08 January 2011


Throughout history there have been groups of people who have either influenced or obtained the actual power of the state to benefit themselves at the expense of others. In ancient times these were frequently oligarchies, who used the government to enrich themselves. In modern times we have organizations that give money to support politicians with the expectation that their interests will be regarded favorably. While this is often associated with business corporations, by far the largest donors are labor unions. Their clout is magnified by the fact that they also bring out voters as well as members to work on campaigns. When it comes to public employee unions they are especially effective in electing politicians who will be extremely pliable in responding to their demands at the expense of the public. I wrote about this almost a year ago (see Pernicious Public Employee Unions). Since then there has been a growing public awareness of the extent to which they are being taken as states face increasingly dire fiscal conditions, owing largely to generous public employee pensions for which there is no equivalent in private industry. The Economist has devoted its current issue to this question.

Not only has this resulted in a bloated public sector, but it has also institutionalized resistance to meaningful reform. This is particularly true of the miserable public education system in the United States despite billions upon billions thrown at the problem. Teacher’s unions resist any kind of change that would reward the best teachers while weeding out the incompetent. Public employees generally, have a vested interest in continually expanding government expenditures and hence higher taxes for everyone else. They are the foot soldiers for the party of big government. The same problem manifests itself throughout Europe as well. Yet despite all the revenue it still takes forever to get a permit when you need one.

More broadly, in addition to the bureaucracy, the party of government includes trial lawyers, the universities, the courts, lobbyists, the mainstream media, some big business, and nonprofit organizations that get government funds. Together they constitute an irresistible force for ever expanding government spending. If you add all those on the bottom who pay no taxes and live off the government you have the makings of a formidable political machine. This is essentially what has governed over the past two years. Worse, when revenues are not enough to support the demands of these constituencies they expand the public debt.

However, all those who are not part of this machine and are continually taxed are increasingly fed up, and in many places have managed to elect governments that will strongly resist these forces and attempt to rollback many of the excesses. There will, however, be fierce resistance by the machine, which will organize and lobby against reform. It is thus necessary to remain vigilant by monitoring those elected officials who are responsible and how they respond to these pressures. The last American election was an open revolt against these forces, but the unorganized citizens must stand fast against the highly organized pressure groups. For better or worse, the machine isn’t going away.

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