Will Taxpayers Gain from Public Workers' Pain?

Governors are fighting hard to curb the power of public sector unions. Taxpayers may benefit, but there's a catch: weakening unions could harm the economy.

Across the country, governors are fighting to curb the power of public sector unions. Taxpayers may benefit, but as my latest column for CNN.com discusses, there's a catch: weakening unions may harm the economy.

Government is about to experience the same great shakeout as farming experienced in the 1950s and as manufacturing experienced in the 1980s.

Governments must cut costs and rationalize operations.

Which is why public-sector unions now find themselves on the firing line.

The issue is not that unionized employees are so very hugely overpaid (although some surely are overpaid).

The issue is that government must be overhauled. Governments must rethink what they do and how they do it.

Under any circumstances, governments find it difficult to adapt. See the sad history of attempts to close redundant military bases. Politicians know that the people who lose from change will vote to punish those who made the change -- but that the people who benefit from the change will forget by Election Day.

But if any change also requires a renegotiation of a contract -- potentially a strike -- then politicians will move even more slowly.

This is the real issue at stake in Wisconsin. If Gov. Scott Walker wins, other governors will be empowered. They may not go as far as Walker and outright abolish collective bargaining over work rules. But then, they may not have to do so: Post-Wisconsin, unions will be a lot more hesitant about demanding that empty jails be kept running.

This new age of government austerity offers hope to taxpayers.

But the coming austerity also poses two great challenges:

1) Government is shrinking at the same time as the private sector is saving more and spending less. Where then is demand in the economy to come from? Or will we all slump together in some stagnant new low-demand equilibrium?

2) Reactionary as unions can be, they do put some floor under the wages of ordinary people. In the private sector, those wages actually declined in the 2000s. They now bid fair to do the same in the public sector in the 2010s. If not unions, what force will ensure that the benefits of future prosperity are shared by all, not hoarded by a few? ...

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