The Coordinated Attack on Public Goods and Public Sector Unions

Milton Fisk, Emeritus Professor of Philosophy at Indiana University

            The attack on private sector unions that began in the 1970s differed from that on public sector unions that began in the 1990s. The striking feature of the earlier attack was downsizing private-sector workforces due to labor saving innovations and to capital flight abroad. By contrast, the most striking feature of the more recent attack is a downsizing of public-sector workforces due to a crisis in state finances and to an attempt to manage this crisis by turning public sector work into work in capitalist enterprises. Thus the more recent attack involves a radical transformation of public goods into private ones.

As I shall argue, the attack on public sector unions is part of a corporate backed effort to privatize public goods.  This effort aims to opens up new areas for profit-making at a time when many areas are becoming less profitable. Public sector unions are a major obstacle to privatization. These unions stand between large reserves of liquid assets and new investment opportunities for those reserves.

Attacks on private sector unions came earlier partly because of the exclusion of public sector unions from the National Labor Relations Act of 1935.  Public sector unions had to wait until the mid-1960s to begin their rapid growth. It was then that state and municipal unions came under state laws. Yet without national enabling legislation, public sector unions were more vulnerable to changes in the laws governing them  by conservative legislatures.

Recently many states, the most notably being Wisconsin, restricted collective bargaining for teachers. Representation fees for non-union workers in both private and public workplaces with collective bargaining are now illegal in Indiana, making it the 23rd such state. The US President, his Secretary of Education, and the Mayor of Chicago promote public funding for charter schools. Despite the NLRA, some state legislators now propose legislation forbidding unions in charter schools.

 

1  Society, the Basis of Public Goods     Economists speak of public goods in a way that has limited relevance to what I have to say about them.  For the economists, a public good fails to generate commodities, that is, goods placed in a market to make a profit for their owners.  Instead, a public good for the economists is in-exhaustible and non-excludable.  Being in-exhaustible, the individual goods a public good supplies us with have no market value. And without excluding anyone from the benefits it generates, nobody owns a public good itself. In a world of public goods of this sort, there are no sellers or owners. Public goods, in the economists view, generate goods with no market value without themselves being owned by anyone.

A major problem with this view is that it fails to give a specific account of motivation. Why would we ever want to put effort into making such public goods?  The answer usually given is that the reward to one’s efforts in developing a public good is not just the benefit one gets directly but also the positive effects one receives from spillover coming from its positive effect on others. Thus the childless adult reaps benefits from paying for the education of other peoples’ children indirectly through the improvement brought to the community by having citizens who received education.

A serious issue lies behind this answer.  People may differ over what they want for a community. Some say that education must be accessible to all in order to have a community of the kind they want. Others say making it accessible to all erodes the need for a market to distribute goods. There will be conflict over this and other proposed public goods. To get around this conflict, we need to go to a more general level.

Any society will have conflict over the goods it should pursue.  Yet most of those conflicts concern goods that fail to be necessary for having a society.  Other societies are feasible without those goods. Even when societies differ – one being agricultural and another being industrial – there are certain features all of them have. Without some degree of mutual help, of trust among most, and of delight in the company of others, a society is in trouble. This fills in the requirement for motivation, which the economic account left open. We have a motive to pursue certain public goods when we think of them as ones we need, in our specific circumstances, for having a society. The public goods of an epoch are then the bedrock of our being social beings in it.

We assume membership in a society in talking about schools, unions, and the courts. We want schools, unions, and courts because we believe a society without them will be a failing society. It will be one threatened by wide gaps in solidarity, in trust, and in conviviality. We choose public goods on grounds of our need for them to sustain our bridges to others of the kind that lets us feel we are part of the same society. On this view, public goods are what potentially each of us can want for all in a given period.  I say potentially since I’m assuming that each of us has a certain fidelity to living in social relations even when we may not see clearly how we are to sustain them. This fidelity to society is the motivation missing from the economic account of public goods.

 

2  Parsing Privatization     Class and other divisions enter into judgments about what public goods, if any, are needed for having a society.  On the one side, there are some who want no limits on what we may capitalize – that is, on what we can make a source of profit for some. Capitalizing can occur either directly through private ownership of what was a public good or indirectly through private management funded by a public agency. On the other side, there are those who demand that we limit what we can capitalize. Their view is that we should not capitalize benefits all require but that many will lack the means to acquire.  Without limits on capitalizing, the distribution of goods and services will eventually end up taking place through a market. This doesn’t ensure that everyone gets what they need. But if we deprive a large number, the society will be in danger.

In a capitalist society, then, public goods have a tenuous existence. But in recent history in capitalist society, there are various views of how far the attack on them should go. On the one hand, the elimination of public goods is the sub-text of the far right, starting with Margaret Thatcher and Ronald Reagan. On the other hand, limiting public goods by the mechanism of out-sourcing is the sub-text of the third-way right, advanced with Bill Clinton and Tony Blair. We call it a third way since it lies between capitalization by ownership of public goods and public goods without capitalization. So the third-way right advocates capitalization by management, with public funds used to create profit seeking management corporations. Both forms of capitalization are modern variants of the “primitive accumulation of capital” Marx discussed at the end of the first volume of Capital. The earlier form took place by conquest, and now politics is the means for capitalization.

The far- right would like to starve public goods by massive tax cuts and deficit trimming. Its protest against Big Government is not about leaving more money in ordinary citizens’ pockets. It is about giving business new terrain for capitalizing. The third-way right wants the benefits of public goods but wants a change in how to get them. What it wants is out-sourcing: Government pays so private firms can profit. Expanding the scope of capitalism is the common aim of both the far right and the third-way right.

Since we cannot expect to find stable systems of public goods in capitalism, fighting for public goods becomes a form of resistance to capitalism. When public goods are outsourced, they end up costing more due to profit taking both by corporations generating those goods and by their suppliers. This leads to demands to curtail funding for the promised goods. Inevitably, the promise to deliver public goods through for-profit business proves deceptive.

US Medicare might seem to be a public good that can avoid the logic of becoming too expensive. Medicare pays the medical establishment – doctors, hospitals, and nursing homes – to provide health care to seniors. Unlike the National Health Service in Britain, US Medicare is in effect outsourcing that service to a variety of private providers by paying them for the health care they give to seniors. In this case, it does not negotiate a lump sum for caring for all seniors or even a budget for individual hospitals but instead it pays private providers on a piece work basis. This makes the system more expensive than it should be. It leads to threats by the right to reduce public funding for seniors’ care. A popular idea now is for the government to do no more than give seniors vouchers to pay for their care. The hope is that, if the vouchers are small enough, costs will subside. Seniors then become guinea pigs in a market experiment over supply and demand.

Privatization is a broader concept than any of the above examples would suggest. In its broadest sense, privatization occurs when the primary goal of an activity is no longer the benefit of all in their struggle to avoid threats to society. There is privatization that leads to non-profit firms, which nonetheless cannot endure without charging clients more than some can pay. But even this does not imply that all privatization is about using resources to produce only for those who can pay. Beyond all such economic privatization there is a privatization of justice when a minority uses the instruments of justice – the law and the courts – to maintain or create unequal power. In short, the privatization of justice does not require outsourcing to private courts and judges who charge a fee for hearing a case and delivering a decision.

            In the case of justice, the privatization is two pronged.  It insists on harsh justice for those who are struggling to get along, and it insists on immunity for the most powerful. Glenn Greenwald develops this theme in his excellent With Liberty and Justice for Some. The financiers who brought on the 2008 recession that caused so much suffering have de facto immunity. The argument for immunity runs that the stability of the society requires that the financiers remain free and powerful. Yet a family that needs to renegotiate a mortgage with the banks due to wage cuts or job loss must pay a price for buying a house it ended up not being able to afford.

            In a society where such unequal treatment abounds, justice is no longer a public good. It is no longer something each wants for all, but has become something that a few want not for themselves but for the rest.  This applies not merely to financiers. Presidential immunity is by now an established principle. Ford pardoned Nixon for Watergate, Reagan got away with Iran-Contra, and Obama gave Bush a de facto pardon for torture. As financiers and presidents escaped justice, US prisons grew to contain 25 percent of the global prison population, even though the US has only five percent of the world population. So, to distract attention from privatizing justice to spare the great and powerful, they define criminal activity to cover more and they make punishment harsher.

 

3  Unions under Attack    Attacks on public sector unions take many forms even though their immediate goal is the same – to silence the voice of employees. Not all of the attacks are as blatant as Reagan’s firing the striking PATCO members in 1981. The union was there when they went on strike but it was gone with his action. After his blitz of PATCO, US unions began a retreat in which they continue losing.  

Public sector unions fared better than others. But now they suffer from both ideological attacks and actual losses of rights and benefits. A currently favored ideological attack is an update of the argument against the cronyism practiced by party machines in big cities. Just as the ward boss distributed public jobs to loyal followers, the “boss” of a public union now gets raises and benefits for the union’s members. The ward boss could deliver jobs since the people who got them voted to keep the boss’s party in power.  The union boss in the public sector gets wage and benefit increases for the rank-and-file, since the boss’s union delivers their votes to grateful politicians. The remedy for this cronyism, says the right today, is to do away with unions in the public sector. In fact, Franklin Delano Roosevelt opposed unions in public employment for just such reasons. But today some on the right would go farther, saying that private enterprise should replace the whole public sector in order to avoid big raises and lush benefits.

The majority of the practical attacks – ones that implement an ideological argument like that above – produce changes that stop short of the results of Reagan’s blitzkrieg. But these attacks weaken public sector unions as the first steps in a longer campaign leading to their demise. Consider two examples.

First, in my town, Bloomington, Indiana, there was an effort to privatize the waste water facility by contracting it out to a private company. A citizens’ campaign in 2000 defeated this version of privatization. But another version of it was forced on the union. The union would henceforth have to bid on running the waste water facility in competition with bidders from the private sector. The union was confident that, with no need to make a profit and with its experienced workers, it could beat out private firms. However, all it would take to get the union out is a city utility manager willing to defeat the union by accepting a private corporation’s low-ball estimate for what the work would cost. Were that to happen, it would interrupt the citizens’ reliance on the public good of a clean environment.

Second, the attack on K-12 teacher unions takes many different forms. Indiana in 2012 passed a charter school law which after two years removes any cap on the number of students that can leave public schools and enroll in charters. It also passed a Right-to-Work law that prohibits unions, including public employee unions, from charging representation fees for non-union employees. Three years earlier, funds for schools were centralized to the state level, making possible an underfunding that gave unions little room to negotiate raises or to protect jobs. Teacher unions were also by-passed by the state’s methods for evaluating individual schools and teachers. The cumulative effect of these attacks is that individual teachers feel isolated. They are aware of the arbitrariness of the methods for evaluating them. Even those who survive school closings and evaluations look for a less fraught environment. Many students are victims of the tension created for the teachers. Once the unions are too weak to play the role of effective advocates for teachers, education suffers. The profit motive of entrepreneurs and the zeal of politicians to strike an anti-union pose combine to keep the schools from being the public good we need.

The attack on K-12 education serves as an example of an attack on a public good. It involves opening private schools that meet guidelines set publically (the charters) and that get much of their support from public subsidies for students (the vouchers). This attack now takes place in a context of attacks on public school teachers as incompetent and of closing public schools and firing their teachers. Indianapolis in 2012 shut down four schools for poor performance. The schools are to reopen as charters. One of them will reopen under Charter Schools USA of Florida, and another will reopen under Ed Power, an Indianapolis non-profit company.  A student affected by the closure can now enroll either in the charter taking over the old school or in a public school somewhere else. The school superintendent in Indianapolis, Charlie White, faces criticism for not cooperating fully in the change over. His reluctance may well have to do with the hole in his budget created by the loss of as many as 3,000 students. Application of Indiana’s recent law on vouchers could lead, within two years, to an exodus of half or more of the Superintendent White’s students.

 

4 Coordinated Attack   It is time to look at how attacks on public sector unions and attacks on public goods come together in a coordinated attack. They go hand in hand.

             On the one hand, there is the attack on public sector unions.  This attack has its own logic. It is the logic of freedom, understood as the freedom of entrepreneurs and generally of the powerful. Thist logic includes limiting the issues unions can bargain over, ending unions’ dues deduction from pay checks, forbidding strikes, and outlawing representation fees. Removing these props weakens unions in confronting privatization of the public goods their members work to realize.

            On the other hand, there is the attack on public goods.  Reducing government spending to avoid deficits becomes a battle cry in the fight against public goods and for the private sector. The logic of the attack on public goods is the logic of the dominance of private property. This logic leads to cutting back and outsourcing many public projects. Corporations like IBM then run social service agencies and charter school corporations drain funds from public ones. This puts the public sector as a whole on the defensive, weakening its ability to claim the funding it needs.

The coordination of the two lines of attack takes place almost automatically. For, those attacking public goods will see how the attack on public sector unions weakens the defense of public goods. Hence, those attacking public goods will reach out to make common cause with those attacking unions.  Conversely, those attacking public sector unions will see that the attack on public goods can dry up the public funding that supports public sector unions.  Hence, those attacking public sector unions will reach out to make common cause with those attacking public goods.

Who then are the protagonists of the coordinated attack? In the case of the schools, it would be a mistake to make the conservative bias of state legislators or state school superintendents the only culprits in the attack on schools and their unions. There is money behind the privatization of public goods, whether in the schools or elsewhere. Here I use education as an example of what can happens in other areas such as health care, transportation, the police, waste water, and roads. An article, in Monthly Review in 2011, by John Bellamy Foster, “Education and the Structural Crisis of Capital,” was revealing in this regard. He points out that at the pinnacle of the investor pyramid in education one finds the Gates Foundation, the Dell Foundation, the Walton Foundation, and the Broad Foundation.  These very deep pockets help spread an ideology of school reform that favors making schools profit making enterprises. They help establish training for managers of these schools. And they help support political candidates who would vote to underfund public schools.

For example, Arne Duncan’s tough line with Chicago’s public schools, of which he was the superintendent, drew on The Turnaround Challenge, which the Gates foundation funded. Later, as Obama’s Secretary of Education, Duncan called The Turnaround Challenge the “bible” of school restructuring and made it the basis of Obama’s Race to the Top program of 2010. He also put those associated with the Gates and Broad Foundations in key posts in the Department of Education.

How then can we characterize the interconnected plight of unions and public goods in the present?  (1)The main thrust against public employee unions came in the aftermath of the Great Recession of 2008. It seemed plausible to say with New Jersey Governor Christie then that the public till was empty, at least without tax increases on the wealthy.  Restrictions affected staff size, raises, pensions, representation fees, closings, and issues bargained over.  (2) Another consequence of the Great Recession was restrictions imposed on funding public projects. The result is that one can no longer ensure the public that it will get needed services.  There was a streamlining of the public workforce making delivery of needed services less reliable.  (3)  With the public sector unable to satisfy public needs, the way was open to claiming that the private sector could do a better job of satisfying general needs. But privatization of public goods makes them more difficult to obtain – due to cost or scarcity. What were public goods – which each helps to realize for the benefit of all – are now goods that some help realize for those who can buy them at a profit-making price.  (4) These barriers hurt low income people more than they do those with high income. To maintain the society, the needy will receive benefits through corporations as middle-men for the state. But a recent study shows that the rich receive more in tax breaks than the poor do in benefits (NYTimes (3-14-2011): B1and 7).

The coordinated attack calls for a response that is itself coordinated between unions and the public. The sparks of militancy found now in only a few locations has to be generalized and deepened. It will need to understand that unions are being destroyed as part of an attack on the public goods.  With this coordinated attack in mind, both union and non-union citizens will see the need to work together to stop it.

March 31, 2012