Wisconsin Rolls On (Over Workers)

In the dead of the night Republicans in Wisconsin vote to end collective bargaining rights of unions who were not supportive of Governor Walker’s election.  The state assembly (the lower house of the legislature) has acted while the Senate is adjourned. The Senate has been unable to convene for lack of a quorum. However, this is not exactly democracy in action. From AP News:

With the Senate immobilized, Assembly Republicans decided to act and convened the chamber Tuesday morning.

Democrats launched a filibuster, throwing out dozens of amendments and delivering rambling speeches. Each time Republicans tried to speed up the proceedings, Democrats rose from their seats and wailed that the GOP was stifling them.

Debate had gone on for 60 hours and 15 Democrats were still waiting to speak when the vote started around 1 a.m. Friday. Speaker Pro Tem Bill Kramer, R-Waukesha, opened the roll and closed it within seconds.

Democrats looked around, bewildered. Only 13 of the 38 Democratic members managed to vote in time

.

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:

 

Prank Phone Call Reveals the Real Wisconsin Governor

Governor Scott Walker in Wisconsin gets totally pranked and reveals a lot.  No, it’s not about the money. It’s about busting the unions and he’ll lie if he has to.  From Yves Smith, the author of Econned and a blogger extrordinaire  at naked capitalism :

The Beast’s “David Koch” Speaks to Wisconsin Governor Walker

I was alerted about and listened to this recorded phone conversation between a caller claiming to be David Koch and Walker a couple hours ago and did not post it then over concern that might not be real. However, the governor’s office has issued a press release attempting to defend the governor’s half of the conversation. Per reader Doug Smith, who pinged me about the official statement:

Here’s the press release from Walker’s office:

The Governor takes many calls everyday. Throughout this call the Governor maintained his appreciation for and commitment to civil discourse. He continued to say that the budget repair bill is about the budget. The phone call shows that the Governor says the same thing in private as he does in public and the lengths that others will go to disrupt the civil debate Wisconsin is having.

I listened to the full tape. Walker said nothing at all that would indicate his appreciation for civil discourse. For example, at one point he describes a gambit under consideration where he’d invite the 14 Senators to join him in a conversation. Walker says ‘not a negotiation, a conversation’. Then he goes on to describe the purpose of this conversation: if they can get the 14 into a room, the law may support the notion that the session has officially begun — at which point, even if the 14 leave again, the quorum for the session would be there and the Republicans can move forward with votes even in the absence of the 14 Dems. Walker says, he’d be happy to have the 14 ’scream at him for an hour’ if he could accomplish this legal tactic.

Civil discourse? Not a whiff of that in anything Walker said when he thought he was speaking to Koch.

Oh, at one point after “Koch” suggested Walker bring a baseball bat to the possible meeting, Walker did say “I’ve got on in my office. A Slugger”.

You can listen below:

 

 

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.

More On Wisconsin

So we’ve already established that Wisconsin Gov. Scott Walker is not trying to balance the budget or otherwise “fix” a deficit (see yesterday’s post).  In fact, the bill itself is going to result in more funding problems, not less.  Menzie Chinn shows us:

Another interesting implication for Wisconsin is that the transit systems would lose approximately $45 million in funds from the Federal government under Governor Walker’s bill. From “Walker proposal could result in $7.1 million cut in federal aid to Madison Metro Transit,” Wisconsin State Journal:

The state received $73.9 million in federal transit funding in 2010, including $22.5 million for the Milwaukee area and the $7.1 million for Madison, according to the memo.

About $27.3 million for the Milwaukee area likely would not be affected because Milwaukee County has a contract with a private corporation to run its transit services, the memo says.

But the remaining $46.6 million, including the funds for Madison, “could potentially be withheld” due to the governor’s proposal, it says.

This is because:

…federal law requires continuation of collective bargaining rights on wages, pensions, working conditions and other conditions to get federal transit money, according to a Legislative Fiscal Bureau memo.

The article observes “[t]he Walker administration did not respond to a phone call and e-mail.” regarding this issue.

Empirical question of the day: who [which income decile] relies the most on city bus systems in Wisconsin?

The bill stripping public employee unions of collective bargaining rights is a pure political power grab instead.  But now we learn that the bill itself isn’t based on some sort of reasoning that opposes theses unions on principle.  Instead, the bill appears to be pure and simple power pay-back at political opponents. It seems the bill exempts four particular public employee unions – the exact public employee unions that endorsed Scott Walker.  As church lady might say, Isn’t that special! How conveeenient!  From the WISC-TV newsite in Madison, Wisconsin:

Walker’s bill would strip state and local government employees, including teachers, custodians and game wardens, of their ability to collectively bargain everything except their wages.

But the measure carves out a special exemption for local police officers, firefighters and the Wisconsin State Patrol.

Critics said the move amounts to political payback for unions that support Walker and could create a schism between government workers.

During his campaign for governor, Walker was endorsed by the Wisconsin State Troopers, as well as the Milwaukee Police and Firefighters associations and the West Allis Professional Police.

In all, five public employee unions endorsed Walker, and four of the five are completely unharmed by Walker’s budget repair bill, WISC-TV reported. Walker has denied that the unions are getting political payback.

Apparently Governor Walker’s favoritism to unions who supported him isn’t being accepted very well. From the same article:

The executive board president of the Wisconsin Law Enforcement Association has issued a statement on the organization’s website expressing regret for the endorsement of Gov. Scott Walker in the governor’s race.

In a post dated Feb. 16, Tracy Fuller writes, “I am going to make an effort to speak for myself, and every member of the Wisconsin State Patrol when I say this … I specifically regret the endorsement of the Wisconsin Trooper’s Association for Gov. Scott Walker. I regret the governor’s decision to ‘endorse’ the troopers and inspectors of the Wisconsin State Patrol. I regret being the recipient of any of the perceived benefits provided by the governor’s anointing. I think everyone’s job and career is just as significant as the others. Everyone’s family is just as valuable as mine or any other persons, especially mine. Everyone’s needs are just as valuable. We are all great people!!” The full statement can be found at www.wlea.org. The executive board president of the Wisconsin Law Enforcement Association has issued a statement on the organization’s website expressing regret for the endorsement of Gov. Scott Walker in the governor’s race.

In a post dated Feb. 16, Tracy Fuller writes, “I am going to make an effort to speak for myself, and every member of the Wisconsin State Patrol when I say this … I specifically regret the endorsement of the Wisconsin Trooper’s Association for Gov. Scott Walker. I regret the governor’s decision to ‘endorse’ the troopers and inspectors of the Wisconsin State Patrol. I regret being the recipient of any of the perceived benefits provided by the governor’s anointing. I think everyone’s job and career is just as significant as the others. Everyone’s family is just as valuable as mine or any other persons, especially mine. Everyone’s needs are just as valuable. We are all great people!!” The full statement can be found at www.wlea.org.

So who’s really behind Governor Walker and his move to destroy collective bargaining for all but the those who support right-wing, Republican causes?  The Koch Brothers.  The same folks who supported the Tea Party movement with behind-the-scenes money. The same folks who funded opposition to healthcare. The same folks who own and make Georgia-Pacific paper products (might want to consider that on your next shopping trip).  From Mother Jones (and many other sources):

Wisconsin Republican Governor Scott Walker, whose bill to kill collective bargaining rights for public-sector unions has caused an uproar among state employees, might not be where he is today without the Koch brothers. Charles and David Koch are conservative titans of industry who have infamously used their vast wealth to undermine President Obama and fight legislation they detest, such as the cap-and-trade climate bill, the health care reform act, and the economic stimulus package. For years, the billionaires have made extensive political donations to Republican candidates across the country and have provided millions of dollars to astroturf right-wing organizations. Koch Industries’ political action committee has doled out more than $2.6 million to candidates. And one prominent beneficiary of the Koch brothers’ largess is Scott Walker.

According to Wisconsin campaign finance filings, Walker’s gubernatorial campaign received $43,000 from the Koch Industries PAC during the 2010 election. That donation was his campaign’s second-highest, behind $43,125 in contributions from housing and realtor groups in Wisconsin. The Koch’s PAC also helped Walker via a familiar and much-used politicial maneuver designed to allow donors to skirt campaign finance limits. The PAC gave $1 million to the Republican Governors Association, which in turn spent $65,000 on independent expenditures to support Walker. The RGA also spent a whopping $3.4 million on TV ads and mailers attacking Walker’s opponent, Milwaukee Mayor Tom Barrett. Walker ended up beating Barrett by 5 points. The Koch money, no doubt, helped greatly.

The Kochs also assisted Walker’s current GOP allies in the fight against the public-sector unions. Last year, Republicans took control of the both houses of the Wisconsin state legislature, which has made Walker’s assault on these unions possible. And according to data from the Wisconsin Democracy Campaign, the Koch Industries PAC spent $6,500 in support of 16 Wisconsin Republican state legislative candidates, who each won his or her election.

It is important to note that the Koch Brothers are not just funding their favorite candidate as an expression of their voting preferences. They are also using their large wealth in deceptive and sophisticated ways to get around legal limits on campaign contributions. Those limits exist so that everybody has at least some of a fair shot at influencing politics. Note too, the Koch Brothers fund a lot “astroturf” organizations – organizations that are named so as to appear nice-and-who-could-be-opposed, but in reality are trying to do things only in the interests of a few folks who know that truth and transparency would be fatal to their cause.  So why are the Koch Brothers funding Scott Walker and a lot of other right-wing conservatives and astroturf organizations? It’s about oligarchy. It’s about power for the rich and more profits. Which means in the end it’s about crushing the middle class. But I’ll tackle that subject in the next post here.

On Wisconsin

For those who are unaware, street protests have come to Wisconsin. Literally tens of thousands (a local Fox news affiliate admitted they numbered at least 70,000 on Saturday) for what is now at least 4 consecutive days of protests in Madison, Milwaukee, and other cities.  The issue that has brought them out is a proposal that recently elected Republican governor Scott Walker made and looked ready to jam through the Wisconsin legislature (Republican majority) without hearings was allegedly a deficit-reduction budget bill.  But the bill contained provisions to outlaw or severely curtail the rights of public employees to collective bargaining. It is an interesting situation. 52 years ago, in 1959, Wisconsin became the first state to allow unionization and collective bargaining by state and local employees. Now the governor wants to lead (?) by abolishing it.  For more on the protests in general see most any major news outlet.  Here are two reports: ABC News and CNN. This is a significant issue and possible turning point in American political economy.  The proposals to end public employee collective bargaining and the protests are spreading to other states such as Ohio, Indiana, Tennessee, and Nevada.

Most of the national news coverage is taking the governor’s claims at face value. In particular the assertion that the state faces a severe deficit, that public employees are “overpaid” and have too-rich benefits, that the only way to balance the budget is to cut benefits, and that only by ending collective bargaining can that happen.  As usual, the news media have failed.  The facts are otherwise.  I turn to Menzie Chinn, one of the country’s premier econometricians, who happens to be on the scene (he teaches at Univ Wisconsin Madison) for a few of his recent dispatches from the front.

First up, the governor had carefully planned this.  Including alerting the National Guard well over a week ago:

From The Isthmus:

The Wisconsin National Guard has not been activated but it is on alert.

“Plan for the worst, expect the best,” Gov. Scott Walker explained to a jam-packed press conference this morning in the State Capitol.

It was the official roll-out of his broad rollback of collective bargaining rights for unionized government employees, part of his budget repair bill, seeking to resolve a $150 million shortfall in the next five months.

Walker said he was well aware that “some union leaders will try to incite their members.”

Next, the governor and Republicans (and Fox news) are repeating ad nauseum the assertion that public workers, both in Wisconsin and in general, are overpaid and overcompensated when compared to the private sector.  The only studies I’ve seen that draw that conclusion are studies that compared the compensation per job of college-educated full-time public employees to non-educated part-time private sector employees.  Menzie Chinn (he is an econometrician) crunches the numbers and finds public workers are lower paid than comparable private sector employees:

Using the March 2010 CPS data, regression analysis controlling demographic characteristics (full-time, education, years of economic experience, gender, race, citizenship, and organizational size) confirms that total hourly compensation for Wisconsin public sector workers is 4.8% lower than for private sector (-5.1% for Wisconsin State workers, and -4.7% for local government). The differentials are bigger for annual compensation. These estimated differentials are statistically significant, as shown in Table 4. (graphs and tables at the link)

On Friday, the unions called the governor’s bluff.  They proposed to accept the benefit cuts (the financial part) if the governor would give up on the ending collective bargaining. Again Menzie reports:

From Milwaukee Sentinel Journal:

…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.

If the governor has rejected this proposal, then it is clearly NOT about the money or the alleged deficit.  It is about power and breaking unions. It is interesting then that the governor, whose real intent is now clear (break the unions) did not try to propose and argue a change in collective bargaining on any merits of it’s own. Instead, he claimed it was necessary because of money, not because he wanted to argue the inherent rightness or desirability of ending collective bargaining. It is not surprising then that we find that even the claim of deficit and the necessity of trimming state spending was false.  In fact, while Wisconsin faces some deficit – with 9% national unemployment, all levels of government are short of revenue, it was in relatively good shape until Scott Walker came into office as governor in January.  Among Walker and his legislature’s first actions in January were to make the deficit worse by giving tax breaks to special corporate interests. The Cap Times reports how “Walker gins up crisis to reward his cronies”.  It turns out that the $137 million deficit Walker claims is the reason for breaking the unions, is actually the result of the $140 million dollar special interest tax breaks bill passed by Walker and his Republicans. As recently as January 31, the state of Wisconsin was forecasted to end the year with a surplus, not a deficit.

How this all turns out will, I think, have significant repercussions beyond Wisconsin.  The governor of Wisconsin has even managed to anger the Super-bowl champion Green Bay Packers.  I don’t think that’s a good move in the cheese state.