Wisconsin Governor Scott Walker handily survived the recall attempt brought by public employees unions angered over his efforts to weaken their ability to negotiate for higher pay and benefits. This proves that Wisconsin isn’t Greece, the nation whose residents violently object to similar reductions in public sector pay and benefits even as the country is going bankrupt.
Fiscal conservatives can take heart from this, but they shouldn’t learn the wrong lesson. That lesson (the wrong one, that is) would be that, once they take power, they can do whatever they feel is needed without regard to the political consequences. As the Antiplanner has previously noted, Walker’s strategy of reducing spending was fine, but his tactic of taking the unions head on was unnecessarily polarizing.
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Too often, when power transitions from one party to another, the incoming party thinks it can do whatever it wants, and in doing so it radicalizes the opposition, which quickly retakes power. President Clinton had a Democratic Congress behind him for two years, then lost to Newt Gingrich’s Republicans. Similarly, Bush lost the Republican majority in Congress, while Obama lost the Democratic majority, both two years into their terms.
So the lesson that should be learned is that incoming leaders need to think tactically as well as strategically. The Republican governors of Ohio, Pennsylvania, and other states who were elected in the same year as Walker were able to cut budgets without generating such strong opposition. Walker may have won, but he should not be considered a model for any fiscally conservative state or federal officials who take office in 2013.
On the other hand, apparently Wisconsin financials are back in the black, or headed there. We must realize that there’s no tiptoeing around the union thugs. As soon as their precious benefits are threatened, a full-on assault should be expected. There is no middle-ground here.
Umm the “thug” unionized government workers agreed to all the cuts proposed by Walker. The objection was collective bargaining.
These union thugs are bankrupting the public finances. Collective bargaining sounds like a good idea, but it’s the way states go broke. Money goes from the taxpayer to the government workers to dues to the unions which go to the candidates that serve the interest of promising them more benefits and pay. A vicious cycle referred to as the money pump. Federal workers don’t have collective bargaining rights, Carter outlawed it. It’s not the pay its the pension deal; the politician will be out of office by the time the pension deal comes. Scott Walker had won the governors race by complaint that unions and government throw money down a hole. In the long term you just can’t sustain it. So Walker asked them to pay a little bit themselves for pension and medical costs, still less than private sector workers pay but they said no. They eventually relented but the Governor tried to rain in their capacity to get more stuff. President Roosevelt admitted that unions (at least in the public sector) could become problematic and they shouldn’t have collective bargaining.
The battle in Wisconsin are trivial compared to what happened in Puerto Rico. 60 days after having been sworn in, Governor Fortuño announced his Fiscal and Economic Recovery Plan which included reducing the government’s annual expenditures by more than $2 billion at the start of the next fiscal year in July 2009. Media speculation estimated that a reduction of such magnitude would require permanently laying off over 30,000 government workers. 12,505 were laid off. As a result of all the cost-cutting measures taken during his first two years in office, on January 31, 2011, Gov. Fortuño signed Law 1 of 2011, the new Internal Revenue Code that provides, retroactive to January 1, 2010, tax relief including a 50% tax cut for individuals and 30% for businesses, beginning with a 7–14% tax cut for individuals and a 7% tax cut for businesses and the simplification of regulations to start businesses. He froze all salaries and cut others including his own. Due to cost-containment and revenue generation measures, fiscal year 2008–09 ended with a $2 billion structural deficit, followed by a $1 billion structural deficit in 2009–2010, $610 million in the current fiscal year with a goal of achieving a structurally balanced budget by July 1, 2012 with hopes of a surplus by 2015.
I still believe that collective bargaining is a good idea. But it needs reform. I totally agree with your statement:
“Money goes from the taxpayer to the government workers to dues to the unions which go to the candidates that serve the interest of promising them more benefits and pay. A vicious cycle referred to as the money pump.”
I believe in the idea of unions for both public and private workers, but many unions today have to accept culpability in the corrupt political process that frustrates so many of us. There is a lot of accountability for our political and economic problems to go around and some will be on the hands of unions.
But the cultural aspect of publicly attacking the teaching and civil service professions is troublesome. Why would any smart, talented and compassionate individual choose to teach or protect and serve? The way things were handled in WI says to these groups, “We do value or appreciate your existence.” I appreciate Mr. O’Toole’s post today for his tacit acknowledgement of how this viewpoint is ultimately unproductive.
* “We do [NOT] value…”
Right. Capital seeks to drive down labor costs as low as possible.
There is a fundamental problem when your society is based oh high wages and expensive infra and buildings and homes and and and, then suddenly you take away income. But who said corporations and economic systems were rational anyways? Vonnegut explored these questions a lot, and could find no reason why bigbrains had any survival value. We’re watching another species reaching its resource limits and the scramble to obtain resources. Simple population biology.
DS
I think you right Dan. Corporations are not rational and have (even more) culpability for our troubles as well. And thus the vicious cycle multiplies, as why would unions concede anything when their opponents who are also culpable will not?
I’m not sure I’m ready to consider it a death spiral… yet.
Dan, you’re completely wrong. The fact that “capital” seeks to drive down labor costs means nothing. Labor, ie the employee, seeks to drive up the benefit they receive as high as possible. Until these two lines intersect, the market does not clear, and one doesn’t get hired. Following your logic, you should be incapable of going to buy apples, since the apple grower seeks to drive up his profit as much as possible, and since you are not represented by the Union of Food Eaters, how on earth would you ever buy a reasonably priced piece of fruit?
It is fundamentally flawed logic, and the fact that 90+% of the private sector in this country functions just fine without Unions, is indicative of this. I work in a Unionized company. I am absolutely opposed to public or private Unions. Unions serve to protect the worthless by creating an artificial monopoly, and thus drag down everyone else with them. A Union is a monopoly, and like all artificial monopolies, it has harmful effects and can only exist thanks to political pressure.
Strange how I don’t see anyone called for Unionization at Microsoft, or Apple. But fat worthless incompetent noncompetitive hugely overpaid workers at UAW, somehow want me to pay for their benefits. I’m not afraid to say this…yes teachers should not be unionized and they should be paid for what they are worth, and in many cases, it is lower than what they make now. Don’t cry me a river for someone who works 9 months a year, 6 hour days, gets by through college with the easiest possible degree (teaching degrees), and then makes on average starting salaries that is greater than the median income of this country (and when taken at a more local level, considerably higher.) That is their benefit; 3 months off, reduced work hours and a cushy job which requires very little in terms of intellectual or physical ability. If they’re so good and do it all for the children, then we’re happy to pay them for their performance. That’s what we’re asking too. My HS History teacher, a rather worthless teacher as I recall, makes $100k right now (salary available online), which is a salary range comparable to most engineers at his career level. And they have to work 60 hour weeks. I don’t think that guy delivered any value to me, other than the knowledge that, somehow, someway, “Russia” could be miss-pronounced!
We are their employers. And this is why you’re wrong, Dan. The market is very rational. And it is very rational for us, who pay them, to demand accountability and pay for performance. I don’t care if you’re a teacher, a cop, a firefighter or whatever. You get paid to do a job, and if you ain’t doing it well, you get out.
AIG:
and the fact that 90+% of the private sector in this country functions just fine without Unions, is indicative of this. I work in a Unionized company. I am absolutely opposed to public or private Unions.
90% of this country does NOT function just fine without unions. For what was once a high wage nation with enviable standard of living benefits, the crushing of labor unions since 1980 has brought stagnation in wages of everyone below the upper 10-15% of the managerial class, shrinking of normal benefits like vacation and sick pay and pensions for everyone not in the 1% Golden Parachute set, and the steady advance of forced Saturday and Sunday work.
If you are opposed to unions, why don’t you personally return to the standards of work set before they existed – six 12 hour days per week, no vacation, no retirement, no pensions of any sort, work until you die on the job, fired if you get injured and live, no sick time, no medical insurance, two days off per year – July 4th and Christmas, company stores and housing, pay in scrip, $1 per day wages.
You are a total ignoramus on this issue.
The fact that “capital†seeks to drive down labor costs means nothing.
Ah. Lacking a second semester in Macro or first in PoliSci, are we**?
It is an issue in our country when 1/3 of the populace denigrates basic education, such that they want to make the educators of our children miserable. It is an indicator as well. Reap what you sow. How sad for our country.
DS
** this does not eliminate the possiblity of a first semester in macro as well…
LazyReader said: These union thugs are bankrupting the public finances. Collective bargaining sounds like a good idea, but it’s the way states go broke.
THWM: The problem is greed.
I don’t like it when unions get greedy, though that doesn’t mean that unions are bad things.
Lazy, I do not believe in collective bargaining for public employees (and I have spent most of my working life in the public sector). I have seen far too many abuses by unions (especially transit worker unions) with taxpayers getting the short end of the stick.
While I agree with the Antiplanner’s point about not being so heavy handed in cutting budgets I do feel that the influence of money is becoming a major problem in society. Walker apparently got about $45 million in contributions for the election, much of it from outside the state. How much of this came from special interest groups who were simply profiting from the Walker’s sale of taxpayers assets at below market prices? For example see the sale of Wisconsin Energy:
http://www.politicalruminations.com/2011/03/why-koch-brothers-associate-had-to-win-the-wisconsin-state-contract-to-manage-the-wisconsin-energy-program.html
(Google search terms “koch brothers wisconsin energy”)
In the last 35 years the USA has seen a big shift in income where much of the huge productivity increase has gone to the top few percent of society. See:
http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States
Many of us who used to be anti union are now becoming increasingly concerned that as unions in the private sector have lost power so more middle income wealth has been transferred to the wealthy. The wealthy are now able to use this buying power to influence the public and spending policy, in many cases getting taxpayers assets in return. Public employees may have to face some cutbacks. However, most private employees should be a asking why they have lost benefits and buying power over the last 35 years even while increasing productivity.
We all know where the money came from.
And we all know those thuggish teachers and firemen drove Wisco off a cliff. *eye roll*
And I agree, Paul, that the wealth transfer continues to accelerate. That’s too bad, because even though we are armed to the teeth, those that are armed don’t seem to realize they are being parted from their money.
DS
Income Confusion
Thomas Sowell
http://townhall.com/columnists/thomassowell/2007/11/21/income_confusion
Anyone who follows the media has probably heard many times that the rich are getting richer, the poor are getting poorer, and incomes of the population in general are stagnating. Moreover, those who say such things can produce many statistics, including data from the Census Bureau, which seem to indicate that.
On the other hand, income tax data recently released by the Internal Revenue Service seem to show the exact opposite: People in the bottom fifth of income-tax filers in 1996 had their incomes increase by 91 percent by 2005.
The top one percent — “the rich” who are supposed to be monopolizing the money, according to the left — saw their incomes decline by a whopping 26 percent.
Meanwhile, the average taxpayers’ real income increased by 24 percent between 1996 and 2005.
more at
http://townhall.com/columnists/thomassowell/2007/11/21/income_confusion
Please. Thomas Sowell’s aim in that column and in most columns is to deceive you; did you catch it and purposely pass on the deception, or did you miss the deception** and…erm…mistakenly pass it on?
DS
http://www.cbpp.org/cms/index.cfm?fa=view&id=3629
I thought that was the aim of your posts
I thought that was the aim of your posts
So you missed it then?
DS
sprawl:
Well duh. I earned $9,000 in 1996 and $80,000 in 2005.
That was because I graduated from college and progressed in a real job.
It doesn’t mean the bottom of society saw their income go up 9 fold. There was still a bottom of society income wise in 2005 that earned peanuts.
Buying power lost of the last 35 years; Couldn’t a lot of that be attributed to inflation. A dollar today is worth only 36 cents in 1980 so today’s money has lost nearly 2/3rd’s of it’s value.
Indeed. The devaluation of the dollar is the primary cause of lost buying power and declining wages. The Fed allocates new money to their crony-capitalist buddies, who, using the money first, get the most bank for their buck. The working class suffers for it, using the funny money as it trickles down and loses value. And why does the government play this game? $7 trillion in nukes. Unconstitutional war in the Mideast. In short, government finances war through fiat rather than taxes.
Couldn’t a lot of that be attributed to inflation.
PPP in $ is a function of inflation and loss of parity from the rise of other economies: the BRIC.
If kept in constant dollars you’ll see that stagnant wages (despite increasing productivity) and BRIC rise is most of the reason. Inflation is just a bit higher than wage increase since IIRC ~1975. Lots of our income went to increasing costs of health care – which rose waaaaaaaay above inflation and the longevity gains went to the top – and for some quintiles for education debt.
Food and staples have largely kept pace until very recently when grain prices took hits from (increasing frequency of) heat waves and slowing real production. The recent swings in PPP may be an indicator of resource limits, as the graphs look similar to other indicators from ecology of resource limits.
DS
Lazy Reader:
Buying power is the relative relation of income to prices, not the relation of present to past prices.
If income and prices both go up 10%, no one loses anything or is in any way worse off. That is the myth of inflation. Price increases only hurt when incomes are fixed or declining.
The whole “Koch brothers bought up Wisconsin power plants bla bla bla” argument is so full of wholes, only Wisconsin cheese makers could have come up with it. It is pathetically weak, given that 1)the plants they manage are in almost all cases plants that do not provide power to the grid; ie they are local generators and co-gen plants for local facilities, such as hospitals, prisons and UW schools, and b) that’s the business Koch industries is in. It’s like that saying, if you repeat a lie often enough, it becomes the truth. Well the Leftist websites have been repeating this line for a long time, and it still isn’t any more true. It’s also silly because that’s what local governments do in order to save money and increase efficiency; they lease or sell such assets to private companies.
As for income inequality, it is utter garbage. I came from a communist country where income inequality did not exist (except for the 10 people on top). What a wonderful thing that was, right? Also, when I was younger, I was in the absolute bottom quintile. I stayed there for a long time till I graduated and got a job. Then I went back in, when I went back to school. Now I’m back up again. They mean nothing, other than the fact that the level at which people can rise to today, is a lot higher than 35 years ago. That’s a great thing.
As for income inequality, it is utter garbage.
Here in the Reality-based community, such phrases elicit a chuckle or a snort. Maybe a sigh of consternation, depending upon what you do for a living. It must be utter bliss for some, I guess.
DS
Unions began as a way to improve working conditions in private industry. Why are unions for government workers needed? Are the conditions of government employment so terrible that they require unionization? If so, perhaps privatization, rather than unionization, is the answer. At least private unions aren’t circumventing the electoral process to wrest more money from taxpayers.
They’re not? UAW, NLRB etc? They’re learning.
The NLRB is not a union. Sheesh!
Sheesh! A different day, a different issue.
I’m shocked I find myself mostly agreeing with Frank on this, RE public employee unions. Perhaps it comes out of my experience having (contractually) worked for the City of Vallejo for 20 years, a city bankrupted by outrageous police and fire pensions.
I’m glad to see that Frank isn’t a knee jerk Republican, given his rhetoric about crony capitalists (gee, another sentiment I generally agree with…I’m looking in the mirror shaking my head…)
A few things are certain in the wake of Scott Walker surviving the recall.
(1) The Democrats WON one of the Wisconsin State Senate recalls, providing veto power and portending well for November.
(2) Walker may still be indicted if the press reports about the “John Doe” scandal are accurate, so current hardcore partisan Republican victory preening may be premature. None here, refreshingly.
(3) Republicans shouldn’t rejoice over the polling finding that 17% of the Walker vote say they’ll vote for Obama.
(4) A large percentage of voters likely to have supported Barrett didn’t turn out to vote, because it is summer vacation time.
(5) Another certainty is many of my “progressive” friends will continue to consider healthy public skepticism about public sector unions to be more global “attacks” on collective bargaining; to the extent they believe this the Republicans will continue to benefit.
(6) The political operatives and political junkies will continue to discuss the Wisconsin recall for months, but the voting public outside Wisconsin will forget about it very quickly–which they wouldn’t if Obama had waded into that thicket–the Repugs would have hung it around his neck (though they’ll still try). For once, Obama made a very wise strategic decision to stay out.
Wow. Six big reasons why the so-called extreme extremist won by more than he did two years ago.
That is why we have elections. Even recall elections. Because polls and idiots screaming in the capitol building are not democracy.
(4) A large percentage of voters likely to have supported Barrett didn’t turn out to vote, because it is summer vacation time.
COLLEGE STUDENTS, of course!
Then Scott got victory by public apathy.
Wisconsinites had a chance to get rid of a crook, they blew it, but they don’t care.
Yep. The opinions of 18 year old English Lit majors at UW-Madison who pay no taxes and will never live in Wisconsin past graduation, were truly missed.
Gee, you’re dense. Wisconsin had ~3 million total voters in the 2008 presidential election, vs. ~2.5 million in this outing. Based on turnout about 250k of this difference were people <25. The number of "18 year old English Lit majors at UW-Madison" who move out of state after graduation was infinitesimal compared to this shortfall in college student age turnout.
As the exit polls also pointed out, ~60% of replying voters thought recalls should be reserved for malfeasance in office, while ~10% felt recalls shouldn't exist. This–and understandable public disdain towards public employee pensions and medical coverage far in excess of what the average taxpaying voter has access to explains the loss, let alone a weak candidate (Barrett).
National Dems tried to warn WI public unions against recall effort, but were ignored. President Obama’s advisors smelled cow manure and kept him at a safe distance. Money spent (I think wasted) by both sides on flyers, radio, TV & robocalls did not change minds of state voters, neither did very successful recall petition drive – results were just like Nov. 2010. This simply means that by 7% margin, WI voters tired of same old – same old and want to try Walker. This is what Democracy looks like.
The US model of labor unions is very heavily based on state government unions, especially teacher unions.
The federal government greatly restricts unions, especially giving them no right to negotiate salary or to strike. Lots of federal employee unions, but they have very little power. But that is perfectly OK with Obama and the Democrats. There is not one proposal in Congress to change that.
Sandy Teal:
Government unions exist to protect civil service employees from the depredations of political appointee managers. If politicians were Angels, they would not be necessary. OTOH, the press everyday reports on the corrupt true nature of the many criminals appointed to government service by the winners of elections.
If you don’t think they are necessary, you’ve never been involved in the typical sort of job grievances they deal with. Example of one my dad was in – his coworker, a research scientist and the union head for a Dept of Ag. facility, was fired by the political hacks in charge 6 months prior to his retirement who then attempted to deny him his pension.
All of these attacks on government workers as “union thugs” are really an attack on civil society itself. A well run government requires competent employees not serving at the whim of election results, and a well run government is an absolute necessity for a functioning private sector economy providing society growing wealth. Without people who dedicte their lives to the larger community through civil service instead of the pursuit of riches, where would we be? A capitalist economy requires property records, courts, police and fire, education, regulators, a military, infrastructure, researchers, diplomats, and others.
If you really want to experience Anarcho-Libertarian nirvana and the absence of functioning government, move to Somalia or Haiti.
Thank your lucky stars you have to deal with bureaucrats and tax payments. That means you live in today’s equivalent of the Roman Empire, rather than among the merciless savages of the Asian Steppe or Germania or the African jungle. If you don’t recall what life was like in those places from high school history, just read about the blood fueds of Njal’s Saga some time about medieval Iceland, and try to imagine forming a functioning business in such an environment.
In addition to the comment below, you might want to actually study the situation in medieval Iceland before making hasty, unsupported generalizations:
Frank:
I really don’t care what Mr. Friedman has to say. I am a descendant of Vikings from Denmark via Normandy and Gloucestershire. I know very well exactly what my ancestors like Urse d’Abetot did, because it is written about in history. They certainly weren’t limited by some national process of violence reduction in the siezure of Normandy or Britain, but instead took whatever they could lay hands upon and killed whom they would please if they could do it. That is what life is really like in Anarcho-Libertarian nirvana.
Andrew, you are full of shit. Seriously. Don’t give me this “I’m an insider so I know” crap. Give me some evidence, not pontification. Dismiss all the professional historians you want, but you’re talking out of your ass.
And next time try refuting the central point with evidence rather than, to use a Danism, hand flapping.
Who should fire government employees? Union people are elected by the union to get them the most pay and benefits. They ALWAYS defer to seniority. Is that better then any other system?
The federal government has a rather sophisticated system with political appointees, career SES employees, and career staff. It is far from perfect, but it is better than any union run system.
“Government unions exist to protect civil service employees from the depredations of political appointee managers.”
Please provide an example of a public school teacher who has experienced “the depredations of political appointed mangers.” Let’s examine your wording. Depredation means robbery. Can you give me an example of political appointee managers that a teacher might have? Then please explain how they’re trying to rob teachers.
Or maybe you’re just full of $h!t as evidenced by your mindless repeating of the knee-jerk “move to Somalia” command that statists wheel out whenever they can’t say something original and intelligent.
Next.
I seem to remember the opposite, that anytime a bad teacher needed to get fired around here, it took 10 years and all the managers and unions colluded to fight the firing.