Saturday, June 9, 2012
Whither Public Unions?
Wisconsin Governor Scott Walker's victory in his recall fight has renewed interest in public sector unions. Rasmussen suggests that Walker's win will spur other states to cut back on benefits to state-level unions. Nevertheless, Rasmussen finds that 49% of Americans favor public unions while 46% oppose them. However, Rasmussen's numbers don't disaggregate respondents who belong to unions and so have a financial incentive opposed to other taxpayers'.
Some of the support for public sector unions comes from the 11.8% of Americans who belong to unions. This includes both public and private sector unions. (According to the OECD, 11.4% were unionized as of 2010. Whether you go with 11.4% or 11.8%, the numbers are lower than all of the other countries' union densities listed on the linked OECD chart, with the exceptions of Estonia and Turkey. Germany's union density is 18.6% and Japan's is 18.4%.) The Bureau of Labor Statistics finds that while 11.8% of US workers are unionized (14.8 million workers), 37.0% of public sector workers (7.6 million workers) are unionized. Public sector workers constitute a bit more than 51% of all unionized workers. Without public sector union members, the labor movement would be more sickly than it is. Unionized workers likely know this and so tend to support public sector unions.
If the employed US labor force, including farm workers not counted in the BLS's official union density numbers, is about 139.8 million, as of May the density (percentage) of union workers, including farm workers, is about 10.5% (assuming farm workers don't belong to unions). Note that 139.8 million is only about 44% of the total US population of 320 million. About a quarter of the population is under 18 and about 12.5% is over age 65 and receives Social Security. Unionized government employees are about 5.4% of the employed labor force and about 4.9% of the total labor force. I don't believe that this number includes union retirees.
Comparing the 11.4% (which excludes farm workers) to the 1920s, which was before the National Labor Relations Act, 9.9% of non-farm workers were union members in 1928 and 13.2% of private sector workers were in unions in 1925. In other words, the current private sector unionization density of 6.9% is a little over half of the private sector density (13.2%) in 1925. The labor movement is now largely a public sector movement. Private sector union workers have an incentive to support public sector unionism because without it union institutions like the AFL-CIO might not exist, or at least would be diminished.
If one excludes union members from the Rasmussen poll, the three percent balance in favor of unions (49% to 46%) will shift to a significant opposition to public sector unions. Let's say 80% of union members favor public sector unionism. Let's also say that of the 243 million Americans over 18, 11.8% either belong to a union or have a spouse or parent who does. If so, the 49% is reduced to about 40% and the 46% is reduced to 44%. Public opinion among non-union Americans would then be 47.6 % for public unions and 52.4% against.
The statistics for taxpayers not in unions are likely even more opposed. Taxpayers are a subset of the total population. They must subsidize union members' pay. If unions boost pay, then taxpayers likely have a conflict of interest with the unions unless the government manages to efficiently enhance productivity in step with wage increases. Since governments and their unions do not implement incentive pay and are famous for bureaucracy, it is difficult to imagine how that would be accomplished. Government employment levels in highly unionized states are no lower per capita than employment levels in states with right-to-work laws or without bargaining laws.
Prior to the adoption of bargaining laws for public sector workers, Wellington and Winter argued that public sector unions would have excessive bargaining power because services like police and sanitation are monopolies with price-inelastic demand. In other words, governments tend to monopolize services that are price inelastic. As is well known to labor scholars, industries with price-inelastic demand tend to have high wages. Wellington and Winter could not have foreseen that unions would not only increase wages but lobby to increase demand for their wage bill--the employment level multiplied by the wage.
Mancur Olson and George Stigler wrote articles and books in the 1970s and 1980s that showed that special interests can extract rents from the public through lobbying. Public sector unions are well-placed to extract rents because they are easily organized and can develop close relationships with elected officials. New York, where I live, has seen a high public sector union density and a high number of taxpayers leaving the state. I am a public sector union member. Unless one is in an ultra-high-wage profession such as investment banking, law, advertising, or other financial services, or is otherwise subsidized by the state as a public sector employee or health-care worker, it is very difficult to flourish economically in New York State. New York's population has hardly grown since 1960, when public sector unionization became prevalent.
As the burden of increasing costs has become difficult for taxpayers to bear, there is increasing resistance to unions. People who do not pay taxes and beneficiaries of public sector spending constitute a large percentage of those who oppose cutbacks. Tax systems are typically set up so that those who are the wealthiest have the most loopholes. Those who work hard and generate the wealth necessary for public sector services are burdened with high taxes. Generally, public sector services range from mediocre (police, roads) to non-existent to destructive, as is the case with drug enforcement, New York's Department of Environment Conservation and Department of Environmental Protection, its bogus building code, its dismal school system, and its destructive welfare system.
Come to think of it, life would be much better if we cut public sector employment by 80%.
Some of the support for public sector unions comes from the 11.8% of Americans who belong to unions. This includes both public and private sector unions. (According to the OECD, 11.4% were unionized as of 2010. Whether you go with 11.4% or 11.8%, the numbers are lower than all of the other countries' union densities listed on the linked OECD chart, with the exceptions of Estonia and Turkey. Germany's union density is 18.6% and Japan's is 18.4%.) The Bureau of Labor Statistics finds that while 11.8% of US workers are unionized (14.8 million workers), 37.0% of public sector workers (7.6 million workers) are unionized. Public sector workers constitute a bit more than 51% of all unionized workers. Without public sector union members, the labor movement would be more sickly than it is. Unionized workers likely know this and so tend to support public sector unions.
If the employed US labor force, including farm workers not counted in the BLS's official union density numbers, is about 139.8 million, as of May the density (percentage) of union workers, including farm workers, is about 10.5% (assuming farm workers don't belong to unions). Note that 139.8 million is only about 44% of the total US population of 320 million. About a quarter of the population is under 18 and about 12.5% is over age 65 and receives Social Security. Unionized government employees are about 5.4% of the employed labor force and about 4.9% of the total labor force. I don't believe that this number includes union retirees.
Comparing the 11.4% (which excludes farm workers) to the 1920s, which was before the National Labor Relations Act, 9.9% of non-farm workers were union members in 1928 and 13.2% of private sector workers were in unions in 1925. In other words, the current private sector unionization density of 6.9% is a little over half of the private sector density (13.2%) in 1925. The labor movement is now largely a public sector movement. Private sector union workers have an incentive to support public sector unionism because without it union institutions like the AFL-CIO might not exist, or at least would be diminished.
If one excludes union members from the Rasmussen poll, the three percent balance in favor of unions (49% to 46%) will shift to a significant opposition to public sector unions. Let's say 80% of union members favor public sector unionism. Let's also say that of the 243 million Americans over 18, 11.8% either belong to a union or have a spouse or parent who does. If so, the 49% is reduced to about 40% and the 46% is reduced to 44%. Public opinion among non-union Americans would then be 47.6 % for public unions and 52.4% against.
The statistics for taxpayers not in unions are likely even more opposed. Taxpayers are a subset of the total population. They must subsidize union members' pay. If unions boost pay, then taxpayers likely have a conflict of interest with the unions unless the government manages to efficiently enhance productivity in step with wage increases. Since governments and their unions do not implement incentive pay and are famous for bureaucracy, it is difficult to imagine how that would be accomplished. Government employment levels in highly unionized states are no lower per capita than employment levels in states with right-to-work laws or without bargaining laws.
Prior to the adoption of bargaining laws for public sector workers, Wellington and Winter argued that public sector unions would have excessive bargaining power because services like police and sanitation are monopolies with price-inelastic demand. In other words, governments tend to monopolize services that are price inelastic. As is well known to labor scholars, industries with price-inelastic demand tend to have high wages. Wellington and Winter could not have foreseen that unions would not only increase wages but lobby to increase demand for their wage bill--the employment level multiplied by the wage.
Mancur Olson and George Stigler wrote articles and books in the 1970s and 1980s that showed that special interests can extract rents from the public through lobbying. Public sector unions are well-placed to extract rents because they are easily organized and can develop close relationships with elected officials. New York, where I live, has seen a high public sector union density and a high number of taxpayers leaving the state. I am a public sector union member. Unless one is in an ultra-high-wage profession such as investment banking, law, advertising, or other financial services, or is otherwise subsidized by the state as a public sector employee or health-care worker, it is very difficult to flourish economically in New York State. New York's population has hardly grown since 1960, when public sector unionization became prevalent.
As the burden of increasing costs has become difficult for taxpayers to bear, there is increasing resistance to unions. People who do not pay taxes and beneficiaries of public sector spending constitute a large percentage of those who oppose cutbacks. Tax systems are typically set up so that those who are the wealthiest have the most loopholes. Those who work hard and generate the wealth necessary for public sector services are burdened with high taxes. Generally, public sector services range from mediocre (police, roads) to non-existent to destructive, as is the case with drug enforcement, New York's Department of Environment Conservation and Department of Environmental Protection, its bogus building code, its dismal school system, and its destructive welfare system.
Come to think of it, life would be much better if we cut public sector employment by 80%.
Wednesday, June 6, 2012
Friday, June 1, 2012
Ron Paul, Not Alexander Hamilton, Can Save Europe
In its May 26, 2012 issue, The Economist has several excellent lead stories on the European crisis. It argues for democratic reform, political integration, and EU-wide supervision of banking. It suggests that the costs of an EU break-up would be high, but the European public lacks an appetite for additional integration. Besides a European banking bureaucracy, The Economist argues for a European assumption of debt, which it calls mutualisation. Quoting Professor Vernon Bogdanor of King's College, London, its writers remind us that Alexander Hamilton fashioned American federalism through the federal government's assumption of debts.
Europe needs Ron Paul, not Alexander Hamilton.
I do not doubt that a breakup of the European Union would be costly. As well, I do not doubt that most Europeans, especially the innovative and hardworking ones, would have been better off without it. In a letter to the editor in the same issue, Alexander Singer of Athens points out that the use of the catchword austerity with respect to recently mandated Greek reforms, in effect rejected in the May 6 election and now being re-polled on June 17, is misguided. Peloponnese garbage truck drivers are paid monthly pensions that are 50% above the wage of starting schoolteachers, according to Singer.
Regardless of the merits of Greek public pension policies, they are not market driven. A garbage truck driver who has saved and accumulated a fortune of one million dollars is entitled to an $80,000 pension. One who has spent 15 years' worth of wages on hookers while sleeping in the back of his truck, only to retire at age 50 on a generous public pension, is not.
Nevertheless, the question is not whether a garbage truck driver should be paid a generous pension, but rather whether the driver produced value to justify it. Decisions about the equilibration of supply and demand are best left to markets; unions' political power allows them to divert wealth from poorer and less politically influential workers to themselves.
The Greek government has made no attempt to equilibrate marginal wages and productivity, nor does the question matter to most Greeks, who are like children harping for an extra candy bar without an inkling as to from whence candy bars spring. It is evident that, to gratify a nation of childish fools, the Greek government has, in yet another display of failed democratic processes, stolen the wealth used to pay that garbage truck driver from French banks. Now, French workers will be asked, through a ridiculous election outcome in France, to subsidize the French banks through monetary expansion, supposedly a "growth" strategy.
The economic incompetence advocated by the world's economists offers a convenient rationale for bankers to force workers to pay for their frivolous errors. Workers pay through inflationary policies that reduce real wages. This is done in the supposed name of the workers themselves. Of course, The Economist's readers (bankers, lawyers, politicians, public employees, executives, and university professors) are the true beneficiaries of stimulus policies and monetary expansion. Since the ending of the world's reliance on gold in 1971, workers' real wages here in the US have not increased.
The solution to Greece's and Europe's problems is recognition that more government causes greater harm. The way out is through stabilization of money and long term stimulation of innovation and hard work through elimination of unnecessary government bureaucrats, starting with pointless institutions like the European Commission, a body whose purpose requires a Kant-sized metaphysics tome to explain.
Although there were inequities in the federal assumption of the Revolutionary War debt in the United States, there was at the time no doubt that every state had to some degree contributed to the war. There were reasons for states like Virginia and Maryland, which had repaid their war debts, to object to paying off less conservative states' debts. Nevertheless, Hamilton asked none of the states to subsidize unearned pensions for 50-year-old buffoons. In fact, many of the valiant soldiers were deprived of their pay, which was in by-then-valueless continentals.
To stabilize Europe's monetary system, the gold standard should replace the euro. The European Central Bank should be shuttered, and the profligate French and German banks, which respectively lent to Greece and Spain, according to The Economist, should be put into whatever European equivalent to chapter 11 there may be.
One of the great ironies of the 1980s was that just as the USSR had proved itself a failure, Europe adopted a central authority akin to the Soviet Kremlin's. Every step of the way infertile bureaucratic wasters in the EU have advocated increasing government, regulation, and bureaucracy. These privileged halfwits, who have produced nothing of value and have overseen a massive real estate bubble and debt collapse, have destroyed value.
As a European currency, gold is a better alternative than the euro because it is not subject to quack economic theories advocated in places like The Economist, The New York Times, and most university economics departments. Not one important economist in the world, including The Economist's staff, which spends all its time studying Europe, foresaw the current default-and-banking problems. The European bankers who lent to Spain and Greece are almost as dumb as the bankers in the US who have made one failed investment after the next for the past 60 years and who have survived only by means of one public subsidy after the next. It is time that the global banking cancer was excised. Businesses that do not produce value, and $29 trillion in subsidies from the Fed so far say that the US banking system has not, need to die.
Recall that it was Hamilton, advocate of federalism, who favored central banking and opposed hard money. Today, Ron Paul and his colleague Gary Johnson offer a set of solutions that can free Europe from the Carolingian dream of its uniting under a central authority. Let Europe free itself from the medieval ideas of the Council on Foreign Relations, The Economist and The New York Times.
A gold standard is how Europe should begin to reform itself.
Europe needs Ron Paul, not Alexander Hamilton.
I do not doubt that a breakup of the European Union would be costly. As well, I do not doubt that most Europeans, especially the innovative and hardworking ones, would have been better off without it. In a letter to the editor in the same issue, Alexander Singer of Athens points out that the use of the catchword austerity with respect to recently mandated Greek reforms, in effect rejected in the May 6 election and now being re-polled on June 17, is misguided. Peloponnese garbage truck drivers are paid monthly pensions that are 50% above the wage of starting schoolteachers, according to Singer.
Regardless of the merits of Greek public pension policies, they are not market driven. A garbage truck driver who has saved and accumulated a fortune of one million dollars is entitled to an $80,000 pension. One who has spent 15 years' worth of wages on hookers while sleeping in the back of his truck, only to retire at age 50 on a generous public pension, is not.
Nevertheless, the question is not whether a garbage truck driver should be paid a generous pension, but rather whether the driver produced value to justify it. Decisions about the equilibration of supply and demand are best left to markets; unions' political power allows them to divert wealth from poorer and less politically influential workers to themselves.
The Greek government has made no attempt to equilibrate marginal wages and productivity, nor does the question matter to most Greeks, who are like children harping for an extra candy bar without an inkling as to from whence candy bars spring. It is evident that, to gratify a nation of childish fools, the Greek government has, in yet another display of failed democratic processes, stolen the wealth used to pay that garbage truck driver from French banks. Now, French workers will be asked, through a ridiculous election outcome in France, to subsidize the French banks through monetary expansion, supposedly a "growth" strategy.
The economic incompetence advocated by the world's economists offers a convenient rationale for bankers to force workers to pay for their frivolous errors. Workers pay through inflationary policies that reduce real wages. This is done in the supposed name of the workers themselves. Of course, The Economist's readers (bankers, lawyers, politicians, public employees, executives, and university professors) are the true beneficiaries of stimulus policies and monetary expansion. Since the ending of the world's reliance on gold in 1971, workers' real wages here in the US have not increased.
The solution to Greece's and Europe's problems is recognition that more government causes greater harm. The way out is through stabilization of money and long term stimulation of innovation and hard work through elimination of unnecessary government bureaucrats, starting with pointless institutions like the European Commission, a body whose purpose requires a Kant-sized metaphysics tome to explain.
Although there were inequities in the federal assumption of the Revolutionary War debt in the United States, there was at the time no doubt that every state had to some degree contributed to the war. There were reasons for states like Virginia and Maryland, which had repaid their war debts, to object to paying off less conservative states' debts. Nevertheless, Hamilton asked none of the states to subsidize unearned pensions for 50-year-old buffoons. In fact, many of the valiant soldiers were deprived of their pay, which was in by-then-valueless continentals.
To stabilize Europe's monetary system, the gold standard should replace the euro. The European Central Bank should be shuttered, and the profligate French and German banks, which respectively lent to Greece and Spain, according to The Economist, should be put into whatever European equivalent to chapter 11 there may be.
One of the great ironies of the 1980s was that just as the USSR had proved itself a failure, Europe adopted a central authority akin to the Soviet Kremlin's. Every step of the way infertile bureaucratic wasters in the EU have advocated increasing government, regulation, and bureaucracy. These privileged halfwits, who have produced nothing of value and have overseen a massive real estate bubble and debt collapse, have destroyed value.
As a European currency, gold is a better alternative than the euro because it is not subject to quack economic theories advocated in places like The Economist, The New York Times, and most university economics departments. Not one important economist in the world, including The Economist's staff, which spends all its time studying Europe, foresaw the current default-and-banking problems. The European bankers who lent to Spain and Greece are almost as dumb as the bankers in the US who have made one failed investment after the next for the past 60 years and who have survived only by means of one public subsidy after the next. It is time that the global banking cancer was excised. Businesses that do not produce value, and $29 trillion in subsidies from the Fed so far say that the US banking system has not, need to die.
Recall that it was Hamilton, advocate of federalism, who favored central banking and opposed hard money. Today, Ron Paul and his colleague Gary Johnson offer a set of solutions that can free Europe from the Carolingian dream of its uniting under a central authority. Let Europe free itself from the medieval ideas of the Council on Foreign Relations, The Economist and The New York Times.
A gold standard is how Europe should begin to reform itself.
Subscribe to:
Comments (Atom)
