Filed under: Capitalism, Democrat Corruption, Economy, Media Bias, Politics, Statism, Taxes | Tags: Governor Scott Walker, Public Sector Unions, The Big Government Project
Some elections matter more than others. The recall election of Wisconsin Governor Scott Walker matters a lot. But we may misunderstand why it matters so much. The media tried desperately to portray the election as a dead-heat, and too close to call, but the polls had shown Governor Walker leading for some time.
The question was whether taxpayers have any hope of controlling the entitlement state. Can a politician take on powerful government unions and survive? For months, the American Federation of State, County,County and Municipal Employees (AFSCME) had been busing in their members, and other unions had been adding theirs, to demonstrate in Madison, occupy to Capitol building and show their support for recall. They carried rude signs, issued threats, called vicious names, and screamed and shouted.
Public unions don’t operate quite like private sector unions which negotiate terms with a single company or a single workplace. Public unions, flush with member dues, can often buy the politicians with campaign contributions and get-out-the-vote efforts. The politicians, who are supposed to represent taxpayers, are often more concerned with their own reelection. So when the time comes to vote for raising union retirement benefits or improving health care the politicians’ choice is reelection or keeping taxes low? Public unions sit on both sides of the bargaining table.
Over time, public unions have been able to extort excessive wages, benefits and pensions. They have even been able to arrange contracts that allow monopoly provision of health insurance.
It is hardly surprising that state and local governments — required to balance their budgets —have been shocked to discover that the generous benefits they have given with the best of intentions to their union workers — are unaffordable. Governor Scott Walker’s principled stand may give them courage. So that is indeed important for the whole country.
But Governor Walker’s reforms ended Wisconsin’s practice of automatically collecting union dues. Now dues are voluntary. And it turns out that many government workers don’t want to belong to a union after all.
Since Governor Walker’s reforms took effect, membership in government unions has dropped significantly. Membership in the AFSCME has dropped from 62,818 in March of 2011 to just 28,745 in February of this year, according to the Wall Street Journal. 34,072 workers decided that they are better off keeping their own dues if they are not forced to pay them. The union can no longer guarantee monopoly wages and benefits. That is the very big deal for the left, and a significant crack in the Big Government Project.
The Big Government Project is all about special interests, and special rules that aid the special interests. Everybody has good intentions, and they like to do nice things for their friends. And when the web of special interests becomes too wide and too thick, they inevitably vote themselves more benefits that society can support.
Big Government — the entitlement state — is in crisis. A recession, with thousands of people unemployed, businesses closed and less economic activity means governments at all levels are getting less revenue. The federal government with huge borrowing power and no requirement to balance the budget that can’t be put off, is somewhat immune, if irresponsible. Efforts to pass a balanced budget law have met congressional resistance. All states, except Vermont, have a balanced budget requirement.
When there is less revenue for a state, the excessive wages and ballooning benefits stand out like a sore thumb. And sweetheart retirement benefits, promised but unfunded, have many states in dire straits. And the people, who are designated to pay for all this excess, may just fire the public officials who have got them into such a mess.
Filed under: Capitalism, Democrat Corruption, Domestic Policy, Economy, Politics | Tags: Governor Scott Walker, How to Reform a State., Public Sector Unions
Yesterday was election day in Wisconsin, and the newscasts were full of “the neck-and-neck battle, too-tight-to-call, a close race,” but the intrade numbers were over 90 in favor of Gov. Walker. Polls suggested that it was not close at all. That undoubtedly explains Democrat anger and astonishment that Governor Walker had won handily. One recall supporter was nearly in tears screaming that it was “the End of Democracy in America.”During the entire battle, the unions were not shy about using some extreme language to describe their position. “First they came for the Jews…”
Wisconsin had a budget deficit of $137 million — in a state required to have a balanced budget. The relationship with the public-sector unions had deteriorated into a cozy arrangement where the unions lobbied the legislators who gave them ever increasing benefits, whereon the unions then voted the legislators back in, who were then willing to give the unions more benefits. A sweetheart deal to say the least. Wisconsin could not afford it. No money. Collective bargaining in the public sector does not work.
Even after Walker’s reforms, public workers are still overpaid.. Union members’ are having to pay more for their health care and pensions, but far less than average. The whiny, screaming union members after Gov. Walker’s reforms are better paid than comparable workers in the private sector, pay less for health insurance and pay less for their pensions. Jobs have been saved (the teacher’s union was ready to get rid of them). And the unemployment rate is now lower than the national average.
- Before Act 10, Wisconsin state workers received health benefits about 2.3 times as valuable and pension benefits about 5.7 times as valuable as what workers in large private firms receive. After Act 10, Wisconsin state workers still receive health benefits nearly twice as valuable and pension benefits more than 4.5 times as valuable.
- Before Act 10, Wisconsin state employees received total compensation (salary and benefits) about 29 percent higher than comparable private-sector workers. After Act 10, the compensation premium is about 22 percent.
- In dollar terms, the average Wisconsin state worker after Act 10 receives total compensation including benefits equal to $81,637, versus $67,068 for a similarly skilled private worker.
Union workers are far better off that comparable workers in the private sector, and a state that is in financial health is more apt to retain their jobs. They are suffering far less than the rest of the country where unemployment is much higher. It is a hugely important victory, not just for good government but also for fair treatment. (That item the Left claims as their goal). It does prove, however, that with political courage, the corrosive effect of public sector unions and outrageous benefit packages can be defeated. And that is the source of all the hate.
Wisconsin is far from the only state with overly generous pensions, overpaid union members, and benefits the state can no longer afford. Scott Walker stood up to enormous pressure and hate. But he provides an example for the rest of the states.
Filed under: Capitalism, History, Japan, Liberalism, Politics | Tags: Democrats Are Not Serious, Japan's Nuclear Plants, Public Sector Unions
—Michael Barone explains the weakest part of our political system—the presidential nomination process. It’s not coincidental that it’s the part of the federal system that finds least guidance in the Constitution.
—Investors Business Daily says the Democrats are simply not serious about the high price of gas. They have reverted to their worst and silliest ideas and claim them to be a fresh new set of policies
—The Japanese were remarkably well-prepared for a devastating earthquake. Many said that although Tokyo got a good shaking, there was little damage. It was the tsunami that caused the devastation. The last “Big One” was the Great Kanto Earthquake of 1923. The Atlantic has a photo gallery of that 7.9 earthquake, and the damage is unbelievable.
—Christine Russell is an award-winning science writer, and president of the Council for the Advancement of Science Writing. She offers a clear explanation of the unfolding situation at Japan’s nuclear plants in “10 Critical Questions About Japan’s Nuclear Crisis.”
—A moving story of the Wisconsin Assembly’s Bold Leap and legislators doing the right thing under very difficult circumstances, and why they did it, in spite of the hundreds of protesters screaming outside.
—Eight more states are following Wisconsin’s Governor Scott Walker’s lead, and reforming the relationship between the government and public-sector unions with new laws protecting workers from union control and fund-raising.
Filed under: Capitalism, Economy, News the Media Doesn't Want You to Hear, Politics, Taxes | Tags: A Compelling Narrator, Public Sector Unions, Steven Malanga
Steven Malanga, a senior fellow at the Manhattan Institute, has written many wise books, and columns. When he writes, I pay attention. His newest book is Shakedown, a timely and important look at the financial collapse and the unprecedented grasp of federal power into our beleaguered free enterprise economy. Steven Malanga provides the grisly details that the mainstream media neglects to cover.
Filed under: Capitalism, Economy, Law, Liberalism, Taxes | Tags: Incentives Work, Public Sector Unions, Wisconsin Protests
The American people are more concerned about budgets and deficits and debt than ever before. That doesn’t mean, however, that everyone gets it. What are students from the University of Wisconsin doing sleeping in the capitol building, and participating in protests? Well, great fun being part of a big noisy protest, beating drums, singing protest songs. But the likelihood that they have any idea of what the protests are all about is slim.
Teachers are being asked to pay 12.8% of their health-care premiums, up from 6%. That means that the taxpayers are still paying 87.2% of their health-care costs. They are being asked to contribute 5.8% of their salary toward their own pensions. The unions said they wouldn’t object to that. So why didn’t all the protesters pack up and go home? The unions don’t want to give up their power. Nobody is taking away their right to bargain collectively over salaries.
The problem is collective bargaining over benefits. No state can possibly afford that. States are required to balance their budgets, and most states can no longer raise taxes, they’re already too high and significantly damaging the free market and killing jobs. In Wisconsin, either public employees agree to fairly modest cuts, or there will be massive layoffs. There isn’t another choice.
In the private sector, unions bargain collectively with management. Private sector management has an interest in keeping labor costs on a par with their competitors. Thus management has an incentive to push back against union demands. If their labor costs get too high, they will lose business to their competitors, and eventually fail.
Public sector unions donate large amounts of money to the campaigns of the very public officials who will bargain collectively with the same unions. The public officials have an interest in pleasing the unions so that they can again receive campaign funds from the unions. They have no incentive to push back against union demands for larger pensions and more generous health care benefits.
People act in their own self-interest. That’s just the way of the world. You can try to order people to do things they don’t want to do, but it doesn’t work well. People respond to incentives. The left seldom understands this.
General Electric and Phillips found it would improve their bottom line to force the American people to buy CFL lightbulbs made cheaply in China , which they could then sell at a larger profit. The American people didn’t like CFL bulbs. GE and Phillips helped the government to write a bill banning the use of incandescent bulbs. The American people still do not like CFL bulbs and are stocking up on regular incandescent bulbs, and demanding that their congressmen repeal the ban. People respond to incentives.
The American people don’t like the government telling them what kind of shower head they can use. They have either installed multiple shower heads, or removed the restrictors from their government-mandated shower heads. People respond to incentives.
The federal government can order school districts to feed broccoli to the kids. There are no incentives there. Kids don’t like broccoli.
The states cannot keep raising taxes, and thus put more people out of work, so that public sector unions can have more power. The people who receive overly generous benefits from their public sector unions are vastly outnumbered by the ordinary people who have to pay higher taxes so that public sector workers can receive big pensions when they are no longer working.
Last year alone, 612,000 US workers dropped their union memberships — each representing as much as $500 in dues. The average wage for public sector state and local government workers is $48,742, while the average private sector worker receives only $45,155 . Used to be that public sector workers accepted a slightly lower wage in return for greater job security and better benefits.
SEIU gave $28 million to the Obama campaign, which went to Organizing for America to deploy activists to agitate for unions in Wisconsin. As Michael Barone says: public sector unions “are a mechanism by which every taxpayer is forced to fund the Democratic Party.”