February 19, 2011
Dispatches (II): Walker rejects union offer to accept concessions
...The Walker statement was in response to a statement earlier Saturday from [State senator] Erpenbach, who said he had been informed that all state and local public employee unions had agreed to the financial aspects of Walker's budget-repair bill. Erpenbach added in his statement that the groups wanted, in turn, for Walker to agree to let labor groups bargain collectively, as they do now.
Since collective bargaining rights do not in themselves have direct budgetary implications, then it is unclear -- from a fiscal perspective -- why agreement can not be made.
Local Fox news affiliate estimates the anti-bill crowd at 70,000, and tea party supporters of the governor's bill in the hundreds.
Posted by Menzie Chinn at February 19, 2011 03:43 PMdigg this | reddit
Gee, how did the unions lose Joe Klein?
Revolutions everywhere--in the middle east, in the middle west. But there is a difference: in the middle east, the protesters are marching for democracy; in the middle west, they're protesting against it. I mean, Isn't it, well, a bit ironic that the protesters in Madison, blocking the state senate chamber, are chanting "Freedom, Democracy, Union" while trying to prevent a vote?
Isn't it ironic that the Democratic Senators have fled the democratic process? Isn't it interesting that some of those who--rightly--protest the assorted Republican efforts to stymie majority rule in the U.S. Senate are celebrating the Democratic efforts to stymie the same in the Wisconsin Senate?
An election was held in Wisconsin last November. The Republicans won. In a democracy, there are consequences to elections and no one, not even the public employees unions, are exempt from that...
Governor Walker ... is also trying to limit the unions' abilities to negotiate work rules--and this is crucial when it comes to the more efficient operation of government in a difficult time. When I covered local government in New York 30 years ago, the school janitors (then paid a robust $60,000 plus per year) had negotiated the "right" to mop the cafeteria floors only once a week. And we all know about the near-impossibility of getting criminal and morally questionable--to say nothing of less than competent--teachers fired. The negotiation of such contracts were acts of collusion rather than of mediation. Government officials were, in effect, bribing their most activist constituents.
Public employees unions are an interesting hybrid. Industrial unions are organized against the might and greed of ownership. Public employees unions are organized against the might and greed...of the public?
Posted by: Jim Glass at February 19, 2011 04:14 PM
Menzie's colleague Ann Althouse has great pictures and video of the rally here.
Posted by: W.C. Varones at February 19, 2011 04:50 PM
Posted by: Menzie Chinn at February 19, 2011 05:37 PM
Of course collective bargaining rights have "direct budgetary implications"; that's why unions want them. Perhaps MC meant they have no "immediate" budgetary implications. But in principle it's good, not bad, for elected officials to think about long-term fiscal implications. I am therefore disappointed that a fiscal economist like MC, does not praise Walker's mindset, whatever he thinks of the particular policy.
Posted by: Nick Curtin at February 19, 2011 06:18 PM
Gentlemen, all of the this is predictable in that we are now seeing the onset of the so-called "turning-point crisis", which is roughly coincident with the coming of age of a new peak demographic cohort (the "Millennials" in the US and the seething masses of poor around the globe) every 32-36 years seeking to assert their desires.
Expect one of the two major US political parties to disappear, as did the Federalists, Democratic Republicans, Whigs, Populist Democrats, Coolidge Republicans, and New Deal Democrats. The crises ahead might even end the democratic/republican/representative system altogether, thrusting us into an imperial dictatorship with rationing, police-state and martial law conditions, and the like.
The larger problem this time around compared to the other turning-point crises eras of the 1960s-70s, 1930s-40s, 1880s-90s, 1830s-40s, 1770s-80s, and 1720s-30s is that there are 7 billion of us trying to consume resources on a finite planet well past human ape population overshoot and at peak global liquid fossil fuel production. While billions in China, India, and elsewhere want to live like westerners, the planet can support no more than a few hundred million people at the western material standard of consumption in the long run.
Moreover, the planet is now under the influence of the converging effects of the Gleissberg (Jovian oribit) and Suess cycles, occurring every 210-220 years, implying global cooling of the mid-latitudes, including underwater volcanic activity cutting off the Gulf Stream flow in the North Atlantic and turning Europe into a freezer over the next 2-3 or more solar cycles (10- to 11-year cycles).
The planet's mid-latitudes are due a similar climate shift as occurred from the 1780s-90s to the 1830s-40s, i.e., progressive cooling with increasing precipitation.
This could not occur at a more inauspicious time, given population overshoot, rapidly growing populations in the Third World, Peak Oil, and the associated risk of falling ag production, water shortages, famine, massive population migration, fiscal collapse, large-scale social unrest and religious/ethnic conflict, and worsening social, financial, and economic crises.
See David Hackett Fischer's book "The Great Wave" to understand that we are moving into what Fischer describes as a "Revolutionary Crisis" era (the culmination of a "Price Revolution" era, this time from the late 19th century) to last 20-30 years.
The Disneyland era is over for happy motoring to the malls with 4-5% unemployment, cheap gasoline, pensions at age 55, and all the debt you can borrow with no intention of paying it back, folks.
Bernanke will print the Fed eventually into seizure by the US Treasury, itself de facto insolvent. Then we can enjoy the benefits of truly worthless Treasury-created digital debt-money that is worth less (or "worthless") at the speed of light.
Prepare for something like "The Road", if we're lucky.
Posted by: Nemesis at February 19, 2011 09:42 PM
Local Fox news affiliate estimates the anti-bill crowd at 70,000, and tea party supporters of the governor's bill in the hundreds.
So now we know who works and who doesn't, not to mention the effectiveness of Obama's "Organizing for America" bus convoy. Sounds like the number of rent seekers is greater than most realize.
Posted by: Ricardo at February 20, 2011 05:28 AM
Is Mr. Chinn also on some public payroll? Than his political bias in (not) handling of fiscal discipline is easy to understand.
Posted by: Ivars at February 20, 2011 06:09 AM
Nick Curin That's nonsense. Even that noted pro-union newpaper The Wall Street Journal had a story showing that Wisconsin is in pretty good fiscal shape. Of this year's $137M budget shortfall, a full $117M is due to a tax cut that Gov Walker pushed through a few weeks ago for his friends and cronies. Over the next couple of budget cycles there is a $3.6B shortfall, but if you do the math it's pretty hard to see how Walker's complaint against the union is relevant. It's like blaming the Katrina flooding on the kid who spit in the Gulf. The arithmetic here is ludicrous. As the WSJ also noted, according to Moody's Investor Services it's Gov Walker's hysterics that are having a bigger effect on the state's bond rating. If Gov Walker was so worried about the state's finances, why did he just cut taxes? Gee, do you think that might have something to do with the $3.6B budget shortfall?
So why is Gov "Gen. Jaruzelski" Walker trying to break the back of the union? Well, it seems that a few GOP strategists have let the cat out of the bag. The real purpose here is to break the union's ability to organize and support Democratic candidates. Contrary to Joe Klein's argument, this is all about ensuring a less democratic society by isolating individual voters from the empowering and mediating institution of the unions. Joe Klein probably needs to take a refresher course in Political Science 101 down at his local community college. Oh wait...the governor probably cut the funding.
Posted by: 2slugbaits at February 20, 2011 06:36 AM
I have a question about the figures/graphs you presented in "Analogy Watch: Cairo has come to Wisconsin." Do the total compensation figures include all the unfunded liabilities?
This really is a huge problem. I live in a small, affluent city in western Massachusetts and it turns out the unfunded liability for retiree healthcare is $80M+. When asked what was being done about it, a city official said, "well, as soon as we get our underfunded pension system squared away (scheduled for 2028), we'll begin tackling the healthcare shortfall. Until then, it's pay-as-you-go."
This is typical of towns and cities across Massachusetts. And as I say, this is an affluent city in an affluent state.
I don't see how your figures could have included these unfunded liabilities when many have never been enumerated and there doesn't seem to be a real system of gathering aggregate data.
I'm a life-long Democrat and would be considered middle-of-the-road in Sweden. And the governor in WI may be a posturing reactionary.
But there is a real disconnect between benefit packages in the private sector and the public sector. How many people with a 401k (most workers nowadays) have any sort of retiree health benefits at all, beyond medicare?
Posted by: Bob_in_MA at February 20, 2011 07:03 AM
I think the Governor knows that he's going to get what the voters want, and he is right to ignore the counteroffer. Eventually the Dems have to come home.
Posted by: Rich Berger at February 20, 2011 07:26 AM
Nemesis Gentlemen, all of the this is predictable in that we are now seeing the onset of the so-called "turning-point crisis", which is roughly coincident with the coming of age of a new peak demographic cohort
I actually agree with what you said here, although I agree for different reasons. There is a demographic fault line here that is starting to run through American politics. Other advanced countries are starting to face a similar problem; most notably Japan. For the first time in history we are having to confront the brute fact that the interests of the elderly are at odds with the interests of the young. The young are demanding investment in the future (e.g., education, infrastructure, energy, etc.), while the elderly are demanding current consumption (e.g., govt funded healthcare for the elderly but not for children, low property taxes, cheap gasoline to power those big motor homes, etc.). The young are worried about economic growth and unemployment; the elderly are worried about inflation and don't care about unemployment because they're retired. The young care about global warming; the elderly either don't care or pretend that it's all fake science. The young worry about the long run debt; the elderly worry about protecting tax cuts. By large margins the young vote Democratic and the old vote Republican. This is a 21st century version of Lincoln's "house divided" analogy.
Posted by: 2slugbaits at February 20, 2011 08:33 AM
2slugs Interesting that when the current 'old' generation was young they were the most liberal generation the U.S. has ever known.
Posted by: tj at February 20, 2011 09:36 AM
Nemesis:"Moreover, the planet is now under the influence of the converging effects of the Gleissberg (Jovian oribit) and Suess cycles, occurring every 210-220 years, implying global cooling of the mid-latitudes, including underwater volcanic activity cutting off the Gulf Stream flow in the North Atlantic and turning Europe into a freezer over the next 2-3 or more solar cycles (10- to 11-year cycles)."
Well, but Krugman said all problems including global cooling arises from global warming!
30 years of cooling just make us try harder to stop warming. That would be a real long term approach. Spend on ideas, ignore reality.
Posted by: Ivars at February 20, 2011 10:29 AM
Dear 2slug, you seem confused. First, to do a proper fiscal accounting one should include off-budget claims along with budgets, and clarify assumptions about returns, or else one winds up like CA, Illinois and NY, whose net fiscal balance is much worse than the budget indicates. Second, what is "nonsense" about observing that collective bargaining has fiscal implications, contrary to MC's denials? If you want to have a civil discussion about the merits of various debt reduction measures, fine, but to sneer at opponents the way you and MC are doing -- well, don't be surprised if the majority of educated people keep voting for the Walkers of the world.
Posted by: Nick Curtin at February 20, 2011 12:12 PM
Nick Curtin: Please oblige me with documentation of specific instances where I have "sneered".
Posted by: Menzie Chinn at February 20, 2011 12:21 PM
tj I'm not sure if that's true. For the most part there was plenty of conservative support among young voters from the late 60s right up until fairly recently. It's true that young conservatives were pretty quiet, but the polling data shows the breakdown was pretty even. In fact, even Nixon ended up doing pretty well with young voters. For example, here's an article from 1972 showing that Nixon had more support than McGovern among college students. I think that's counter-intuitive to most people's impression, but facts are facts.
The Pew Research group has been tracking young voters and the recent widening of the gap between young and old is startling. And this is new. Since Clinton was first elected it has gone from a slight Republican edge among young voters to a 2:1 Democratic dominance.
The problem for Democrats is that mid-cycle election years are good for Republicans because the young don't vote and the old do vote.
Posted by: 2slugbaits at February 20, 2011 12:32 PM
MC: Gladly. Let's start with the 2nd Oxford definition of "sneer": "speak or write in a manner suggesting or expressing contempt or disparagement".
Now let's examine your quotation "Since collective bargaining rights do not in themselves have direct budgetary implications, then it is unclear -- from a fiscal perspective -- why agreement can not be made."
As noted, I think the presumption of your sentence (the claim that collective bargaining rights have no direct budgetary implications) is false, but you stated it as if it were true, so let us accept it as a postulate.
Given the postulate, it seems to follow pretty clearly that there's no fiscal reason not to agree. Correct me if I'm wrong, but I believe that your as a professor of public affairs and economics who tends to delight in lambasting what you see as conservative idiocy, that indeed that was your point. But instead of saying that directly, you said it was "unclear from a fiscal perspective". I interpreted that as sarcasm intended to hint at the muddleheadedness and/or dogmatism of your governor. That's what I meant by "sneer". If I have misunderstood I apologize.
Posted by: Nick Curtin at February 20, 2011 03:00 PM
Nick Curtin: That is, in my view, a pretty expansive definition of "sneer". By stating "unclear from a fiscal perspective", I was attempting to be precise. No sarcasm intended. Hence, I believe you have misunderstood, and I accept your apology.
By the way, I challenge you to find in any of my posts over the past 6.5 years the phrase "conservative idiocy".
Posted by: Menzie Chinn at February 20, 2011 03:36 PM
(revised from what I submitted earlier)
MC: Gladly. Let's start with the 2nd Oxford definition of "sneer", namely to write in a contemptuous or disparaging tone. Now let's examine your statement "Since collective bargaining rights do not in themselves have direct budgetary implications, then it is unclear -- from a fiscal perspective -- why agreement can not be made."
As noted in my first comment, I believe your postulate is wrong. But you stated it as fact, so let us imagine it is. Given that postulate, it seems to follow clearly that there is no fiscal reason not to agree. Correct me if I'm wrong, but I think that was your point. But instead of saying that directly, you said it was "unclear", which I seems a mocking hint that "oh, our governor is too muddle-headed or dogmatic to understand simple logic". If I have misunderstood I apologize. But I could give many other examples where you tend to mock the (ir)rationality of conservative opponents. Believing they deserve it doesn't make it less of a sneer.
Btw, I say this without prejudice to your right to criticize. If you had said, "I think the fiscal implications are so mild that the governor must be doing it to sabotage the fund-rasing machines for his Democrat opponents", that would have been at least as harsh but I wouldn't have called it a sneer.
Posted by: Nick Curtin at February 20, 2011 03:37 PM
MC: When I said you "tend to delight in lambasting what you see as conservative idiocy", I expressed no opinion that you had used those last two words in tandem. However, the substance of my observations stands. Just a few days ago your lead paragraph on a comment by House Speaker Boehner noted "I thought of interest to see exactly how bad his math was". Is not your core point that a conservative leader is mentally deficient, and that you think it's fun to bring it to public attention?
Posted by: Nick Curtin at February 20, 2011 03:46 PM
Nick Curtin: That the Speaker's math is so bad is not something that I consider "fun". Rather, it indicates either (i) he is math challenged (which is not the same necessarily as mental deficiency), (ii) his staff is math challenged, or unable to access the internet, or (iii) he is being mendacious. None of these interpretations bode well for public policy; but I do not consider pointing out any of these possibilities "fun". (By the way, I would welcome your illuminating exactly which one of these interpretations you hold.)
Let me highlight the adjective "direct" by appeal to a hypothetical. Suppose I belong to a union (which in reality I do not), and the administration asks me to take a pay cut, and I say yes and stay in the union, versus say yes, and don't stay in the union, is there any direct fiscal consequence of having collective bargaining rights? That is the spirit in which I noted that there are no direct fiscal consequences of collective bargaining rights, given the unions have indicated they will accede to the Governor's requests on the financial side.
I had thought that a clear point, but I apologize if it was not to you.
Posted by: Menzie Chinn at February 20, 2011 04:14 PM
Collective bargaining makes a big fiscal difference to small municipalities negotiating with teachers, especially on benefits and pensions, but also on rules for layoffs and hiring.
I had thought that a clear point, but I apologize if it was not to you.
Posted by: Nick Curtin at February 20, 2011 04:21 PM
"Collective bargaining rights" sounds so benign and reasonable. What it means is that the employer is FORCED to cut a deal with the union. They are not free to instead make other arangements in the event that the union is being unreasonable, such as hiring more willing workers.
If the shoe were on the other foot, to wit the employees were FORCED to deal with a given employer & not able to explore other alternative, we would call that slavery.
Posted by: Bryce at February 20, 2011 05:44 PM
Nick Curtin: I see. The Governor is rejecting the union financial concessions because he is concerned about the local governments and municipalities. I did not realize he had been elected to run all those municipalities as well. Why do we need locally elected officials then?
Bryce: Just so I have interpreted your statement correctly, you are equating collective bargaining to slavery?
Posted by: Menzie Chinn at February 20, 2011 06:50 PM
MC: It is normal in federal systems for higher authorities to establish legal frameworks that facilitate or hinder the operations of local authorities. In this case the governor hopes to improve the negotiating position of local authorities vs teachers' unions. He is not commanding the local authorities how to act; they will be free to offer even more benefits than before although, cash-pressed, they almost surely will not.
Again, I am not criticizing you for siding with the teachers' union though I do not. I am simply reaffirming that this showdown has broad fiscal ramifications.
Posted by: Nick Curtin at February 20, 2011 07:39 PM
See for example the GAO report of March 2010 on state and local governments' fiscal outlook. It's scary, and most of the scare comes from the off-balance sheet obligations for state and local employee benefits.
It is true, as some protestors claim, that Governor Walker's proposals recall a world leader from the 1930s and 1940s. But not Hitler. Rather, Franklin Delano Roosevelt, who believed in free speech, free elections and workers' rights but sought to hobble public sector unions.
Posted by: Nick Curtin at February 20, 2011 08:02 PM
I'm not equating collective bargaining to slavery. But it isn't the voluntary interaction which characterizes a free society either.
The union will with their monopoly power (and the advantage of their concentrated interest vs. diffuse cost of taxpayer) leverage as much out of the taxpayer as the cover of darkness will allow.
Posted by: Bryce at February 20, 2011 08:19 PM
From the same Milwaukee Sentinel article is another quote, right after the one cited by Menzie.
"Cullen Werwie, Walker's spokesman, said in a statement that state Sen. Jon Erpenbach (D-Middleton) "should come to work and debate the bill while doing his job in Madison."
If the Erpenbach compromise is so good, that is exactly what he should do, get back in the state, return to his job, offer his compromise by amendment and let the democratic process of the state legislature work.
If he succeeds and the vote goes his way, great. If he loses and the vote does not go his way, great. Even bigger than union politics, even greater than political factions, even above party affiliation, is the commitment to the time tested political process, and then let the voter decide at the next election.
Posted by: Ed Hanson at February 20, 2011 09:02 PM
Nick Curtin the GAO report of March 2010 on state and local governments' fiscal outlook. It's scary, and most of the scare comes from the off-balance sheet obligations for state and local employee benefits.
Not all states are in a bad way, and according to Moody's the state of Wisconsin is, relatively speaking, in pretty good shape. And if the state was in as bad fiscal shape as Gov Walker claims, then why did he make it one of his first orders of business to push through a big tax cut for some of his business cronies? We see the same thing happening in other states with newly elected GOP governors.
It is true, as some protestors claim, that Governor Walker's proposals recall a world leader from the 1930s and 1940s. But not Hitler. Rather, Franklin Delano Roosevelt,
As I told Ricardo, comparing Gov Walker to Gen Jaruzelski is closer to the mark. If you recall, Gen Jaruzelski's primary objective was to break the back of the trade union movement in the Gdansk shipyards. And the arguments that Gov Walker is using today are eerily reminiscent of the same arguments used by Jaruzelski 30 years ago; e.g., relative generousity of shipyard workers' benefits relative to employees in other sectors, Polish govt deficits, disruption of state run industries, illegality of govt workers calling in sick, etc.
Posted by: 2slugbaits at February 21, 2011 05:59 AM
I should have said 'government-forced monopoly power'. I have nothing against unions as voluntary associations wanting to negotiate with an employer so long as the employer has the right to say 'no.'
Posted by: Bryce at February 21, 2011 08:43 AM
I've looked into how many states restrict bargaining and strike rights for employers. I wanted to gauge whether this was important or not, whether it will substantially hurt employees and whether it will in fact transform government.
My finding is that it is a relatively small matter. Without going through details - google it for yourselves - some states restrict or prevent bargaining and a number more restrict strikes, which distorts bargaining power by reducing union leverage.
A quick look shows that these states are not better off fiscally. They have pension and medical benefit problems. They have budget deficits, sometimes huge ones. The ones that eliminate bargaining tend to have worse educational systems, but I don't claim this is a causal relationship.
Why do it? I think some of the issue is highlighted in the comments here: people somehow think that changing laws regarding bargaining rights eliminates contracts that have existed and thus pension rights that have accrued. That is just not true; ex post facto laws are unconstitutional. Only future benefits can be changed and note that these terms were accepted by the union in Wisconsin.
Take teacher salaries. A few minutes of research shows there is little variance state to state. Mississippi's minimum pay scale is similar to that for Texas - both no bargain states, both at the bottom of educational attainment, both have budget deficits (Texas' being huge) even after substantial cuts. Wisconsin pays slightly more but the cost of living in Wisconsin is higher and I'd bet all 3 work out to similar real numbers when adjusted for cost of living.
It seems this is largely an ideological issue. One would otherwise have to believe - irrationally - that a change in Wisconsin would have more of an impact than lack of bargaining rights have had on government in other states. This is being sold as a type of "magic bullet" but it isn't.
Posted by: jonathan at February 21, 2011 09:56 AM
MC: If collective bargaining has no direct budget implications, as you say, would you agree that Gov. Walker is legally entitled to strip the collective bargaining restrictions from the budget bill and vote on them separately? He has a quorum for non-budgetary votes.
2slugs: It is ludicrous to compare to "martial law by a Communist dictator" the rollback of a collective bargaining provision covering less than 10% of the working population, when the majority of other states don't have as generous provisions, by a democratically elected legislature which has denied no one free speech.
Posted by: Nick Curtin at February 22, 2011 05:51 AM
Nick: Here is what eliminating work conditions as a mandatory subject of bargaining might mean. Hypothetically, elementary classroom teachers might also be asked to teach PhyEd, Music, and Art, as well as supervise recess. That would allow districts to reduce FTE for special area teachers and para-educators. The biennial budget that is coming will have deeper cuts to education than can be accommodated through the increased employee contributions to pensions and insurance. Many things could be on the table now.
Posted by: Stiles at February 22, 2011 08:45 PM