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Monday, February 21, 2011

Not Tunisia

Saturday's NY Times featured the following headline and (excerpted) article:

Wisconsin leads way as workers fight state cuts.

The unrest in Wisconsin this week over Gov. Scott Walker's plan to cut the bargaining rights and benefits of public workers is spreading to other states....The images from Wisconsin -- with its protests, shutdown of some public services, and missing Democratic senators, who fled the state to block a vote -- evoked the Middle East more than the Midwest. The parallels raise the inevitable question: is Wisconsin the Tunisia of collective bargaining rights?

This is typical Times, trying to put the unions on the side of righteousness. But that comparison is simply silly. Governor Scott Walker is not another Ben Ali. He did not come to power in a coup d'etat. He did not get elected by being the only candidate running. He does not jail opposition journalists. Interpol has not issued a warrant for his arrest. And if Walker flees Wisconsin because of this "popular" uprising, it is a safe bet that he will not take 1.5 tons of gold from Wisconsin's treasury and settle in Saudi Arabia.

The far better parallel to the Wisconsin protest would be the May 2010 protests in Greece, where public sector employees rioted for several days when it became apparent that their cushy jobs and benefits might be on the table because of the Greek debt crisis.

Governor Scott Walker -- perhaps we should just call him Ali for short -- had the temerity to suggest that public sector employees in Wisconsin contribute 5% toward their pensions and that they double the share of their health premiums they pay, to 12%, which is still only half of what the average private sector employee pays. So the unions, outraged at the thought that any of their benefits might be cut, have organized a mass sit-in at the Statehouse.

The unions certainly have the right to protest. But overall voter sympathy for public sector employees has dried up. Walker was elected this past November with a mandate to get the Wisconsin deficit down from its current $3.6 billion. And much of that deficit is due to the benefits that the unions have arranged for their members. It's understandable that their members want to preserve those benefits, which are far better than workers in the private sector get. But in a democracy the majority gets its way, and the majority voted for Walker.

It couldn't be clearer that this is Greece II, rather than Son of Tunisia. But since the Times is Tass II, they will spin whatever misleading analogies they can.


Anonymous said...

Wisconsin's public sector workers couldn't be more disconnected from reality. Today the private sector is the serf society to the public sector. Public sector employees make about 50% more than private sector employees doing comparable work, and public sector workers get far better benefits.

Federal public sector union collective bargaining was legalized under JFK. That was a mistake that should be reversed, in fact public sector unions should be illegal. In the private sector there is a check and balance: when unions get too much and refuse to concede the company goes bankrupt (unless its GM). When federal public sector unions get too much, the country just goes into unsustainable debt - there is no reigning the unions in. It remains to be seen what happens with state public sector unions, but we have already seen the federal government stepping in to fund them too.

The Post Office is a good example of a relatively simple problem that isn't being addressed due to politics. It is hemorrhaging money and over one thousand post offices need to be closed. But each local representative will defend that post office against closure. I have a friend who retired from the post office at 53 1/2 years old - cashing in on a year and a half of sick time to reach his 55 year old retirement requirement.

Contrast this with what's going on in the private sector where we have stagnant to falling wages and declining benefits. My personal experience might be more extreme than most but each successive job I get is a harsher work environment with less benefits and 25 years out of college I earn a little more that a college graduate in my field earned in 1998. Good luck to people who are supposed to fund their own retirements through 401K on the salaries that are being offered today.

Imagine being a 22 year old college graduate today. You could easily have $100K in student loans, need a car to get to work (~10K for dependable used car?), and aspire to own a home some day at $300K. If this graduate can find a job at all, it might be in the $30K / year range. On top of that the USA is on an unsustainable dept trajectory, that will hurt this graduate's earning potential and likely increase his tax burden. How does this add up?

In the last 30 years the US has gone through a number of economic shocks that in retrospect were obvious and could have been addressed in advance: S & L's; the internet bubble; the banking / mortgage crisis. In each case we ran that train right off the tracks and then dealt with the mess. We now face out of control government spending crisis. Can we deal with it? I doubt it.

- Ed

John Craig said...

Ed --
Thank you, you are entirely right. The problem with the debt is that it has been around, increasingly slowly for so long, that nobody pays it as much attention as they should. Plus the nature of politics is such that each interest group cares more about the individual issue that affects them more than people as a whole care about that issue. But people do finally seem to be waking up to the fact that the public sector unions have been feasting too greedily at the public trough for too long. we have the Great Recession and Barack Obama to thank for that awakening.