political allies counterattack with a powerful arsenal. A particularly egregious lie they resort to is that their high, early pensions are justified because police officers and firefighters tend to die at an early age. Greenhut produces evidence conclusively refuting that claim. Truth, however, doesn’t matter. The unions and their allies go right on making this and other false statements to keep the public complacent. Another devious tactic is to seek out auditors who will use creative accounting to mask the extent of the underfunding problem.

Greenhut specifically targets the public education system, so high in cost and so low in productivity. Taxpayers are forced to pay huge amounts of money to prop up a socialistic monstrosity that many of them have never had anything to do with. The education establishment and teachers’ unions never stop demanding more, with syrupy messages that it’s all “for the kids.”

The outrages are not just financial, either. Greenhut shows that our “public servants” don’t just live high on the hog at everyone else’s expense. They also connive to put themselves above the law. In California, for example, many government employees are eligible for special license plates that identify them as part of the “family” and thus immune to punishment for traffic violations. Moreover, there is something akin to the Mafia’s code of silence that lets police and guards get away with acts of violence that ought to land them in jail.

Greenhut sums matters up, writing, “We’ve seen a massive transfer of wealth from the private sector to the public sector, from taxpayers to tax consumers. The result is a class of coddled, overpaid and underworked public ‘servants’ whose pay and retirement levels cannot be sustained without cutbacks in public services and higher taxes.”

  • George Leef is the former book review editor of The Freeman. He is director of research at the John W. Pope Center for Higher Education Policy.

  • Steven Greenhut is senior fellow and western region director for the R Street Institute. In this role, he is responsible for running R Street’s West Coast office in Sacramento, California and leading R Street’s work on legislation and issues affecting the western states.