Wisconsin

[Storm]

Storm,

RE Wall Street wanting to get its hands on the pension funds:

I don't think this is part of the story at all.  Who do you think already manages those pension funds?  The Wall Street institutional investor advisory industry.  It would be moving money from one pocket to another.

Perhaps I wasn't as clear as I meant to be.  I think it is plausible, as think of the large state employee pension funds as managed by fairly competent investment advisors who are able to negotiate lower fees for their transactions.  By splitting up the workers into individual 401k or IRA accounts, they no longer have investment advisors working on keeping those fees low, so they end up paying higher fees overall, feeding the wall street machine.  Sure, it's just moving money from one pocket to another, but the new pocket has holes in it that coins can fall out of...

[moda0306]

Pkg Man,

Unions are products of the free market, even if they are somewhat regulated/supported by politicians.   They may bargain for very socialistic compensation, but that's what their membership collectively decided.  I agree they have too much power, but so does Wal Mart.  Private sector unions are no different than a partnership/corporation in some ways:  A group of people that decide that they can accomplish more for themselves if they come together and form a functioning entity and act as a unit instead of competing as individual players in the market place.

Monopolies (oligopolies moreso) are also natural products of the marketplace.  Companies realize they can accomplish more by joining together than by competing in a perfect competition environment.

The "free market" can actually result in a number of different levels of wages/benefits.  With all else equal, the bargaining power of the two sides (as set by the free market players) plays a huge role in what those wages end up being.  Kind of like Wal Mart... with their size, they can demand lower prices from their suppliers than if Wal Mart was 100 different independent stores.  Wal Mart acheived that size through basically being better than the competition.  Not through anti-capitalistic coercion.  That said, capitalism, at some point, is self-destructive, in that the very perfect (or good enough) competition that was supposed to be the beating heart of why it works becomes less and less about being better and more and more about controlling the market they're in.

[Wonk]

Lively discussion we've got going.  Good to see we can all stay civil when talking about heated issues like politics (is religion next?)

Wonk,

Just to keep you on your feet, I'm going to play Devil's Advocate:

1) I'm quite sure that once you compare people of equal education, government employees make at or below the average compensation.  For instance, I'm a tax accountant.  Given my qualifications and experience, if I went to the public sector and worked for a department of revenue, I would make less money and benefits would be about the same.

The average firefighter in California is paid $50K/yr with very generous benefits and pension.  Some make $200K+.  The firefighters in my town (not a small one) are volunteers.  They get paid nothing but gratitude.  We, of course, donate generously whenever asked.  A firefighter from CA and one from my town might both have bachelor's degrees, but it matters not.  What matters is what level of taxes people of a given city/state are willing to pay for the services they request. 

2) If there truly is such a difference in pay, maybe the private sector is underpaid, not the public sector being overpaid.  Maybe the union representation should be more wide-spread in the private sector as it was 50 years ago.  Maybe private sector workers feeling slighted should be mad at themselves for not collectively bargaining (something that built the middle class of the U.S.), or at multinational corporations (and the laws that protect them) for seeking the lowest common denominator and making developed countries compete with slave labor.

You seem to stage the two sides pretty simply, which I think is hardly the case.  Unions, as entities, are to benefit if their members benefit, but their members are middle-class Americans... who also happen to be taxpayers.  Also, as history indicates, unions have a tendency to set a certain level of labor competitiveness that raises non-union wages and standards as well... so I don't necessarily seeing a "tax-paying" construction worker benefitting by laying off 20% of the state workforce or significantly reducing their collective bargaining power.

The problem with this approach as I see it is it starts with capital.  Capital wants to be treated properly regardless of whose hand its in.  So it seeks safety or growth in productive endeavors (usually enterprise).  That capital employs people.  It produces jobs.  It advances civilization.  It changes hands freely and without force. 

Public unions, on the other hand, don't produce anything.  Instead, they artificially drive up the cost of services that could be obtained elsewhere in a more efficient manner.  Their existence is based on the willingness of the people who write checks in the form of their taxes.  When the taxpayers feel they are getting fleeced or can get equal services for less elsewhere, they deserve the right to pursue that in one way or the other and without the shackles of collective bargaining.  Unfortunately, the unholy trinity of union police, union firefighters and union teachers play the sympathy trump card whenever cuts are called for.  The fear mongering is outrageous.  Fortunately, guys like Chris Christie have brass balls and can lead the way for others to follow.

Good grief, I'm starting to sound like Mish....

Anyway, my admittedly drawn out point is that the reason why the private sector is not underpaid is because Mr. Market votes on it.  Prices too high due to union labor?  Fine.  Mr. Market will buy the good or service elsewhere or Mr. Market won't buy it at all.  Mr. Market doesn't get to freely hire and fire public unions.

[LNGTERMER]

http://www.democracynow.org/2011/2/22/m ... all_street
This perhaps puts this in perspective.

[Lone Wolf]

Unions are products of the free market, even if they are somewhat regulated/supported by politicians.   They may bargain for very socialistic compensation, but that's what their membership collectively decided.  I agree they have too much power, but so does Wal Mart.  Private sector unions are no different than a partnership/corporation in some ways:  A group of people that decide that they can accomplish more for themselves if they come together and form a functioning entity and act as a unit instead of competing as individual players in the market place.

I would completely agree if an employer had the freedom to associate or not with the union.  Unfortunately, they do not.  Once unionization has occurred, the government forces you to the negotiating table with them forever.  It is illegal to attempt to sever this connection.  This is the strict opposite of what you could consider a free market interaction.

I have no problem with people choosing to form any kind of labor cartel that they wish so long as nobody is forced (via law or other forceful means) to deal with them.

By comparison, if you don't like Wal-Mart, you simply don't shop at Wal-Mart.  You remain free.  If you don't like the union that has taken over your (or what you thought was your) business, you have no options apart from surrender, selling out, or closing up shop.

That's why I don't fear the businessman but I do fear the politician.  The politician can compel me with force.  The businessman cannot legally do so.  The obvious exception is the businessman who purchases the services of a politician to use force on his behalf.  In either case, the solution is the same: reduce the size of government and strictly limit the situations in which the politicians can employ force of law against their citizenry.

[MediumTex]

Lone Wolf,

Harry Browne got to the heart of the matter when he said that from a marketplace perspective government has simply obtained a monopoly on the use of force and coercion, and its activities in the marketplace consist of leveraging this monopoly to achieve its desired ends.

[Lone Wolf]

Harry Browne got to the heart of the matter when he said that from a marketplace perspective government has simply obtained a monopoly on the use of force and coercion, and its activities in the marketplace consist of leveraging this monopoly to achieve its desired ends.

Browne's ability to boil something down to its essence was without peer.  It's such a pleasure to read the writing of someone with great clarity of thought and clarity of communication.

[AdamA]

http://mypinksalmon.blogspot.com/2011/0 ... endas.html

This is my Uncle's blog, with his take on Wisconsin, and related issues.  Curious to hear what people think...

[Wonk]

http://mypinksalmon.blogspot.com/2011/0 ... endas.html

This is my Uncle's blog, with his take on Wisconsin, and related issues.  Curious to hear what people think...

I don't share his views, but fortunately, everyone has a right to their opinion.  I grew up decidedly working/middle class.  Father worked in a union shop.  I was sympathetic at times to the union cause.  That is, until I found out my Grandfather, who worked in the trades, had his ladder knocked out from under him in the 60s by union tradesmen. 

I went a different route and started my own company.  When I became responsible for the income statement, I learned real quick what's fair, not fair and the true meaning of risk.  I tried my best to offer great pay, benefits and environment for my employees because I cared for them as human beings.  If the market rate was $10-$15/hr for a job, I'd pay $15 + benefits.  Would I pay $25 for artificially inflated union labor?  Hell no.  Not good enough?  Great--there's the door. 

The thing is, I disagree with his assessment that the middle class is being used in this fight.  I still consider myself middle class.  I want a world where people are free to exchange labor for capital as they see fit, with little regulation.  It allows for more social mobility when the barriers for entrepreneurship are lowered. 

He referenced an article on the Koch brothers funding the Wisconsin fight:

http://blogs.forbes.com/rickungar/2011/ ... ic-unions/

I say great, let me shake their hands.  I've always admired the Koch dynasty and have Charles Koch's book "The Science of Success" on my reading queue.  John Mackey is another guy I highly admire.  Any movement to crush union power in all forms is one I can get behind.

Dinner conversations with the extended family(and my ardently socialist father in law) at the Wonk household are always lively, as you can imagine.  I've always gotten a kick out of the phrase "our jobs."  As in, "our jobs are being shipped overseas."  Or, "our jobs are getting cut because of some unsympathetic governor."  Really?  Do the workers own those jobs?  No, whoever cuts the paycheck owns those jobs.  If the union folks don't like it, I would direct them to leave and open up their own business and see what it's like.

[AdamA]

Wonk--

Thanks for taking the time to read it.  Very intersting to hear your response.  

I don't really know enough to agree or disagree either way.  I just thought it was kind of interesting that his central point seems to be that many of us receive handouts in one form or another.  Some are just less obvious than others.  



 

[Reub]

I have actually heard that off-shoots of the AFL-CIO are actually fomenting and encouraging revolution in, not Wisconsin, but in Algeria and Egypt and who knows where else. Could this be true?

[moda0306]

Paul Krugman's column on Wisconsin.

http://www.nytimes.com/2011/02/25/opini ... .html?_r=1

[AdamA]

I have very tough time picking sides in this.  Have heard very articulate arguments made both ways.

[moda0306]

Adam,

Your uncle's a very smart, interesting guy.  I like when people can step out of the fire for a second and put things in some context that doesn't fit into some pre-defined political box or soundbite, whether I agree with them or not. 

People like that show how 3 dimensional political/economic opinions can be... it's not a 1-dimensional sliding scale like so many try to stage it as.  Many on this board are inflationists, maybe a few less deflationists... but few are supportive of easy money.  Krugman's a deflationist (and a welfare statist) and would probably make a lot of the same points MT makes, but he believes the only way to improve private balance sheets is to use monetary and fiscal policy that may worsen the public balance sheet (which he believe is not very constrained at this point... he uses Japan as an example).  Interesting to see where people's opinions start to differ from each other.

[AdamA]

Krugman's a deflationist (and a welfare statist) and would probably make a lot of the same points MT makes, but he believes the only way to improve private balance sheets is to use monetary and fiscal policy that may worsen the public balance sheet (which he believe is not very constrained at this point... he uses Japan as an example).  Interesting to see where people's opinions start to differ from each other.

Good point.  Inflation or deflation, more easy money probably won't solve anything. 
Peter Schiff thinks Paul Krugman should return his Nobel prize.  Not sure I agree, but it's very entertaining to listen to schiff rant about it.

[moda0306]

Some things infuriate me about Krugman, but sometimes he makes surprisingly good points.  My main problem is that he seems to put full priority on maintaining (artificially, if need be) full employment at all costs.  He uses employment figures and GDP (as well as benefits for the needy) as almost his only metrics of economic success, even if their all artificial... since anything that keeps someone "productive" for one more day is worth it.

[AdamA]

http://www.huffingtonpost.com/robert-cr ... 26951.html

Here's another interesting take...

Again, not necessarily my opinion...just like hear how people respond.

[Reub]

I am in a federal govt union. They are blinded by their own ideology and partisanship.

[MediumTex]

I am in a federal govt union. They are blinded by their own ideology and partisanship.

I have noticed that about unions I have dealt with.

They typically seem to believe that management is incapable of doing anything intelligent and that the battle lines between labor and management can never be erased.

Even if such beliefs are based on reality (and they usually aren't) such narrow-mindedness in the leadership is always discouraging to me.

Normally, no matter how adverse parties are, there is some common ground, some overlapping of interests, some shared beliefs.  In my view, good leadership is about identifying those areas in which you and your opponent can agree and trying to build something from there. 

[Reub]

From what I have seen in my 29 years of federal service, management is extremely incompetent. They waste billions with a "b" on a regular basis. My union only rescues them from themselves at a price...whether that be better working conditions or higher wages and benefits. My problem with the union is that they are so politically partisan that they create a situation where they disregard what many of their very own members believe. These public protests by public unions are an embarrassment to me. Unions should stay out of politics!

[Maestro G]

In a show of solidarity, Wisconsin police have marched into the state capitol to support the protesters and vow not to expel them!

http://understory.ran.org/2011/02/25/br ... e-capitol/

The clock is ticking on Walker! Boy did this backfire on him!

He should resign now to spare the state the cost of a recall and save Wisconsin some much needed money! Wow!

Maestro G

[Reub]

Changing the subject a little, has any state ever tried to print its own currency in difficult financial times? This would not be to replace the federal greenback, but rather to augment it. For instance, they could pay their state workers a percentage of their wages and pensions in New York State Nubles, or something.

If this were possible, then bankrupt states could engage in their own "QE2's" and print themselves out of debt.

[julian]

The problem is that most states have spent themselves into insolvency which is not good for any of us. Just as the real estate buble hurt everyone, regardless if you participated, the states fiscal issues are huge and will impact us all. No matter what the outcome, the economy will suffer as people are either layed off or have their income cut. Breaking the unions or not, public employees need to face up to the fact the company they work for can no longer afford what they have promised. Similiar to the UAW at GM, they can milk the states for only so long before they will be forced into some type of bankruptcy. Unlike GM, this problem is too big even for Obama. There will be no worker protection at the expense of bond holders. With that said, I would not want to be a muni holder right now. This situation only reinforces the beauty of the PP. Should this situation implode, one of our assets will protect us. The best thing is no one knows which asset will save us. I can make a claim for at least 3 of the 4. If you want to get another bigger topic started, this issue is just the forerunner of the social security scam that will hit us sooner then later. People thinking they can retire at 65 and count on SS are smoking something. We r all living longer & therfore must work longer. Just as HB would say, no one can predict the future but it will be very interesting.

[fnord123]

In a show of solidarity, Wisconsin police have marched into the state capitol to support the protesters and vow not to expel them!

http://understory.ran.org/2011/02/25/br ... e-capitol/

The clock is ticking on Walker! Boy did this backfire on him!

He should resign now to spare the state the cost of a recall and save Wisconsin some much needed money! Wow!

Walker should fire the police immediately, along with their chiefs, call in the sherriffs or if need be the state guard, and hire a new non-unionized police force.  Reagan had the balls to do this with the air traffic controllers, I hope Walker is made of similar stuff.

The job of the police is to enforce the law, not to pick sides in politics. This action is disgraceful on their part.

[moda0306]

Fnord 123,

Does he have the authority to fire police?  Would he stand a chance at reelection if he did?  So do the taxpayers really want all the police fired?  Aren't the taxpayers the ones who have the interest in seeing this budget fixed?  Are we now encouraging our public officials to fire anyone who speaks out against them... holding their jobs hostage?  Do the police not have a right to support who they wish on their own time?  How does their duty as police officers while on the clock have anything with how they choose to express themselves politically on their dime?  If the police were to be out there in support of Walker, not the unions, would you be calling this disgraceful?  Do you think there are enough qualified individuals to fill all those slots?  Will they have the option of organizing or should Walker outlaw the new sheepolice from assembling outside of work?  Do you think we'd have a middle class in this country without unions?  Do you think if they disappeared today we'd sustain a middle class?  

Unions are a natural thing, as are corporations and governments.  Each of which is benefitted through perversions in our society at the expense of freedom and individualism.  Just because the scales are tipped in different ways doesn't mean we should lose all perspective of what we're actually suggesting.