Wisconsin Increasingly Looks Like Bizarro World

A couple items from Wisconsin. Menzie Chinn points out how governor Scott Walker, who claims a deficit to be the compelling reason for eliminating collective bargaining rights for public workers, also thinks the way to save money is to have government ignore cost vs. benefit analyses when making decisions.  Actually, Walker doesn’t even want the analysis done in the first place. His mind is made up.  Private contractors will always be cheaper in his eyes, and he doesn’t need any stinkin’ facts or analyses to get in the way.

Digression: Eliminating Benefit-Cost Analysis?

Here is something that struck me — as someone who teaches in a public affairs school with courses in policy analysis — as odd, particularly in a time when resources are limited. From the Milwaukee Journal Sentinel.

Gov. Scott Walker’s budget proposal would eliminate a law requiring state agencies to study the costs and benefits of outsourcing work.

That provision and others in the GOP governor’s 2011-’13 budget drew questions from both Republicans and Democrats at a briefing Tuesday before the Legislature’s budget-writing committee.

Current law says agencies must compare the costs of having private contractors do work costing more than $25,000 against what it would cost to have state workers do the job.

Speaking to the Joint Finance Committee, Administration Secretary Mike Huebsch said that the law was cumbersome and required an analysis of contractor costs to be done even in cases where state workers couldn’t do the work.

“We did a cost-benefit analysis on the cost-benefit analysis and found it was costing us money,” Huebsch told the committee.

That analysis is definitely one I would love to see. (I am hopeful that the “we” in the passage refers to him and staff.) The article continues.

Under Walker’s bill, the cost-benefit analyses would be retained only for engineering services at the state Department of Transportation.

The proposed change drew questions from Sen. Luther Olsen (R-Ripon) and Rep. Tamara Grigsby (D-Milwaukee). Olsen said he didn’t want to burden state agencies with red tape but also wanted to make sure that agencies weren’t spending money unwisely in a time of tight budgets.

“Can you explain why, when we’re in a time of serious fiscal trouble, we would not want to do a serious cost-benefit analysis? . . . When you are cutting government and cutting programs, you can’t afford to make mistakes,” Olsen said.

In May 2009, a legislative audit found that the state Department of Transportation outsourced 125 construction engineering projects over 16 months even though it determined each one of them could have been done for less using state workers.

Using state workers instead of outsourced engineers could have saved $1.2 million during that period, the Legislative Audit Bureau report found.

State officials are often reluctant to hire more workers because of concerns that they will have to pay those costs for years into the future. Contractors, while sometimes more expensive, are paid on a project-by-project basis.

For those interested in learning about CBA, see this collection.

It’s a strange way to get more value out of government money. But then this is the same governor who thinks selling off state-owned assets without a competitive bidding process will get the best price for the state.

In the same posting at Econbrowser, Chinn points out that the state government has chosen to defy a court judge, not once but twice, and go ahead with implementation of a law against the judge’s injunction.  The state is preparing to spend thousands of dollars fighting the judge and appealing when all they really need to do is pass the law in the legislature again, only this time conforming to the state’s open meetings law.

It’s not about the state deficit in Wisconsin. It’s about power and cronyism.  It clearly isn’t about the rule of law.

 

How Come Conservatives Only Hate Some “Unions”?

Michael Perelman writes an excellent post on the roots of the current conservative efforts to roll-back collective bargaining rights for public workers. (See the Michael’s full post after the ‘more” button). Namely, the target right now is public sector workers but the effort is the same effort that traces back to the 1960’s as concerted effort of the right-wing.  The idea pushed was that by eliminating workers’ rights and increasing business (particularly financial industry) profits, everybody would benefit. It didn’t work out that way, though.

One very interesting observation that he makes is that not all “unions” are targets of the right-wing.  Technically in economic terms, a “union” is any combination, cartel, or trust that aims to reduce horizontal competition and negotiate or set prices/wages/output as one group.  Any such “union” is in essence anti-competitive. But in some cases it may be justified as increasing overall social welfare. For example, labor unions are justified when there is only one or a very few, very large employers negotiating with a very large number of employees. The employers have monopsony power (a monopoly on the buy side). The union balances the scales. (See my post here for more.) The right-wing though is apparently only opposed to labor unions, not all unions:

One union stood out by its successes.  It is not generally called a union, but so long as we can abuse reality by calling corporations people, we can call the Chamber of Commerce a union.  This union is so powerful that the present United States must come before as a humble supplicant.  This union was at the forefront of the deconstruction of the New Deal.

The time has come to stop blaming the victim.  Somehow, we have to learn to fight back in this one-sided class warfare.  We have to learn to explain that more of the same medicine that made us sick is not going to cure us.  We have to learn to identify the architects of this disaster — the political manipulators, the right wing foundations and their benefactors, and if we want to begin a legitimate fight against unions, let’s start with the Chamber of Commerce.

He highlights the Chamber of Commerce (particularly at the national level), but I can name others.  For example, the American Medical Assoc is effectively a union of high-paid physicians yet the right-wing actually promotes them. The American Bar Assoc. and other professional associations are likewise unions. Yet they don’t get criticized despite doctors fees and lawsuits being a very significant part of our long-term budget difficulties (healthcare costs).

Continue reading

Union-busting In The Past

Since unions and collective bargaining rights are in the news lately, here’s an event of interest for students of economic history.  Ninety-seven years ago, union-busting meant murdering. Twenty-five people were shot and killed in Colorado on orders of the Governor of Colorado and John D. Rockefeller.

The Ludlow (Colorado) coal strike massacre (from About.com):

In the decades before World War I, industrialists such as John D. Rockefeller had become millionaires; by the early years of the 20th century labor unrest blossomed in the United States, particularly in the coal mine industry. Strikes grew into riots occurring throughout the US, and then into full scale battles, the most famous of which was in 1914, the Ludlow Coal Massacre, when Colorado National Guard opened fire on a tent city of striking miners and their families in Ludlow Colorado.

Basic Facts

On April 20, 1914, Colorado National Guardsmen attacked a tent colony of 1,200 striking miners at Ludlow, Colorado, looting and burning the colony. Twenty-five people were killed. This was the worst of many such skirmishes between the government and the miners in Coal Field War of 1914, which lasted for seven months.

Battle Statistics

The battle lasted 14 hours and included a machine gun and 200 armed militia; the tent city was destroyed. Of the 25 people killed, three were militia men, twelve were children, and one was an uninvolved passerby. The strikers were mostly Greek, Italian, Slav, and Mexican workers; the militia were sent by the Governor of Colorado and ultimately by John D. Rockefeller, owner of the Colorado Fuel and Iron Company.

 

 

Shock Doctrine, Neo-liberalism, and Current Events

Primarily for my Comp Systems and Political Economy students (this is part one):

As previously noted here, the events in Madison, Wisconsin are not unique.  There appears to be a concerted effort to roll-back collective bargaining rights for many workers and roll-back social programs all because of a supposed  “fiscal crisis”- the idea that government budgets are out-of-control in spending.  Yet, this “fiscal crisis” is largely contrived and to the extent it exists at all, it is due not to increased spending but from reduced tax collections resulting from the Great Financial Crisis Wall St. created and repeated tax cuts, especially for the wealthy.

So what we have is a “crisis” that supposedly justifies drastic cut-backs in social support, increased privatization, and reduced tax burden on the wealthy.  If it sounds familiar, that’s because it is.  It sounds a lot like the way neo-liberal “global capitalism” was forced onto much of the world over the last 40 years.  Naomi Klein, in her book Shock Doctrine explains the strategy used, including the fact that leading neo-liberal ideologues (in the U.S. they are called “conservatives” or “libertarians” but not with much accuracy) intentionally do so.  They idea is to use any crisis, be it a natural disaster (Haiti earthquake?), or invasion (Iraq?), or revolution to force political economy changes that people might not otherwise accept.

Paul Krugman at the New York Times observes how the pattern is being applied here at home now in Wisconsin and other states:

Shock Doctrine, U.S.A.

By PAUL KRUGMAN

Here’s a thought: maybe Madison, Wis., isn’t Cairo after all. Maybe it’s Baghdad — specifically, Baghdad in 2003, when the Bush administration put Iraq under the rule of officials chosen for loyalty and political reliability rather than experience and competence.

As many readers may recall, the results were spectacular — in a bad way. Instead of focusing on the urgent problems of a shattered economy and society, which would soon descend into a murderous civil war, those Bush appointees were obsessed with imposing a conservative ideological vision. Indeed, with looters still prowling the streets of Baghdad, L. Paul Bremer, the American viceroy, told a Washington Post reporter that one of his top priorities was to “corporatize and privatize state-owned enterprises” — Mr. Bremer’s words, not the reporter’s — and to “wean people from the idea the state supports everything.”

The story of the privatization-obsessed Coalition Provisional Authority was the centerpiece of Naomi Klein’s best-selling book “The Shock Doctrine,” which argued that it was part of a broader pattern. From Chile in the 1970s onward, she suggested, right-wing ideologues have exploited crises to push through an agenda that has nothing to do with resolving those crises, and everything to do with imposing their vision of a harsher, more unequal, less democratic society.

Which brings us to Wisconsin 2011, where the shock doctrine is on full display.

In recent weeks, Madison has been the scene of large demonstrations against the governor’s budget bill, which would deny collective-bargaining rights to public-sector workers. Gov. Scott Walker claims that he needs to pass his bill to deal with the state’s fiscal problems. But his attack on unions has nothing to do with the budget. In fact, those unions have already indicated their willingness to make substantial financial concessions — an offer the governor has rejected.

What’s happening in Wisconsin is, instead, a power grab — an attempt to exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy. And the power grab goes beyond union-busting. The bill in question is 144 pages long, and there are some extraordinary things hidden deep inside.

For example, the bill includes language that would allow officials appointed by the governor to make sweeping cuts in health coverage for low-income families without having to go through the normal legislative process.

And then there’s this: “Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state-owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).”

What’s that about? The state of Wisconsin owns a number of plants supplying heating, cooling, and electricity to state-run facilities (like the University of Wisconsin). The language in the budget bill would, in effect, let the governor privatize any or all of these facilities at whim. Not only that, he could sell them, without taking bids, to anyone he chooses. And note that any such sale would, by definition, be “considered to be in the public interest.”

If this sounds to you like a perfect setup for cronyism and profiteering — remember those missing billions in Iraq? — you’re not alone. Indeed, there are enough suspicious minds out there that Koch Industries, owned by the billionaire brothers who are playing such a large role in Mr. Walker’s anti-union push, felt compelled to issue a denial that it’s interested in purchasing any of those power plants. Are you reassured?

The good news from Wisconsin is that the upsurge of public outrage — aided by the maneuvering of Democrats in the State Senate, who absented themselves to deny Republicans a quorum — has slowed the bum’s rush. If Mr. Walker’s plan was to push his bill through before anyone had a chance to realize his true goals, that plan has been foiled. And events in Wisconsin may have given pause to other Republican governors, who seem to be backing off similar moves.

But don’t expect either Mr. Walker or the rest of his party to change those goals. Union-busting and privatization remain G.O.P. priorities, and the party will continue its efforts to smuggle those priorities through in the name of balanced budgets.

Where’s Obama?

The President is missing. Could we get the candidate back?

The concerted effort to eliminate collective bargaining rights has spread well beyond Wisconsin.  So have the protests. Reports have protests in 38 state capitols this week, including even Montana. Heck, even the protesters in Cairo are expressing support and solidarity with the workers in Wisconsin. But there’s a giant gap in the protester lines.  President Obama is staying out of it. Apparently President Obama doesn’t have a strong opinion on workers’ bargaining rights.  Interesting because candidate Obama had a strong opinion and made a strong promise:

 

Observations on Wisconsin

I’m noticing that the media is being somewhat slow to pickup on the real story happening in Wisconsin and not spreading to Indiana and Ohio. It’s not about fixing state deficits or finances. It’s about busting unions, pure and simple.  As such, it’s part of an long-term effort that the right wing of American politics has been pursuing since the late 1960’s to increase the share of GDP that goes to profits and elite investors and to reduce the share of GDP/national income that goes to the middle class/working class.

Steven Pearlstein of the Washington Post is starting to get it, though:

The last time any elected leader made such a direct and brazen attack on the legitimacy of the union movement was when Ronald Reagan risked havoc in the skies by firing hundreds of striking air-traffic controllers and preventing them from ever getting their jobs back. This dramatic bit of union-busting became a turning point from which organized labor never really recovered – and, like the Wisconsin imbroglio, skillfully played off resentment of public employees whose pay and benefits exceed that of the average taxpayer.

But rather than playing Reagan to Wisconsin’s truant teachers, Walker overreached, refusing to give up his union-busting even after the unions agreed to his benefit-cutting demands. Now that he has allowed the unions to reframe the issue from one of greedy public servants to one of political revenge, Walker has single-handedly succeeded in bringing more attention, unity and sympathy to the union movement than it has had since . . . well, since Ronald Reagan took on the control tower. A mischievous columnist might even take this opportunity to speculate whether this is the beginning of the revival of labor’s fortunes

Pearlstein also observes how all the conservative talk about “running government like a business” is pure nonsense.  No sane business leader interested in building a long-term successful business would approach workers this way, something I can attest to from my own corporate and consulting experiences:

Back when I was working at Inc. magazine in the mid-1980s, we loved nothing better when approaching a public-sector issue than to ask how the private sector would handle it. Faced with the situation in Wisconsin, we would have called up Tom Peters or Peter Drucker and posed the example of a new chief executive brought in by the shareholders (i.e., the voters) to rescue a company suffering from operating losses (budget deficit) and declining sales (jobs). Invariably, they would have recommended sitting down with employees, explaining the short-and long-term economic challenges and working with them to improve productivity and product quality in a way that benefits both shareholders and employees.

Now compare that with how Wisconsin’s new chief executive handled the situation: Impose an across-the-board pay cut and tell employees neither they nor their representative will ever again have a say in how things will be run or get a pay raise in excess of inflation. A great way to start things off with the staff, don’t you think? Remember that the next time you hear some Republican bellyaching at the Rotary lunch about why government should be run more like a business.

This situation, both the efforts to bust the unions and the protests, which started in Wisconsin but has spread will, I think be a major turning point in U.S. political economy.  It’s too early to tell if which way things turn.  It could spell a determined u-turn back to the early 20th century and worse working conditions and wages share of GDP/GNI, or it could be the beginning of the reversal of the 1970’s-1980 conservative revolution (is that an oxymoron?)  and a return to progressive values.  Too early to tell.

 

Why Collective Bargaining Is Necessary

Collective bargaining and unions are necessary and beneficial to society, even for those who are not members of the society.  It’s not because unions are always in the right or that the positions they espouse are always the best  They aren’t. But then neither are the positions or policies of large corporations, or churches, or the military, or the either  Republican or Democratic parties or administrations.  Unions are needed for two reasons.

First, they provide an offset to concentrated power of very large employers.  This is called countervailing power, an idea first put forth and made famous by John Kenneth Galbreath. Governments can be very, very large employers. As such, governments possess a disproportionate bargaining power against individuals employees.  Unions balance the scale.  It is interesting, that even with unions, government employees are lower-compensated than comparable private-sector employees.

The first reason is of interest to those employees who are represented by unions. But the larger society benefits too.  Government listens to wealth. Supposedly government in a democracy is supposed to listen to the voters, the people. But when income and wealth inequality becomes too disparate and the nation or state too big, the wealthy can control the voting. They can do this by controlling and influencing media which controls and guides what the people know and think. The wealthy raise the bar on how much money it takes to campaign.  Then only rich or the -willing-to-do-as-the-rich-say candidates get on the ballot.  The result is oligarchy. Rule by the wealthy elite.

I’ll let two others explain in more detail.  First, it’s Kevin Drum from Mother Jones:

Every single human institution or organization of any size has its bad points. Corporations certainly do. The military does. Organized religion does. Academia does. The media does. The financial industry sure as hell does. But with the exception of a few extremists here and there, nobody uses this as an excuse to suggest that these institutions are hopelessly corrupt and should cease existing. Rather, it’s used as fodder for regulatory proposals or as an argument that every right-thinking person should fight these institutions on some particular issue. Corporations should or shouldn’t be rewarded for outsourcing jobs. Academics do or don’t deserve more state funding. The financial industry should or shouldn’t be required to trade credit derivatives on public exchanges.

Unions are the most common big exception to this rule. Sure, conservatives will take whatever chance they can to rein them in, regulate them, make it nearly impossible for them to organize new workplaces. But they also routinely argue that labor unions simply shouldn’t exist. This is what’s happening in Wisconsin: Gov. Scott Walker isn’t satisfied with merely negotiating concessions from public sector unions. He wants to effectively ban collective bargaining and all but do away with public sector unions completely.

Nobody should buy this. Of course unions have pathologies. Every big human institution does. And anyone who thinks they’re on the wrong side of an issue should fight it out with them. But unions are also the only large-scale movement left in America that persistently acts as a countervailing power against corporate power. They’re the only large-scale movement left that persistently acts in the economic interests of the middle class.

So sure: go ahead and fight the teachers unions on charter schools. Go ahead and insist that public sector unions in Wisconsin need to take pay and benefit cuts if that’s what you believe. Go ahead and rail against Davis-Bacon. It’s a free country.

But the decline of unions over the past few decades has left corporations and the rich with essentially no powerful opposition. No matter what doubts you might have about unions and their role in the economy, never forget that destroying them destroys the only real organized check on the power of the business community in America. If the last 30 years haven’t made that clear, I don’t know what will.

Next we’ve got Paul Krugman at the New York Times:

Tellingly, some workers — namely, those who tend to be Republican-leaning — are exempted from the ban; it’s as if Mr. Walker were flaunting the political nature of his actions.

Why bust the unions? As I said, it has nothing to do with helping Wisconsin deal with its current fiscal crisis. Nor is it likely to help the state’s budget prospects even in the long run: contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there’s not much room for further pay squeezes.

So it’s not about the budget; it’s about the power.

In principle, every American citizen has an equal say in our political process. In practice, of course, some of us are more equal than others. Billionaires can field armies of lobbyists; they can finance think tanks that put the desired spin on policy issues; they can funnel cash to politicians with sympathetic views (as the Koch brothers did in the case of Mr. Walker). On paper, we’re a one-person-one-vote nation; in reality, we’re more than a bit of an oligarchy, in which a handful of wealthy people dominate.

Given this reality, it’s important to have institutions that can act as counterweights to the power of big money. And unions are among the most important of these institutions.

You don’t have to love unions, you don’t have to believe that their policy positions are always right, to recognize that they’re among the few influential players in our political system representing the interests of middle- and working-class Americans, as opposed to the wealthy. Indeed, if America has become more oligarchic and less democratic over the last 30 years — which it has — that’s to an important extent due to the decline of private-sector unions.

And now Mr. Walker and his backers are trying to get rid of public-sector unions, too.

There’s a bitter irony here. The fiscal crisis in Wisconsin, as in other states, was largely caused by the increasing power of America’s oligarchy. After all, it was superwealthy players, not the general public, who pushed for financial deregulation and thereby set the stage for the economic crisis of 2008-9, a crisis whose aftermath is the main reason for the current budget crunch. And now the political right is trying to exploit that very crisis, using it to remove one of the few remaining checks on oligarchic influence.

So will the attack on unions succeed? I don’t know. But anyone who cares about retaining government of the people by the people should hope that it doesn’t.