Originally published on December 13, 2010
The WSJ posts two enlightening articles today. The first is by Gov. Tim Pawlenty about the inappropriateness of government unions and how generous States and the federal government have been in raising the pay and the benefits of many government workers. The extent of this problem is new to me in the past year and it represents a huge growing burden on the health of the economy. Pawlenty is right, there is no good rationale for a government union. The effect of the union seems to be to exploit the democratic process, in a legal way, that results in more transfers from taxpayers to fund higher salaries and benefits. This is great if you are a government worker and in this case you have every incentive to support the union. If this resulted in better government services at the same time it might make sense. However, instead it funds an industry that faces no competitive pressures to improve outcomes, and offers generous guarantees for employment, salaries and benefits all at taxpayers expense.
Although it is true that taxpayers could, in principle, throw the excess spenders out of office, even then it is likely to have little effect as shown by the second interesting article in the WSJ today. This one shows the unrelenting influence of special interests in the ethanol industry. Even though science now seems to refute the positive environmental effects of ethanol in lieu of gasoline, the ethanol industry and all who stand to gain from it continue to influence legislation in their favor. Even though the election seemed to send a message that voters are fed up with the ways of Washington, Washington continues as it always did. The voters can only vote into office a slightly modified legislature, all of whom will face the same distorted incentives as the previous legislatures. So why should we expect the new crop of people to change decidedly, especially when old-timers run the show?
It is like we are playing a game of rock, paper, scissors, with special interests always trumping the general interests. It would seem the only way to change the behavior is to change what legislatures are allowed to do. And that can only come through a change in the Constitution, or perhaps, adherence to the rules put forth in our Constitution. For example, the US Constitution is supposed to limit the capacity of the Federal government to do anything in special group interests: they are only to spend money on things that satisfy the national or general interest. National defense clearly satisfies this condition. Subsidies to the ethanol industry clearly do not.
