This is a rush transcript from "On the Record," December 12, 2012. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: It is already happening in Michigan, Wisconsin and Indiana, unions losing power. So is it a sign what is to come across America? Former senior adviser to President Reagan Pat Buchanan joins us. Nice to see you, Pat.

PAT BUCHANAN, FORMER PRES. REAGAN ADVISER: Good to see you, Greta.

VAN SUSTEREN: Pat -- Pat, unions started in many parts of the country, '30s, '40s, '50s. Is the union today different than it was then, have a different purpose? And are they becoming weaker.

BUCHANAN: They're are not only becoming weaker, they've been devastated in the last 40, 50 years. In 1950, one third of Americans were in unions and almost all of them were in these private -- unions in private sector. UAW had a million workers and things like that.

And what's happened here -- this is almost a mortal blow, I think, to -- when this happens in Michigan, for this reason, that everybody that's -- that's a -- paying dues to the union but is not a member is going to stop paying dues. They're going to say, I'll keep the money myself.

And union members themselves are going to say -- go to the employer and say, Would you keep me on the job if I resign from the union? And they're going to do that and keep the money themselves.

The threat here is not to the workers, it's to that union hierarchy and the union structure and the union money. I mean, workers are going to be as well off or as bad off as workers in Virginia, in Tennessee and Texas and Florida, all of which are right-to-work states. Are those folks really in horrible shape? Their unemployment rate is lower than it is in Michigan.

VAN SUSTEREN: Well, you know, there are two different types of unions. There's the private union and there's the public union.

BUCHANAN: Right.

VAN SUSTEREN: The public sector union. And the public sector union is so vastly different in one respect. You know, lawyers always have to worry about conflicts of interest.

BUCHANAN: Right.

VAN SUSTEREN: But it's -- there's something bizarre about a public sector union, putting somebody in office...

BUCHANAN: Right.

VAN SUSTEREN: ... and then negotiating with that somebody for the person's wages or benefits.

BUCHANAN: Right.

VAN SUSTEREN: I mean, public service. There's that horrible conflict of interest that -- you know, I don't know how to correct it. I just know that it exists because, you know, you're negotiating with the person you got -- you put in office!

BUCHANAN: Exactly. Well, that's right. They go raise money for this guy. They nominate him, get him nominated, then they elect him. He wins by a few points and they go in and say, Now we want to negotiate the contract for our employees. Joe, you and I are buddies. Let's talk it over. So you've got an inherent conflict of interest there.

Problem with the public unions, though, is, look, we're borrowing 40 cents out of every dollar we spend. And people are looking at it, and many of these public unions -- when I wrote my book, "Suicide of a Superpower," the federal government, the pay and benefits combined of the average federal worker were about twice what they are in the private sector! And of course, they got far greater job security.

So here taxpayers paying for their employees are making average twice as much as they are. You saw this -- this was behind that uprising, really, in Wisconsin. Then you had it in Indiana. It was in Ohio and pulled back (INAUDIBLE) But in Michigan? I mean, Cadillac Square? That's in Detroit. That's where Democratic candidates launch their campaigns!

VAN SUSTEREN: Would you agree that private sector unions are much different and in terms of, you know, even historically, needing some protection, needing to sort of gather together and sort of pool their resources?

BUCHANAN: You know, I -- I'm a union guy myself right now. I'm still in AFTRA/SAG, the two (INAUDIBLE) combined. I pay dues and I don't have to because it's a good union.

But I'll tell you, when I was in St. Louis as a journalist in 1962, I went out and the editor hired me and they told me, You got to join the union within 60 months or you're going to be fired. Then they came -- the union came to me and said, You got to pay for this strike in New York, union strike in New York, or we're going to get you fired when I was writing editorials against the strike in New York.

So this is the -- it's that kind of coercion which is coming to an end everywhere. And you heard it right here. The folks in Michigan said, We looked at Indiana. They're getting jobs. Businesses are coming in there. That's why we did it.

They looked South. Where are all the foreign companies coming? (INAUDIBLE) to Spartanburg, South Carolina, BMW plant, Mercedes plant, Tuscaloosa, Alabama, the Volkswagen plant -- I believe Chattanooga, Tennessee, the Nissan plant, Tennessee -- when foreign folks come into the country, they take a look, they say, Look, we don't want to deal with that kind of stuff. Let's go where we got good labor relations in the United States of America, wages are reasonable.

VAN SUSTEREN: Are those big companies, though, in some ways -- are they the ones that are sort of union-busting? Because if they're only going to go to those states, they're going to -- they're sort of put some governors up against the wall in order to compete competitively...

BUCHANAN: Sure. And they're going to get the best deal. Now, here's where I do agree with the union guys. All these agreements -- NAFTA, GATT -- what these are, a Magna Carta for transnational corporations to shut their factories in the United States, where they got high wages, strong regulations, all the rest of it -- shut the factory there, move it over to China, cut your wage rates by about 80 percent, produce there, bring the products back into the United States. And then the huge new profits you make, share those with your shareholders and the executives.

And that's where I disagree. This globalization, free trade -- they have really been unfair. One place I agree with Hoffa. I was -- he was sort of with me back in the 1990s. They're bringing Mexican trucks into the United States, driving them on American highways, Mexican drivers, and to undercut American Teamsters. And I think that's wrong. I think the Teamsters...

VAN SUSTEREN: Yes, but you know what the thing is? When -- when the United States is fighting that -- I mean, they were a little bit shifty. They were saying that they were trying to prevent those trucks coming into this country, not saying because it's a trade issue, but basically saying it was a safety issue. I mean, there were a lot of sort of games that the U.S. played on that.

BUCHANAN: Well, we weren't playing any games. I said, Why can't you make American Teamster who make very high wages -- a Teamster in Arizona ought to compete with a Teamster in Alabama, but not a Teamster in Mexico, who makes maybe one fifth the salary, and they're driving on American highways.

I think Hoffa was right there. But when Jim Hoffa gets up and they talk about a civil war and you see this battling out there, that's hurting the labor movement far more than that guy got hurt by that overhand right that we've been showing a lot here on Fox.

VAN SUSTEREN: Pat, as always, thank you.

BUCHANAN: OK.