What Brian S. is missing

Brian Schoeneman is one of the more thoughtful bloggers in the center-right of Virginia’s blogosphere. That is what made his post on Wisconsin labor reform all the more painful to read.

I think Brian is correct that this issue will not go away with Wisconsin; I don’t even think the story is over in Wisconsin. However, Brian’s analysis is missing two very big pieces: history and the dramatic impact of local governments on state budgets.

The history regarding labor is not very well-known in general, besides the usual hagiography about the rise of organized labor to challenge the industrial barons of the late 19th century. Organized labor’s history is actually much older and, surprisingly, more controversial. For much of the first third of the 1800s, unions were seen not as a necessary protection for laborers but rather as a dangerous attempt to monopolize the workforce and destory the artisan-farmer economy. Numerous labor leaders were arrested on “restraint of trade” charges in an attempt to keep labor markets competitive.

Several things changed this dynamic. The expansion of suffrage made anti-union policies far more problematic on election day (union leaders themselves made sure of that by becoming more active in politics – in no small part to ensure their ability to operate freely). Moreover, the rise and concentration of industry shifted Americans’ concerns about “restraint of trade” from the suppliers of labor (unions) to the demanders of labor (the firms). Organized labor was viewed more as a check against monopolization than a cause of it.

Lest anyone be confused, I’m not defending the early 19th century notion of organized labor. One of the chief tenets of rational expectiations in economic theory is that as time progresses, people have more data available to make economic and political decisions. I sincerely doubt anyone in 1830 who could have been made aware of the 1890 situation would have defended the “restraint of trade” actions against unions. My point is that collective bargaining was not considered a “natural, God-given” right, but rather a power workers felt they should be able to use. Over time, most Americans agreed – at least in the private sector.

As for the public sector, that discussion is still ongoing – even before Wisconsin. Several states do not allow collective bargaining for public employees at all, while many others place limits upon them.

Last night, Wisconsin joined the latter group. That’s big news for Wisconsin, and again this is due to history of which Brian may not be aware.  Limited government has always fought an uphill political battle in the Badger State. The Republican Party was “founded” in Ripon in 1854, but from that point until roughly 1940, the GOP was the big-government party in American politics; that shift began with big-government Republicans left for FDR’s Democrats or the LaFollette’s Progressives. Anyone want to guess where the LaFollette family called home?

This is the real reason why Wisconsin has garnered so much attention – as opposed to Indiana, who did this six years ago with much less reaction due its history of more affinity for limited government.

These pieces of the historical puzzle make it clear that the Wisconsin Republican Party is hardly as radical in their actions as Brian claims. That said, it does not explain why they did it. For that, you have to consider the nexus between local and state spending, something that may seem strange to Virginians but unquestionable in much of the rest of the country.

Here in the Commonwealth, the combination of the Dillon Rule and the lack of collective bargaining for local government workers has led to an unusual disconnect between state politics and local politics. In fact, only three Virginia Governors in 50 years began their political careers in local office – and two (Albertis Harrison and Jim Gilmore) were Commonwealth Attorneys. Only one (Tim Kaine) started in politics by governing at the local level.

Meanwhile, although a very large chunk of the tax money Richmond gets is rerouted to county courthouses and city halls; Richmond has largely told local governments that complain about funding to keep quiet and balance their budgets on their own. Governor McDonnell is one of the very few who has examined the relationships between state and local governments – and his focus is on reducing mandates rather than adding funding.

Outside of Virginia, however, the impact of local politics cannot be underestimated. The tax revolt in California that some say helped elect Ronald Reagan in 1980 was in reaction to property taxes, and the effort to combat them (Proposition 13) is widely credited with reorienting local funding – from the homeowner to the state legislature.

In the state where I was raised (New Jersey), property taxes have been a hot state issue for more than two decades, even though the state has no impact on property tax rates. New Jersey has been offering property tax rebates to homeowners since 1991. In New York, the loudest opposition to Andrew Cuomo’s attempts to rein in state spending has been NYC Mayor Michael Bloomberg (he’s worried about a cutback in funding from Albany). Brian may be surprised to learn that Bloomberg’s greatest worry is not the need to cut local spending in response, but his inability to keep good younger teachers and fire old, incompetent ones due to a “last-in-first-out” clause in the teachers’ union contract. All over the country – and most especially in blue states – local governments have been rattling tin cups in the state capitals to fund their spending sprees.

As for the role public sector unions play, we need to remember that Governor Scott Walker was the Milwaukee County Executive before 2011. He has seen first hand how public sector unions forced up local government costs. Again, in places where collective bargaining for the public sector doesn’t exist (like Virginia), this isn’t seen. None other than the Washington Post has noticed the difference between Montgomery County, Maryland (where public sector unions can collectively bargain) and Fairfax County, Virginia (where they can’t).

This is why Walker initially proposed his reforms as part of budget repair: for his state, its long term fiscal health is dependent upon getting local government costs under control. In order to do that, he has moved Wisconsin from the left end of the public sector union scale to the center of the scale. It’s unfortuante that Brian can’t see that.

Cross-posted to BD