Game Changer

Scott Walker is Reagan-like in his bold steps to remake Wisconsin government

By Richard Esenberg

Madison has fallen.

All of its settled ways have been disturbed. The unbroken and upward trajectory of government spending might well flatline. The New Deal symbiosis between the elected and the supplicant in which, as FDR aide Harry Hopkins is reported to have said, “tax and spend” becomes “elect and elect” seems, if not gone, at risk.

To be sure, resistance continues. The defeated partisans still place signs in the windows — the offices of Democratic legislators resemble a college dorm circa 1969 — and scrawl messages in chalk on the sidewalks. They put on orange t-shirts and hold hootenannies in the Capitol rotunda. They sing the old hits — Solidarity Forever, Guantanamera, the Internationale.

There remains hope for restoration. Following passage of the budget-repair bill, Dane County liberals, apparently mistaking Wisconsin for Greece, called for a “general strike” — a term that I have not heard used in reference to American politics since The White Album. Recently, in a restaurant on the Capitol Square, I overheard a woman say that it would be fascinating when “the United Nations comes to Wisconsin to investigate Walker’s human rights violations.”

There may still be victories on the left. I don’t expect to see the UN blue helmets marching down East Washington any time soon, but future elections may return control of the Senate to the Democrats. As Democrats learned last fall, there are no political victories that cannot be reversed.

But I want to suggest that Gov. Scott Walker’s bold steps are game changers — policies that are Reaganesque in not only advancing a policy position but in changing the debate that surrounds it. They will do this not because they are immediately popular but because, over the long run, they may work.

Arnold Kling and Nick Schulz point out in a recent issue of National Affairs that services provided by the government are notoriously inefficient and resistant to improvements in productivity. Part of this is that they are labor intensive in a way that cannot be readily addressed by advances in technology.

But this inefficiency is also rooted in the unionization of government employees. The economic and political critiques of collective bargaining in the public sector are well known. All unions are cartels designed to shift the supply curve of labor. In the private sector, the objective is to increase employees’ share of a firm’s output by either reducing profits or raising prices. There are, of course, no profits to reduce in government so that unionization necessarily raises its price, i.e., taxes.

In the private sector, the ability of unions to increase labor’s share of a firm’s output is disciplined (as are profits) by the market. In the old phrase, pigs get fat but hogs get slaughtered. Overreach and you lose business. This is one reason that unions have become rather thin on the ground among private employers.

In the public sector, there is little or no competition to hold down the cost of services. While the political process theoretically disciplines public bodies, those processes tend to be dominated by the intensely interested. Unions are far more interested in the terms and conditions of their members’ employment than the general public. They also play a significant role in choosing the officials with whom they negotiate. As the reaction to collective bargaining reform has demonstrated, public employee unions are the alpha males on the political playground. One nasty look and Democrats hand over the lunch money.

Taken together, these factors produce precisely what we see in public employment — generous compensation packages in which the most expensive provisions are often opaque and deferred in a way that avoids public objection. We see benefit packages and work rules that would never survive competition in the private sector.

What Walker has attempted is to, in President Obama’s phrase, “bend the cost curve” for the provision of government services. Faced with a $3.6 billion structural deficit, it was inevitable that state and local government would have less. Reforming collective bargaining reform is an attempt to do more with less.

There is a certain irony in this. The left has excoriated Walker and the Republicans for turning their backs on children, the elderly, working families, and virtually every other sentient thing, save for “corporations and the super-rich.” But “turning his back” on those who need government services is precisely what Walker has not done. Instead, he found a way to deliver those services at a more affordable price.

This is not to say that the Walker budget will result in no service cuts — the verdict is still out. But, as its provisions go into effect, we are beginning to see school districts across the state announcing millions in savings and cancelling layoffs.

This is where the game may change. If Walker really has managed to close the budget gap without raising taxes and imposing significant service cuts, a return to the union-dominated politics of the past will never happen. If the sky does not fall, AFSCME and its kin may go the way of their private-sector brethren.

Madison will be utterly changed.

Richard Esenberg is president of the Wisconsin Institute for Law & Liberty and an adjunct professor of law at Marquette University. He blogs at Shark and Shepherd.