Is “Right to Work” About Freedom?

It’s Rick Snyder’s incredible flip-flop here in Michigan on so-called “Right to Work” legislation and his claims that it’s about “freedom” that brings me back to blogging.  Lately I’ve been getting increased questions about what “Right to Work” really means.  So, let me try to cut through the Orwellian rhetoric and explain.

So called “Right to Work” laws have absolutely nothing to do with “freedom” for workers. The “freedom” talk is purely a made-up rhetorical lie intended to get gullible workers to support something that most likely is not in their personal best interest.  Supporters of  so-called “Right to Work” laws (RTW)  claim it’s about establishing the “freedom to not be forced to join a union”, that it’s about “freedom of association”.  But that is an absolute falsehood.  Forcing someone to join a union as a condition of employment is called a “closed shop” rules.  Ever since the 1948 Taft Hartley (a US law covering all states) “the closed shop” has been illegal. Let me repeat for clarity. Forcing someone to join a union as a conditon of employment has been illegal everywhere, including Michigan, since 1948.  RTW laws change nothing in this respect.

But Taft Hartley law also says that if a union is certified as bargaining representative, then the union must bargain on behalf of ALL employees, whether union members or not.  Further all employees are covered by the union-negotiated contract, whether members or not. A union becomes the certified bargaining representative by a vote of ALL employees at some point in time, with a majority necessary to cerify.  A union may be de-certified later by another majority vote of all employees (whether members or not).  Until the union is decertified, the non-member employees benefit from the contract and are covered by the contract.  If a union is certified to represent, non-members are not free to strike different deals or contracts.

Employees who choose to be union members pay dues.  In return for dues, members receive the benefits of bargaining, the contract, and due process representation. Members also get to vote on union leadership and maybe participate in social events put on by the union, depending on which union it is. Non-members do not get the social benefits or voting rights, but they DO get the benefit of the contract, bargaining, and due process.  In return, non-members do not pay “dues”. Rick Ungar in Forbes clarifies:

But did you know that Taft-Hartley further requires that the union be additionally obligated to provide non-members’ with virtually all the benefits of union membership even if that worker elects not to become a card-carrying union member?

By way of example, if a non-member employee is fired for a reason that the employee believes to constitute a wrongful termination, the union is obligated to represent the rights of that employee in the identical fashion as it would represent a union member improperly terminated. So rock solid is this obligation that should the non-union member employee be displeased with the quality of the fight the union has put forth on his or her behalf, that non-union member has the right to sue the union for failing to prosecute as good a defense as would be expected by a wrongfully terminated union member.

Obviously, the Taft Hartley law puts a burden on unions. A certified bargaining agent union must bargain on behalf of all workers, whether they are members or not.  That costs the union money and time.  Yet,the union may only collect “dues” from members.  Herein lies the difference between RTW states and the rest. The rest should properly be called “union shop” states.  In a “union shop” state such as Michigan was until yesterday (Dec 11, 20123), the certified union may charge “agency fees”, not “dues”, to non-member employees on whose behalf they bargain. Agency fees are required by law of non-member employees in union shop states. In RTW states, non-member employees do not have to pay agency fees. In RTW states, non-member employees are allowed to benefit from the contract and protections and bargaining power of the union without paying a dime to support the bargaining activities.  The agency fees are established in union shop states to reimburse the union for it’s costs of negotiating, bargaining, etc.  RTW laws are all about how much money gets paid to certified unions and have nothing to do with “freedom”.

How Much Are Dues vs. Agency Fees?  Enter the Supreme Court

For a few decades after passage of Taft Hartley in 1948, many unions set the agency fee at the same dollar amount per month as the dues.  Obviously this encourages membership since an employee faces a choice of same cost for non-membership vs membership, yet membership brings some marginal benefits beyond the bargaining and contract benefits.  But, a few decades ago (I forget exactly when – I think it was in the 1980’s), some non-members of unions in union shop states sued to not have to pay the agency fee, claiming a First Amendment free speech violation. The logic of their argument was essentially that:

  • union shop labor laws required non-members to pay agency fees to an organization, the union, of which they were not a member and with whom they may disagree politically
  • unions use some of their money for political “speech” purposes: campaign contributions, advertising, lobbying, etc.
  • Ergo, the laws were forcing the non-members to supoort political speech with which they disagreed and therefore should be considered unconstitutional under the US Constitution 1st Amendment.

Countering the non-member’s argument was the union position that the non-members benefit from the union’s activity (bargaining) and should be required to contribute their share to the costs.  If non-members were not required to monetarily support the union’s bargaining and other activities, then it would constitute an unfair burden on members (they would be forced to pay to provide union benefits to non-members) which is itself probably unconstitutional (see Beverly Mann about Article 1, Section 10)

The Supreme Court “split the baby” and developed a solution that acknowledged both sides.  The Supreme Court established that required agency fees are indeed constitutional (ie. “union shop” laws are constitutional).  But, it also said that requiring non-members to support political speech and activities with which they disagreed was not constitutional.  The solution lay in establishing that unions report the amounts they spend on political speech and adjust the agency fee to be some fraction of the dues.  In other words, if the dues for members were $40 per month and the union reported that 20% of it’s total expenses were for political speech activities, then the agency fee would have to be set at $32. This decision was one of a few public policy and economy changes that helped to reduce union influence in the political arena starting in the 1980’s.  There were other more significant ones such as the PATCO strike, but the Supreme Court decision did help reduce marginally some of the money and support unions could provide to union-friendly politicians.  The effect was most pronounced in private sector unions.

Indeed, the battle over RTW laws vs. union shops has nothing to do at all with “freedom for workers”.  It has everything to do with money for political campaigns and political activities.  Historically, most union political activities have been in support of Democratic candidates, but not always.  Republicans perceive they can gain a significant advantage and perhaps a permanent power majority if they can weaken unions and cut-off the political support unions provide to Democrats while simultaneously increasing their financial support from corporations and billionaires, neither of which face any limitations any more.  It is no accident that police unions are exempt from the new RTW law in Michigan.  Police unions such as the FOP can continue in Michigan to demand either dues or agency fees from all police officers.  Why?  Police unions have historically been the unions most likely to support Republican candidates, particularly for court judgeships.

NOTE: Despite continuing really heavy work duties, I am going to try to make posts in the next few days about “Whether and How RTW Laws Weaken Unions and Affect Workers” and “What the Evidence Shows on RTW Laws and Economic Growth”. 

Rick Snyder Advocates Government Planning to Fix the Labor Market

In recent posts here, here, and here, I’ve been discussing structural vs. cyclical unemployment.  In particular I’ve observed how those who are opposed to government stimulus efforts, either broad-based tax cuts or spending, are desperate to assert that our unemployment is a structural problem and not cyclical.  Yesterday’s post about a story in the Wall Street Journal was one example.  But here in my home state of Michigan, our Governor Rick Snyder has been saying much the same thing.  Since Governor Snyder’s previous claims that the magic jobs genie would create jobs from budget cuts have not worked, he really wants to join the “it’s all structural” brigade.  So last week Snyder announced:

Michigan needs to do better training people for in-demand jobs, and matching skilled workers with potential employers, Gov. Rick Snyder said…

“Today, too few workers have the skills needed to meet the demands of employers in the new economy,” Snyder said, according to an advance copy of his message. “Despite an unemployment rate of 10.6 percent, thousands of jobs remain unfilled in Michigan.”

Snyder said state companies say there is a “talent disconnect,” with baby boomer retirements leading to a loss of skilled workers and increasingly technology-driven economy requires advanced skills that many of our workers do not have.

“Today, talent has surpassed other resources as the driver of economic growth,” he said. “Times have been tough in Michigan. We have failed to think strategically about the relationship between economic development and talent. Job creators are finding it challenging to grow and develop without the right talent and job seekers are struggling to connect with the right opportunities that leverage their skills.”

Among the proposals is a new website, Pure Michigan Talent Connect – MiTalent.org – will feature tools for job-seekers and employers to identify labor trends and help people assess their skills, look for the training they need and connect with mentors.

The site is being launched in phases through June 2012. The first phase, features the “Career Matchmaker” and the “Career Investment Calculator.”

Partnering with public colleges and universities to provide a post-secondary education that is marketable and transferable. Snyder noted that the Center for Michigan concluded that colleges graduated 20 percent too few computer and math professionals, 14 percent too few health care professionals, and 3 percent too few engineers in 2009-2010.

“We need to stop overproducing in areas where there is little or no occupational demand and encourage students and educational institutions to invest in programs where the market is demanding a greater investment in talent,” Snyder said. “The current imbalance creates a population of young talent that cannot find work in Michigan, is saddled with debt and is ultimately forced to leave the state. This is an outcome we cannot afford.”…

“The simple truth is that tomorrow’s opportunities cannot be realized with yesterday’s skills,” he said. “The challenge we face is to align the aptitudes and career passions of job seekers with the current and evolving needs of employers. The solution is to reinvent the way in which we prepare our children for successful, fulfilling careers; reshape the manner in which Michiganders look for work; and redesign the way in which employers obtain the skills they need.”

Basically, Snyder is now asserting that Michigan’s high unemployment rate is primarily structural – it has nothing to do with Snyder’s jobs cuts and spending cuts in the state or with the present contractionary federal fiscal policy.  Instead he blames the unemployed – they have the wrong skills and the wrong education.  What’s particularly interesting here is that normally Snyder, like most Republican governors, is very pro “free market” and “private sector”.  But apparently the free market and the private sector haven’t performed well in the labor market according to Snyder.  Snyder seems to be saying we need government planning and direction to tell people what skills and education to get.  Apparently Snyder also doesn’t think private employment agencies or employers do a very good job of identifying trends or make connections.

I think the problem is not that Michiganders don’t know the right way to look for work.  There simply aren’t enough jobs at reasonable wages when they look.  It seems strange to hear calls for such fancy government economic planning coming from a so-called advocate of free markets and the private sector.  But when you’re desperate to justify spending cuts instead of stimulus, I guess that’s what you say.

Unemployment Benefits Cut Will Worsen Things.

CalculatedRiskBlog reports:

Here is a depressing report from the National Employment Law Project: States Made Unprecedented Cuts to Unemployment Insurance in 2011

NELP’s new analysis shows that in 2011, six states cut the maximum number of weeks that jobless workers can receive unemployment insurance to less than 26 weeks—a threshold that had served as a standard for all 50 states for more than half a century, until this year. Michigan, Missouri, and South Carolina cut their available weeks down to 20; Arkansas and Illinois cut down to 25; and Florida cut to between 12 and 23 weeks, depending on the state’s unemployment rate. Double-digit unemployment in Michigan, South Carolina, and Florida did not discourage lawmakers there from making the cuts.

… Indiana changed the formula it uses to calculate weekly benefit amounts so that the average unemployment check will drop from $283 to $220 a week.

Ouch.
This makes things worse.  It increases the risk of  another drop in GDP.  See, when people who have been getting unemployment benefits have their benefits cut, they cut their spending.  That means some businesses are selling less stuff. Those businesses in turn layoff more workers, or at best case avoid hiring new ones.
As for the argument that people who get unemployment benefits avoid working just to get the benefits, there’s two responses.  First, even by the micro-economic models and theories so beloved by conservatives, it’s totally irrational to do so.  I mean, do you really believe people pass up opportunities to have $48,000 a year or more (median household income) in order to collect $8,000 (maximum unemployment benefits for 26 weeks)?  No, it’s totally irrational.  Second, cutting unemployment benefits to try to get people to have jobs is essentially punishing the unemployed. If there are no jobs to be had, it makes no difference how much we punish them.  They can’t get a job.  The beatings will continue until morale improves.

Gov. Rick Snyder Invokes the Magic Job Genie

The mantra of Republican governors (and in Congress) has been that taxes must be cut in order to create jobs.  In previous posts I’ve dealt with the confusion about how federal level changes income taxes  might or might not affect the strength of the economy. Most of the federal tax discussion focuses on individual income taxes.  But at the statehouse level, Republican governors have been pounding a theme that claims business tax cuts will drive economic growth in general and job creation in particular.

In Michigan, Republican Governor Rick Snyder has just pushed through a massive restructuring of Michigan taxes.  The old Michigan Business Tax (a complicated scheme applying to all businesses) was repealed.  In it’s place is a new corporations-0nly 6% profits tax. The new tax collects only a small fraction of the revenue the old tax did, so individual tax burdens have been increased, particularly on seniors and low-income folks.  In summary, it is a giant tax shift: lower taxes for businesses and higher taxes for individuals, especially the poor and seniors.

Why?  Jobs, we’re told. The Governor, a self-proclaimed very smart person (“nerd”), keeps telling people that Michigan needs new jobs and the way to create them is to cut business taxes.  Even before the new tax cuts were officially passed, the evidence is starting to come in that the idea doesn’t work, as shown here.  But the governor continues to claim jobs will result if we only cut business taxes.  I’m skeptical, but willing to listen.  After all, he’s a really smart person (his campaign ads keep telling us that, so it must be true, right?)  So I was very excited this morning as I’m driving to work  and listening to Michigan Public Radio  (recording of program as MP3 available here) to hear the Governor would be on the show live.  Maybe he could enlighten me about how this “tax cuts create jobs” stuff works.

The very first question was fantastic.  An alert listener asked (I’m paraphrasing from memory): “Precisely what empirical evidence exists that your business tax cuts will create additional jobs and just how many jobs should we expect?”  Snyder couldn’t give a straight answer.  He immediately responded with “It’s just a matter of basic economics. When a business have more money or resources it can create more jobs” (again paraphrase).

Unfortunately for the people of Michigan, Snyder has it all wrong.  That’s not basic economics.  He’s thinking basic accounting.  Basic economics says businesses will hire more workers when they perceive there’s demand (spending) for their product at profitable prices.  Taxes don’t really enter into it.  That’s not just basic economics theory, it’s also confirmed by repeated surveys of business managers.  Tax rates, particularly state tax rates, are waaaaay down the list of factors important in deciding on hiring and staffing levels.  Snyder should know better.  He himself, when he was CEO of Gateway Computers, moved the company from South Dakota, a low tax state, to California, a very high tax state?  Why would he have done that if taxes were so important?

The moderator, Rick Pluta, to his credit, didn’t bail out Snyder but moving quickly to the next question.  Instead we were treated to the Governor claiming that “it’s not possible to pinpoint exactly how many or which jobs might be created by the tax cuts, but we believe it will happen”.  That’s my point here. There is no evidence. There is no sound theory.  Instead, what we have is a faith-based policy.  We cut taxes for businesses in total and eliminated them completely for thousands of businesses in belief  that jobs will be created.  There’s no real evidence.  There’s just a belief in the magic jobs genie*.  The jobs genie only comes out when taxes are cut.  And when taxes are cut, the genie just magically appears and inspires businesses to go crazy and say “Hey let’s hire people. Let’s create jobs!”

Snyder then proceeded to offer his only empirical evidence. “We have some surveys where many of these small and medium businesses say they would consider creating new jobs in response to this bill”.  The Governor’s a lousy social scientist and economist.  Contrary to Snyder’s claims, it is possible to study and quantify this stuff.  Applied economists have done this stuff for decades. It’s our bread-and-butter.  There are  many studies on the jobs impact of state business tax cuts.  The evidence does not support Snyder’s position.  Indeed, contrary to his claims that they don’t know how many jobs will be created, the state treasurer and budget office must necessarily make estimates of state employment under different tax schemes in order to make budget forecasts.  Snyder is hiding because the evidence doesn’t support what he wants to claim.  He prefers to conjure magic beings like the jobs genie.

Snyder did say that employment is how he should be measured as governor.  What he didn’t say is that the appropriate measure is how much Michigan’s employment grows relative to the national average.  If the U.S. as a whole simply manages to not have a major recession while he’s in office, then Michigan employment will grow.  The U.S. economy as a whole is the dominant influence on Michigan employment, not what the state government does.  But, the policies of the state government have a major influence on whether the state does better or worse than national average.  For the last approx. 15 months, Michigan has performed significantly better than the national norm, albeit Michigan started in the worst condition.  (Nevada has that title now).  The clock is ticking now.  It’s up to Snyder to prove that, contrary to historical evidence and his own prior business decisions, that state business tax cuts will create faster than national average job growth.

* The magic Jobs Genie is only one of a pantheon of magical creatures that animate the economic theories of many politicians these days.  There’s also the Banking Unicorn and the Investment Confidence Fairy and others.  I’ll talk about those in future posts.

In Michigan, Governor Snyder Is Increasing Unemployment

For years and through the early part of the Great Recession of 2007-09, Michigan was ground zero for unemployment. Unemployment rates of around 15% – worst in the nation.  But once the GM and Chrysler completed their bankruptcies, it has begun to emerge. In the past 12 months Michigan has made relatively good progress on it’s unemployment problem.  In fact, it’s made the most progress of any state (a low bar, I know) while some states like Nevada and California and two other states are worse.  To the extent a governor is responsible for unemployment in the state, this must be accredited to Jennifer Granholm who left office in January 2011.

The new governor, Rick Snyder, came in full of Republican talk and promise of “creating good jobs”.  He’s been extremely vague about this happens other than to wave the magic business tax-cut genie.  Apparently, according to Snyder, if we simple cut business taxes by raising taxes on seniors and poor people, then the jobs will just happen.  Now there’s plenty of evidence indicating this idea simply doesn’t work.  Taxes are not the major reason why businesses are where they are.  More importantly, no business ever said “hey, my taxes were cut so I’ll be a good citizen and hire somebody”.  What real businesses do is they say “hey, there’s demand for my product, I better hire somebody”.

Unfortunately Snyder is not content to simply cut business taxes.  He has to tinker with a proven job-creation system based on tax credits for the film industry.  How this tax credits for a film industry are different from general business tax cuts is because they are focused on creating the initial infrastructure or economic “eco-system” that causes a significant industry to concentrated in one area.  Creating the basic infrastructure and network of start-up firms concentrated in a particular industry is critical.  It’s how giant industries grow.  It’s the dynamic that created Silicon Valley.  Heck, it’s the dyanamic that created Detroit and Michigan as the center of the auto industry 100 years ago.

We’re backtracking now.  From The Detroit News: http://detnews.com/article/20110511/BIZ/105110359/Michigan’s-film-studios-go-to-fade-out#ixzz1M6IMlJeh

Michigan’s fledgling film studio infrastructure is crumbling as the number of productions declines in the wake of a $25 million limit on state cash incentives for movies, television shows and digital media.

Livonia-based Maxsar Digital Studios, which opened a week before Gov. Rick Snyder announced in mid-February that he wanted to cut and cap the nation’s most generous film and television industry tax incentives, has laid off its 50 employees and idled all productions.

A west Michigan facility known as 10 West Studio has lost two potential film deals, and one of its principal founders has relocated to Los Angeles.

Another studio operated by S3 Entertainment Group in Ferndale was evicted from a Madison Heights location earlier this year for failure to pay rent.

“We don’t have a sufficient industry to support an infrastructure at the $25 million cap,” said Jeff Spilman, founder and managing director of S3 Entertainment Group, referring to Snyder’s plan, which the state Film Office has adopted but the Legislature has yet to approve.

“Everyone who has had the capacity to leave has pretty much left,” Spilman said.

Having government plant the seeds, build the infrastructure, or even fund a young industry is an old and proven tactic for industrial growth.  It worked for railroads, the telegraph, electricity, computers, software, airlines, aircraft, pharmaceuticals, and many others.  Snyder is abandoning what’s proven to work for a magical belief in a genie.

I still expect some gradual improvement in Michigan unemployment, but that’s largely because our good old standby, the auto industry, is recovering and gaining ground.  Unfortunately that leaves Michigan just as dependent on one industry as we were before.

Shock Doctrine and Wisconsin and Michigan

Author Naomi Klein wrote a book a few years ago called Shock Doctrine.  It is a powerful antidote to the pro-free markets, pro-globalization stories of authors such as Daniel Yergin and Stanislaw who wrote Commanding Heights.  I wish Shock Doctrine were a full-length video to juxtaposition against Commanding Heights. In the book, Klein documents how repeatedly over a 40 year period various crises have been exploited by right-wing, free-market fundamentalists to implement policies that could not be implemented via ordinary democratic means.  Further, Klein documents how the exploitation of these crises was not accidental. It was intentional. Amy Goodman notes of the book:

In it, she reveals how those in power use times of crisis to push through undemocratic, radical, free market economic policies.

The book, published in early 2008, mostly deals with crises in other countries. Some were political, some economic, some war-related, and some natural disasters. It is a disturbing and yet riveting tale.  The “reforms” forced through in country after country inevitably work to the benefit of the global elite corporations and banks. Yet in the book most of the crises and forced “reforms” are in either poor or developing countries. It’s possible to read the book and think that we in the developed, industrialized countries are immune to such anti-democratic exploitation of either real or contrived crises.  Yes, Klein offers the example of Katrina striking New Orleans to illustrate that it “can happen here”, yet it’s possible to think not. Now it’s time to think again.

Now it’s 2011 and the crises have come to the U.S. and other developed countries. In the U.K., a new conservative government has chosen to whip up a fear of a sovereign debt crisis. “We don’t want to be like Greece”, despite the reality that the U.K., having it’s own currency, can never be in the circumstances Greece is.  They are exploiting the fear of crisis to mount a massive dismantling of public benefits that would not otherwise be possible. A dismantling they didn’t explain prior to the election.

But what I want to observe is that Shock Doctrine tactics have come to the U.S.  In Congress, Republicans are claiming the government is “broke” despite the evidence that the government can borrow unlimited amounts at near-zero interest rates and despite the fact that the U.S. cannot go “broke”. But they are using this supposed “crisis” to try to reduce or dismantle a fundamentally sound, socially beneficial program like Social Security. Heck, even if there were a budget crisis for the government, Social Security isn’t the cause and cutting isn’t the solution.  Yet the tactic here is pure shock doctrine.

I’ve mentioned before how we’re seeing Shock Doctrine in Wisconsin, Ohio, and other states that are attempting to repeal collective bargaining rights for public workers and to bust unions is pure Shock Doctrine. There is now an extensive interview with Naomi Klein where she talks about these events:

we are seeing right-wing ideologues across the country using economic crisis as a pretext to really wage a kind of a final battle in a 50-year war against trade unions, where we’ve seen membership in trade unions drop precipitously. And public sector unions are the last labor stronghold, and they’re going after it. And these governors did not run elections promising to do these radical actions, but they are using the pretext of crisis to do things that they couldn’t get elected promising to do.

And, you know, that’s the core argument of and the thesis of the book, is not that there’s something wrong with responding to a crisis decisively. Crises demand decisive responses. The issue is this backhanded attempt to use a crisis to centralize power, to subvert democracy, to avoid public debate, to say, “We have no time for democracy. It’s just too messy. It doesn’t matter what you want. We have no choice. We just have to ram it through.” And we’re seeing this in 16 states. I mean, it’s impossible to keep track of it. It’s happening on such a huge scale.

Teachers’ unions are getting the worst of it. March 8th was International Women’s Day. This is—you know, as you pointed out on your show, it’s overwhelmingly women who are providing the services that are under attack. It’s not just labor that’s under attack; it’s the services that the labor is providing that’s under attack: it’s healthcare, it’s education, it’s those fundamental care-giving services across the country, which could be profitable if they were privatized.

Later in the interview, Klein touches on what’s happening here in Michigan. In Michigan we have Governor Rick Snyder, a man who won a landslide by specifically not telling anyone what he planned to do other than “re-invent” Michigan.  Yet within days of taking office he announces plans to raise taxes on senior citizens and poor people. He further cuts state funding of local governments and school districts. Then he and the Republican legislature pass a new law to allow the governor to appoint an “emergency financial manager” with dictatorial powers to take over any local government or school district in financial trouble. All of this it is claimed is necessary because of a budget “crisis”.  Yet the budget “crisis” is itself largely the result of Snyder’s own proposal to repeal existing business taxes and replace them with business taxes that collect much less money.  It’s a crisis that Snyder largely creates and then proposes to “solve” by repealing voters rights’ to run their own local governments.

AMY GOODMAN: Well, let me ask you about Michigan. About a thousand people rallied in Michigan—

NAOMI KLEIN: Yeah.

AMY GOODMAN:—reminiscent of Wisconsin. Talk about the proposal there.

NAOMI KLEIN: … there’s so much going on that these extraordinary measures are just getting lost in the shuffle. But in Michigan, there is a bill that’s already passed the House. It’s on the verge of passing the Senate. And I’ll just read you some excerpts from it. It says that in the case of an economic crisis, that the governor has the authority to authorize the emergency manager—this is somebody who would be appointed—to reject, modify or terminate the terms of an existing contract or collective bargaining agreement, authorize the emergency manager for a municipal government—OK, so we’re not—we’re talking about towns, municipalities across the state—to disincorporate. So, an appointed official with the ability to dissolve an elected body, when they want to.

AMY GOODMAN: A municipal government.

NAOMI KLEIN: A municipal government. And it says specifically, “or dissolve the municipal government.” So we’ve seen this happening with school boards, saying, “OK, this is a failing school board. We’re taking over. We’re dissolving it. We’re canceling the contracts.” You know, what this reminds me of is New Orleans after Hurricane Katrina, when the teachers were fired en masse and then it became a laboratory for charter schools. You know, people in New Orleans—and you know this, Amy—warned us. They said, “What’s happening to us is going to happen to you.”

Think of the power now concentrated in the Governor.  If any local government or school district doesn’t do what Governor Snyder wants, if the local voters don’t want their schools run the way Snyder does, then Snyder cuts the funding to the school district/city.  They fall into “financial trouble”.  Snyder appoints a crony as financial manager.  The financial manager can go so far as to privatize the entire city and dissolve the entire existence of the city.  So much for popular will and voters speaking in a democracy.  Meanwhile, Snyder, the Governor becomes a very, very powerful man. And power can always be converted into great wealth.  Welcome to the banana republic and crony capitalism. Outcomes no voter would support if given a choice. Courtesy of the Shock Doctrine.

MI leads (good way)

Lots to catch up as taxes and grading have taken my time the last week or so.

The Philadelphia Fed Reserve Bank issues “Philly Fed Coincident Indicators”.  This is an index, state-by-state, of various economic indicators.  The index helps tell whether the local (state) economy is improving or not.  As you can see from the map, Michigan is leading – the only state with a more than 1% improvement in the 3 -month index.  Now granted, we’re improving from a very depressed, low level. But improvement is improvement and if Michigan is to return to “normal” conditions like most states, we have to improve more, faster.  I like it.  It’s confirmation of the same message we’re getting from the state-by-state unemployment data.  See here

I quote:

from CalculatedRisk on 3/30/2010 12:41:00 PM

Philly Fed State Conincident Map Click on map for larger image.

Here is a map of the three month change in the Philly Fed state coincident indicators. Twenty five states are showing declining three month activity. The index increased in 18 states, and was unchanged in 7

Here is the Philadelphia Fed state coincident index release for February.

In the past month, the indexes increased in 21 states, decreased in 22, and remained unchanged in seven for a one-month diffusion index of -2. Over the past three months, the indexes increased in 18 states, decreased in 25, and remained unchanged in seven for a three-month diffusion index of -14.