Daamien
02-26-2011, 01:18 PM
I wrote a thread about unions (http://www.ronpaulforums.com/showthread.php?281405-Public-Unions-Flaws-in-Collective-Bargaining) the other day but forgot to include a poll. So, should public employees be permitted to unionize? Feel free to vote.
I'm going to start writing about controversial topics that interest me and share my unorthodox viewpoints. Share your thoughts and feel free to challenge me.
Today I'm going to focus on collective bargaining, particularly in the public sector. This is a topic in the news because of a stand-off between lawmakers and unions in Wisconsin who oppose the governor and Republican majority's plan to reduce union benefits and strictly limit public collective bargaining rights to decisions regarding pay. 14 Democratic lawmakers in the minority who oppose the bill to rein in public sector spending and limit collective bargaining have fled the state of Wisconsin to prevent a vote in the state senate, which requires a quorum of 20 members to vote on a bill. Given that there are only 19 Republicans in the majority, the bill cannot pass under this quasi-filibuster. I want to explore three topics:
Are the benefit cuts appropriate and necessary?
Should public workers be allowed to collectively bargain by forming unions?
Should lawmakers be held accountable for neglecting their duty to partake in the legislative process?
CUTS:
While I think the benefit cuts are unfortunate given how most public workers probably work hard to contribute to society and were not directly responsible for the mishandling of state and municipal funds, the cuts are necessary to bring in excessive public spending. I am not opposed to raising taxes as a means of temporarily bringing revenue balance in a crisis, but that is not to say that spending cuts should not be the priority. The state will simply use increased tax revenue as justification for increased spending and the crisis will repeat itself while even more capital is drained from the private sector, affecting unemployment. So, how bad are the proposed cuts? Governor Walker’s bill attempts to raise what union members pay for their health coverage from 6% to 12%, which seems reasonable given the average American worker pays between 20-25%. Furthermore, public employees would fund 50 percent of the annual pension payment, which would be a contribution of about 5.8% of their 2011 salary. I think it's fair to expect public workers to have to shoulder some of the burden of their benefits, especially given how private sector taxpayers in Wisconsin make only 74% of their state-level public sector counterparts. This is the 48th worst pay differential in the nation.
The alternative to cutting benefits and raising taxes would be a reduction in the number essential public workers. How many public sector jobs might be lost if concessions are not made by public unions? If the state misses a deadline to refinance $165 million of debt it will be forced to start issuing layoff notices to a potential total of 1,500 employees. I don't think anyone wants to see that scenario play out, so it would be in the best interest of the taxpayers and the public employees to find some common ground by agreeing to a package of tying any temporary revenue increased to cuts to benefits and non-essential services.
There is one final option: the state defaults on its debt obligations and declares bankruptcy. This sounds scary, but losses are shared with investors who will no longer receive 100% principal as debt is liquidated. In a bankruptcy scenario the restructuring of the state's finances would be achieved quicker, allowing for the market to rebalance risk and reward and resume growth at a faster pace. The consequence for government will be that it will be hamstringed in further efforts to incur high levels of debt as a result of higher interest rates. The economic downturn would admittedly be sharp initially and services would be limited to what is essential, but the recovery would be hastened by the liquidation. The sooner and more thorough the correction, the more economically sound the state would be in the future. Even if this scenario were to potentially occur, which is highly unlikely because of the stigma associated with bankruptcy and the political fallout, the US federal government and the Federal Reserve would likely bailout the state to prevent the liquidation process entirely or extend the correction to the benefit of the politicians and financiers who were on the losing side of betting on the state's finances. This would create a moral hazard by establishing a precedent for future bailouts when states fail to take serious steps to balance their budgets. This encourages privatized gains while socializing losses, making taxpayers nationally pay for the excesses of a few.
PUBLIC EMPLOYEE COLLECTIVE BARGAINING:
Let's start by exploring why collective bargaining in general exists. Unions are proposed, voted on, and certified to advocate worker rights and benefits. They negotiate to secure these interests. Unions collect dues from their members in order to advocate for these rights and benefits, organize a professional team to negotiate for their interests, and pay into union-sponsored plans such as work insurance in the case of a strike. So, should public employees have collective bargaining rights? The question comes down to who they are bargaining and negotiating with. Private sector trade unions negotiate with management, who act on behalf of shareholder interests, as two distinct entities without impacting third-parties. It is in the interest of a private sector union not to financially ruin the business they are negotiating with. The problem with public sector unions is that taxpayers are not represented at the negotiating table when the unions and politicians both have a vested interest in more spending.
It's interesting to note that military members don't have collective bargaining rights as public sector employees. The reason is not because they provide an essential service which requires compliance and hierarchy, because the same argument could be made for police unions. It's because their work is not for the distinct benefit of themselves like private sector workers, it is to the public benefit. As public servants they should be treated well and rewarded for their work, but their costs and benefits must be considered by the general public rather than negotiating independently.
Now, there are plenty of other problems with public unions as well. Private sector employment is based on needs and merit, but this generally does not apply to the public sector where it is arguably more important to society to effectively address public needs and instill meritocracy. For example, agreements with teachers unions such as in New York generally establish that seniority outranks performance in determining pay and employment within the public school system. Lack of competition within these public institutions leads to poorer services and sacrifices a younger, more innovative workforce in order to protect the established. Another significant problem is that many public workers do not have the right to refuse to join a union or the right not to pay compulsory union dues. This, along with the fact that public union certification does not require secret ballots, provides public unions with an unnatural monopoly and hurts public workers who do not desire to partake in the collective bargaining.
LAWMAKERS:
What should happen to Wisconsin's state senators who fled the state to prevent a quorum and avoid voting on difficult cuts? Well, given that they are abandoning their jobs to participate in governance for Wisconsin's constituents, they should lose their jobs entirely. If they want to filibuster the bill, they must do so within the legislative process, not by avoiding the legislative process. We live in a republic where the constitutional rule of law is supreme, not any decision of a majority. Therefore, their efforts should be focused on overturning such a bill as a violation of constitutional rights and limitations if they cannot overcome the bill through a vote.
I'm going to start writing about controversial topics that interest me and share my unorthodox viewpoints. Share your thoughts and feel free to challenge me.
Today I'm going to focus on collective bargaining, particularly in the public sector. This is a topic in the news because of a stand-off between lawmakers and unions in Wisconsin who oppose the governor and Republican majority's plan to reduce union benefits and strictly limit public collective bargaining rights to decisions regarding pay. 14 Democratic lawmakers in the minority who oppose the bill to rein in public sector spending and limit collective bargaining have fled the state of Wisconsin to prevent a vote in the state senate, which requires a quorum of 20 members to vote on a bill. Given that there are only 19 Republicans in the majority, the bill cannot pass under this quasi-filibuster. I want to explore three topics:
Are the benefit cuts appropriate and necessary?
Should public workers be allowed to collectively bargain by forming unions?
Should lawmakers be held accountable for neglecting their duty to partake in the legislative process?
CUTS:
While I think the benefit cuts are unfortunate given how most public workers probably work hard to contribute to society and were not directly responsible for the mishandling of state and municipal funds, the cuts are necessary to bring in excessive public spending. I am not opposed to raising taxes as a means of temporarily bringing revenue balance in a crisis, but that is not to say that spending cuts should not be the priority. The state will simply use increased tax revenue as justification for increased spending and the crisis will repeat itself while even more capital is drained from the private sector, affecting unemployment. So, how bad are the proposed cuts? Governor Walker’s bill attempts to raise what union members pay for their health coverage from 6% to 12%, which seems reasonable given the average American worker pays between 20-25%. Furthermore, public employees would fund 50 percent of the annual pension payment, which would be a contribution of about 5.8% of their 2011 salary. I think it's fair to expect public workers to have to shoulder some of the burden of their benefits, especially given how private sector taxpayers in Wisconsin make only 74% of their state-level public sector counterparts. This is the 48th worst pay differential in the nation.
The alternative to cutting benefits and raising taxes would be a reduction in the number essential public workers. How many public sector jobs might be lost if concessions are not made by public unions? If the state misses a deadline to refinance $165 million of debt it will be forced to start issuing layoff notices to a potential total of 1,500 employees. I don't think anyone wants to see that scenario play out, so it would be in the best interest of the taxpayers and the public employees to find some common ground by agreeing to a package of tying any temporary revenue increased to cuts to benefits and non-essential services.
There is one final option: the state defaults on its debt obligations and declares bankruptcy. This sounds scary, but losses are shared with investors who will no longer receive 100% principal as debt is liquidated. In a bankruptcy scenario the restructuring of the state's finances would be achieved quicker, allowing for the market to rebalance risk and reward and resume growth at a faster pace. The consequence for government will be that it will be hamstringed in further efforts to incur high levels of debt as a result of higher interest rates. The economic downturn would admittedly be sharp initially and services would be limited to what is essential, but the recovery would be hastened by the liquidation. The sooner and more thorough the correction, the more economically sound the state would be in the future. Even if this scenario were to potentially occur, which is highly unlikely because of the stigma associated with bankruptcy and the political fallout, the US federal government and the Federal Reserve would likely bailout the state to prevent the liquidation process entirely or extend the correction to the benefit of the politicians and financiers who were on the losing side of betting on the state's finances. This would create a moral hazard by establishing a precedent for future bailouts when states fail to take serious steps to balance their budgets. This encourages privatized gains while socializing losses, making taxpayers nationally pay for the excesses of a few.
PUBLIC EMPLOYEE COLLECTIVE BARGAINING:
Let's start by exploring why collective bargaining in general exists. Unions are proposed, voted on, and certified to advocate worker rights and benefits. They negotiate to secure these interests. Unions collect dues from their members in order to advocate for these rights and benefits, organize a professional team to negotiate for their interests, and pay into union-sponsored plans such as work insurance in the case of a strike. So, should public employees have collective bargaining rights? The question comes down to who they are bargaining and negotiating with. Private sector trade unions negotiate with management, who act on behalf of shareholder interests, as two distinct entities without impacting third-parties. It is in the interest of a private sector union not to financially ruin the business they are negotiating with. The problem with public sector unions is that taxpayers are not represented at the negotiating table when the unions and politicians both have a vested interest in more spending.
It's interesting to note that military members don't have collective bargaining rights as public sector employees. The reason is not because they provide an essential service which requires compliance and hierarchy, because the same argument could be made for police unions. It's because their work is not for the distinct benefit of themselves like private sector workers, it is to the public benefit. As public servants they should be treated well and rewarded for their work, but their costs and benefits must be considered by the general public rather than negotiating independently.
Now, there are plenty of other problems with public unions as well. Private sector employment is based on needs and merit, but this generally does not apply to the public sector where it is arguably more important to society to effectively address public needs and instill meritocracy. For example, agreements with teachers unions such as in New York generally establish that seniority outranks performance in determining pay and employment within the public school system. Lack of competition within these public institutions leads to poorer services and sacrifices a younger, more innovative workforce in order to protect the established. Another significant problem is that many public workers do not have the right to refuse to join a union or the right not to pay compulsory union dues. This, along with the fact that public union certification does not require secret ballots, provides public unions with an unnatural monopoly and hurts public workers who do not desire to partake in the collective bargaining.
LAWMAKERS:
What should happen to Wisconsin's state senators who fled the state to prevent a quorum and avoid voting on difficult cuts? Well, given that they are abandoning their jobs to participate in governance for Wisconsin's constituents, they should lose their jobs entirely. If they want to filibuster the bill, they must do so within the legislative process, not by avoiding the legislative process. We live in a republic where the constitutional rule of law is supreme, not any decision of a majority. Therefore, their efforts should be focused on overturning such a bill as a violation of constitutional rights and limitations if they cannot overcome the bill through a vote.