Editor's note: David Frum writes a weekly column for CNN.com. A special assistant to President George W. Bush from 2001 to 2002, he is the author of six books, including "Comeback: Conservatism That Can Win Again," and is the editor of FrumForum.
Washington (CNN) -- The New York Times reported this weekend on the story of the juvenile detention center in Wisconsin's rural Manitowoc County, on the shores of Lake Michigan.
Manitowoc County operates a juvenile detention center at a cost of about $350,000 a year. That center currently holds a single inmate.
The county executive has proposed closing the center and paying another county to hold the single inmate.
Seems sensible, right? So why has it not happened? The local paper has the details:
The relevant labor contract forbids Manitowoc County to do any subcontracting if unionized workers have been laid off. So, unless the county can find other jobs for the six redundant juvenile detention center workers, the county cannot contractually pay another county to store its lone inmate.
Many people assume that government can only grow. Not true.
On the eve of 9/11, the federal government employed fewer civilians than at any time since 1965.
But state and local employment has grown hugely since the 1960s -- and kept growing through the 1990s. Now states are hitting a financial wall.
New estimates say that as many as 400,000 public-sector jobs have vanished since 2008, according to The Washington Post.
More layoffs are certain to follow in 2011 as federal stimulus funds cease to flow.
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?
A request to readers: There should be a concluding paragraph here that optimistically proposes a reassuring answer. I cannot think of it. Can you?
The opinions expressed in this commentary are solely those of David Frum.