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Public Unions ARE the Political "Establishment"

The successes of anti-establishment presidential candidates are a powerful reminder that mainstream politicians are not managing America’s political economy or cultural evolution in a way that satisfies most of the electorate. That’s no surprise – it’s a tough job these days, with few historical precedents to offer guidance.

Earlier this week an essay published in the Asia Times, “A Millennial conundrum: Communism and youth,” offered a concise set of reasons why so many millennials are supporting democratic socialist candidate Bernie Sanders. The author, Chan Akya, didn’t chastise these youth for their selfish naivete, caused by receiving too many participation trophies during their sheltered childhoods. Instead he gave the following reasons:

(1)  Sharing economy: Technology has propelled sharing into new markets, from cars and vacation homes after opening up personal space on platforms such as Facebook, Twitter and Instagram. For people with itinerant lifestyles driven by mobility in jobs, such a sharing economy may end up shaking the very foundations of property rights – everyone is essentially a tenant at prevailing market rates for everything, and everyone is a target for advertisers based on their data profiles. The sense of one’s privacy and private property diminishes as a result of these technologies.

(2)  Inflated asset values: Incipient asset bubbles across most markets have driven affordability to absurd heights on the back of concerted and global central bank easing. It used to be something of an expectation that one earned and saved money while in their twenties, and got married and bought a house in their thirties. Youth who do not have such expectations are likely to see themselves as tenants for life, driving the sharing economy whilst despising the property owning classes.

(3)  Lack of jobs: it appears that there are now only two types of jobs. The first kind is entrepreneurial, Silicon Valley type jobs with low wages and high equity payoffs in the event that one’s company gets ‘funded’. Then there is the second type of job which offers low wages and no equity upside at all – this would be otherwise referred to as ‘flipping burgers’. All the other jobs, be it in services such as banking or government or manufacturing such as in assembly and production, have simply evaporated from Western societies.

(4)  Student loans: The core issue is that a social ‘contract’ of sorts has been broken – you go to college and end up with a nice job whereas now you go to college and are addled with debt but no job with which to pay it off.

(5)  No prosecution: The lack of prosecutions for bad behaviour at banks, mortgage advisors and investment funds has only helped to create broader appeal for anti-establishment candidates.

Clearly some of these reasons for dissent are legitimate. And herein lies an educational opportunity. Because neither of the anti-establishment candidates have secured a political endorsement from any major public sector union. Nearly all of those unions back Hillary Clinton. And while Sanders, and even Trump, have had some support from private sector unions, it is arguable that if those private unions made endorsements that reflected the sentiments of their members, Sanders and Trump would get them all.

This political season of disaffection presents an opportunity to explain differences between public and private unions that go beyond the obvious ones – that public unions elect their own bosses, that public unions don’t rely on the profitability of a company to get funding, that public unions operate the machinery of government and can use it to intimidate their opponents. The less obvious but more profound difference between public and private unions is that public union power is enhanced when more people are destitute, divided, and dependent on government, and when more activities are criminalized. Private unions have no such perverse incentives.

There’s more.

If you review Chan Akya’s five reasons for America’s disaffected, anti-establishment youth, the worst and most credible have the fingerprints of public union interests all over them. The most glaring example of this are the inflated asset values which have made home ownership almost impossible, especially in California. Using low interest rates to create an “asset economy” is unsustainable. But in the meantime it shores up public employee pension funds, increases property tax revenues to local governments, and of course, wealthy individuals watch their well-hedged portfolios yield excellent returns, while the average American has no chance to earn a decent risk free return on their savings. Who else benefits? Unionized public university faculty, whose pay and benefits skyrocketed on the backs of student loans. As for job creation – once prices for land, utilities and regulatory compliance became too expensive, business who could took their work offshore. But public unions prospered.

If you step back and examine everything the average private sector American worker has to pay for – along with their overpriced homes and exorbitant college tuition – it’s pretty easy to see why politicians like Sanders and Trump are popular. The American taxpayer doesn’t just pay for a bloated, overpaid, inefficient and totally self-interested unionized pubic sector. They pay for global military security, medical and pharmaceutical research and development, and bleeding edge environmental mitigation and clean energy technologies. As a percentage of GDP, no other nation imposes nearly such a burden onto their citizens in these three areas. On top of that, Americans are now being asked to turn their nation into a “multicultural” petri dish, so that internally as well as externally, this country will midwife the emergence of a global civilization. Much of this is inspiring. But it’s a lot to ask.

Millennials in particular, and Americans in general, need to understand that unionized government is the enabling heart and soul of the “establishment” that has let them down, and that an honest search for solutions to the challenges of this age will only begin when government workers get the same deal as the citizens they serve.

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Ed Ring is the president of the California Policy Center.

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