George Will: Illinois home-care workers should not be forced into unions - The Washington Post

The Democratic Party is the party of government because it embraces a proposition it has done much to refute — that government is a nimble, skillful social engineer — and because government employees are a significant component of the party's base and of its financial support through government employees unions. Franklin Roosevelt, architect of the modern party, believed unionization would be inappropriate in the public sector. Today's party, however, aggressively uses government coercion to create supposed "government employees" from whom unions can extract money, some of it for the party.

On Tuesday, the Supreme Court will hear arguments about whether the Illinois government's policy of herding home-care workers into unions violates the workers' First Amendment rights. It does.

http://www.washingtonpost.com/opinions/george-will-illinois-home-care-workers-should-not-be-forced-into-unions/2014/01/17/c58bf068-7ed3-11e3-93c1-0e888170b723_story.html

Inspect In Safety?

Faced with the imminent bankruptcy of multiple railroads in the 1970s, Congress enacted a series of laws that made it easier for railroads to stay in business by deregulating freight rates and encouraging mergers.

In addition to dropping regulations, the government also reduced oversight of safety practices. The number of annual inspections has decreased, with some railroads undergoing no government inspection at all. With railroad inspectors stretched thin, railroads wind up being mostly self-policing.

The policy has worked for many railroads, as the industry-wide decline in accidents attests.

http://www.realclearpolicy.com/articles/2013/07/12/gone_galt_566.html

Unions make workers too expensive, railroads make their business operate by reducing crews, meaning railroads are less safe.  So, the only possible thing to do is to ... have government inspectors.  IOW - government begets more government.

Kill 'Em (Government Backed Unions) All

"Overheated rhetoric is a hallmark of every campaign season. But the GOP's and Romney's positions on labor and collective bargaining-from support for a federal union-weakening "right-to-work" law to eliminating most public-sector bargaining rights-are genuinely to the right of where they were even four years ago. With unions now accounting for less than 12 percent of the workforce (down from 36 percent in the 1950s), it is now possible to imagine a country devoid of labor power, replaced by a corporate vision of "employee empowerment and workplace flexibility," as the GOP 2012 platform puts it."

http://www.inthesetimes.com/article/14076/romneys_9_point_plan_to_kill_unions

Amazing. Unions make the GOP enemy number one, and the GOP reciprocates. Imagine that. Too bad Romney wasn't more vocal with this plan, I'd have been donating from way back. There are few things more destructive to Americans and workers specifically than unions backed by a coercive Federal monopoly.

Rights, Wrongs, Union Coercion

"Michigan would become the 24th right-to-work state and it could be the best thing to happen to its economy since the internal combustion engine. Michigan still has the nation's sixth highest state jobless rate at 9.1%, and it had one of the lowest rates of personal income growth between 1977 and 2011. A flood of economic evidence shows that right-to-work states have done better at attracting investment and jobs than have more heavily unionized states.  According to the West Michigan Policy Forum, of the 10 states with the highest rate of personal income growth, eight have right-to-work laws. Those numbers are driving a net migration from forced union states: Between 2000 and 2010, five million people moved to right-to-work states from compulsory union states.  Other policies (such as no income tax) play a role in such migration, so economist Richard Vedder tried to sort out the variables. In the 2010 Cato Journal, he wrote that "without exception" he found "a statistically significant positive relationship" between right to work and net migration.  Mr. Vedder also found a 23% higher rate of per capita income growth in right-to-work states. An analysis by the Taxpayers Protection Alliance finds that Michigan is now the 35th state in overall prosperity measured by per capita income. Had Michigan adopted a right-to-work law in 1977, the group estimates, per capita income for a family of four would have been $13,556 higher by 2008.  As impressive as all of this evidence is, the best case for right to work is moral: the right of an individual to choose."

http://online.wsj.com/article/SB1000142412788732340190457815745368760842
8.html?mod=WSJ_Opinion_LEADTop

A right to choose?  How's that going to fix social justice anyway?  Crazy talk.

Natural Consequences

The fact is that in the right-to-work states, unemployment is 6.9%. And in the other stays the non-right-to-work, it's 8.7. So you can choose to have fewer workers who enjoy higher, inflated, unnatural, if you like, wages, uncompetitive wages. Or you can have competitive wages and more people employed, more people with the dignity of a job and less unemployment, more taxation and more activity. I think it's it the right choice but I understand how it's a wrenching choice.
http://www.realclearpolitics.com/video/2012/12/11/krauthammer_right-to-work_an_adjustment_to_reality_.html

Who knows whether the "right to work" part makes it easier to have employment, or not; there are any number of other correlates that go with "RTW" states that may also be part of those states' relative superiority for employment opportunity. But what is not debatable is that RTW is not "bad" for workers - it just means that a union cannot require that you fork over money in order to be employed with a company which has a union. That means to earn your financial support, the union must behave in a way that you support. What could be more natural?

Unions offer the façade of "helping the worker", while in fact, they simply protect some workers at the expense of others. Unions help the workers in a union by preventing those on the outside from competing for a job based on their willingness to work for a lower wage or less costly benefits. The multiple unintended negative consequences of the Federal Government's coercive support of labor unions has hurt far more workers than it has helped.

Payback Is A ...

"On the private-sector side, one need look no further than the auto industry. Trying to preserve pay and benefit structures not sustainable since the 1960s, labor has wreaked havoc on Detroit, contributing to the need for the bailouts of General Motors and Chrysler.

"Something similar happened in the recent demise of Twinkies' maker Hostess. Its bakers union refused to recognize that the company was hemorrhaging money in an industry plagued by an excess in antiquated plants. The result is that 15,000 jobs have disappeared when some could have been saved.

"Public-sector unions, meanwhile, have all but declared war on the general public. In many cases, they have induced lawmakers to put their states and localities on a path to insolvency by approving massive, unfunded pension and retiree health care obligations. They are certain to pay a steeper price as taxpayers are forced to endure higher taxes or reduced services in the name of benefits that few get themselves."
http://www.usatoday.com/story/opinion/2012/12/12/union-right-to-work/1765439/

My limited experience with unions led me to believe they suffered all of the same flaws as other coercive political systems. People get elected to leadership roles by arousing the base instincts of the crowds; no one is elected to leadership of these organizations by asserting that "we don't know how good we have it."

Ultimately, "workers" will be better off without the government's coercive backing of unions; let's hope the day comes sooner, rather than later.

Public Sector Collective Bargaining - Hurts All

Walker's solution is the only way to regain sanity in public sector unions.  The hangover from prior unsustainable contracts is hurting everyone - except the politicians and union leaders that made the deals.

"In San Jose, where the average cost of employing a city worker, including benefits, has soared to an extraordinary $142,000 annually, Mayor Chuck Reed had to fight long and hard for a ballot measure to reduce pension costs that was passed by voters in June. In the three years before the vote, the city had to lay off about 2,000 employees and cut back on parks, libraries and other services.
In Stockton, which declared bankruptcy in June, for every dollar the city spent on salaries, it spent another dollar on employee benefits. Facing unsustainable employee costs and an intransigent police union that was demanding the city pay retired officers about $300,000 for unused sick and vacation time, Stockton cut a quarter of its public safety forces and still couldn't meet its obligations.
No wonder that state and local government employment slumped nearly 6% in California from the beginning of 2009 through the close of 2011. That's nearly double the rate of decline among state and municipal workers nationwide in the same period."
http://www.latimes.com/news/opinion/commentary/la-oe-malanga-wisconsin-california-bankruptcies-20120717,0,5879241.story

And it's not just in Cali:
"
Last year, New York City taxpayers put nearly $2.1 billion into the cops’ $24.7 billion pension fund to pay for future benefits — up from more than four-fold from the 1999-2000 average. (Cops’ own contributions are $207 million, but they pay only 9 percent of the total.)
If pension costs for cops had “only” doubled in a decade, we’d have an extra $1 billion a year — enough to hire at least 5,000 cops.
One problem is that the pension fund isn’t earning the magical returns expected of it. It’s supposed to generate 8 percent returns a year — but has managed just 5.76 percent annually over a decade."

Read more: http://www.nypost.com/p/news/opinion/opedcolumnists/pension_tension_the_crime_spike_uTj1WEOOpb45LkkKEQQLiN#ixzz20tPseDEh

Doubling Down On Union Perversion

Step One: state politicians promise big pension and health care benefits to their unionized work forces, but don’t set aside enough money to fund those benefits when the bill comes due. This makes union leaders and unions look good, because they can point to the shiny new benefits they have negotiated with the politicians. Meanwhile, it makes the politicians happy because the unions support them with contributions and volunteers at election time, but because the unions don’t insist on full funding for the benefits, the politicians don’t have to raise costs or otherwise disturb the big majority of voters who don’t work for the government.
http://blogs.the-american-interest.com/wrm/2012/06/25/time-to-occupy-the-pension-funds/

Regular federally backed unions are bad enough - they punish workers by preventing those workers inside the union from having to compete for their jobs against workers outside the union - even if those outside could do a better job, or do the same job for lower cost, or both.  Some win, some lose, but the coercive monopoly on labor chooses which gets the bad deal.

A government union doubles down on this perversion - it empowers some workers to use political rent seeking to get the state to coercively extract tax money from other workers - and other "non-workers" as well - to send to the union members.  How could this possibly be considered even remotely justifiable?

Let state workers do what everyone else does - come to work if they think the pay and benefits are worth the life energy that must be exchanged to gain those benefits.  Why would such a group of "public servants" need a union?  Work for the state or get a better job - that's not a formula for injustice to "workers" it's natural law and the human condition.

But that's not as bad as it gets - it also feeds our current state of crony capitalism, in which profits may be had by feeding the political cycle much like unions do; backscratching all around.

Pension reform is about more than cutting benefits to realistic levels, and ensuring that politicians and union leaders have to stop the collusive scams. It is also about enabling pension funds to invest in safer investments and stop paying huge fees to hedge fund managers and investment banks — and because public pension funds are such large pools of capital, this would be an effective way to help bring Wall Street back down to earth.

The conclusion:
This is not a pretty sight, and the whole mess is a strong argument for those who believe that “regulatory capture” means that a powerful government ends up serving the rich and well-connected rather than helping working and middle class Americans. Transforming what ought to be a safe and reliable pension system into a Wall Street boondoggle is exactly the kind of thing a serious labor movement would fight. That the public unions are in effect fighting to retain the “freedom” to put worker pension money in high risk, high fee assets is an indication of just how intellectually and politically bankrupt much of the American public sector labor movement has become.

Coercion Has Consequences

Unions once helped advance working conditions, but now union rules hurt workers because they stifle growth by making companies less flexible. When I arrived at CBS, I was stunned to discover that I couldn't even watch a video in a tape player without risking a grievance being filed by a union editor, saying I'd encroached on his job. Work ground to a halt while we waited for a union specialist to press the "on" button. ABC and CBS, being private businesses that had to compete, eventually got rid of those rules. But it took years.
Unions eventually hurt union workers because unionized companies atrophy. Non-union Toyota grew, while GM shrank. JetBlue Airlines blossomed, while unionized TWA and Pan Am went out of business. Unions "protect" workers all the way to the unemployment line.
http://www.realclearpolitics.com/articles/2012/05/30/improving_life_for_workers_114310.html

A union does one thing well - it allows a small group of people to prevent competition from other workers.  It provides a small group - those inside the union - a monopoly on labor.  It is nonsensical to think a monopoly backed by the coercive force of the government is going to help more than it hurts.

A money quote: 
Economic historian Robert Higgs joked that it will always be easier to rally politically inclined people behind unrealistic, revolutionary causes than to rally them around subtle economic progress, because no crowd marches behind a banner proclaiming, "Toward a Marginally Improved Society!"

What Happens After City Bankruptcy?

What happens when a city goes bankrupt?  The people who were going to benefit from the unsustainable contracts their unions negotiated get screwed.  This is another brick in the "why unions hurt workers" wall.

...young people were joyfully playing soccer in a park near the picturesque Blackstone River waterfall that gave this city its name. Older residents gathered on the spacious porches of their ancient Victorians or wooden triple-deckers, drinking beer and conversing in Spanish, Portuguese and sometimes English.
If any U.S. city was destined to go bankrupt, it was this one -- though Vallejo, Calif., beat it by three years. Like Vallejo, ruinous public-employee contracts sent Central Falls over the edge. Unlike the San Francisco suburb, Central Falls has a smaller, less economically diverse tax base. (The median household income is under $33,520 a year.) Its local government at the time of the bankruptcy filing was far more corrupt than Vallejo's.
On this thin tax base, Central Falls faced an annual deficit of $5 million and unfunded pension obligations of $80 million. For a long time, its police and firefighters could retire on full pensions after only 20 years of service. So even though their monthly payouts were not princely, workers could start collecting them -- and free health coverage for life -- while in their 40s. Bankruptcy lets a city tear up union contracts and start over.

http://www.realclearpolitics.com/articles/2011/08/09/this_is_what_happens_when_a_city_goes_bankrupt_110857.html

More Unions, Fewer Employed

But two other factors are omitted from this narrative. The first is the price of labor. The Wagner Act, the great modern labor statute, became law in 1935. It made possible the closed shop, under which only unionized workers were allowed into a unit. In 1937, after Roosevelt was safely elected, labor leader John L. Lewis and his Congress of Industrial Organizations began using their new power to its full extent. Labor's tour de force in this period is memorialized in the photos we still recognize today of sit-down strikes at the General Motors Co. plant in Flint, Michigan. Strike days in 1937 totaled 28 million, up from 14 million during the election year.
Such labor stoppages, and the threat of more, led companies to raise wages more than they could afford to. Harold Cole of the University of Pennsylvania and Lee Ohanian of the University of California, Los Angeles, have demonstrated that wages in the latter half of the 1930s were well above trend for the entire century. Employers also hired less: Even as unionization increased, nonfarm unemployment did as well.
http://www.bloomberg.com/news/2011-06-06/what-paul-krugman-misses-about-1937-redux-echoes.html

This is nothing but common sense.  Anything that makes it more expensive to employ workers makes it less likely they will be hired.  If I could get my lawn mowed for $1, I'd never mow it again - but right now, my son won't even mow for the price I'm willing to pay so he's unemployed and I burn up an hour of my week on a mower. 

This is the effect of unions - fewer workers making more money, for a while; and "after a while" those higher paid union workers get pushed out of the marketplace by workers who provide more productivity than do their union competitors.  Exception - government employees, who rarely have to compete and those from places like Boeing and the big, old automakers who are protected from the folly of their abusurd contracts by their ability to buy off politicians.

McArdle's Summary of the Greek Default Dominos

After she summarizes another author's post, she summarizes her thoughts:

The most compelling argument against my belief that the euro can't last is simply that it's so . . . damn . . . hard to get out.  The country that does it will suffer immensely.

On the other hand, people do snap their currency pegs when they're already suffering a great deal.  And while the PIIGS are suffering now, that's nothing compared to what will happen if their economies stay in the slough of despond, and the governments and central banks of more solvent countries run out of money and/or patience to continue the subsidies they're now receiving.  

I've only been writing about finance for seven years, and I've already watched a bunch of "unthinkable' and "impossible" actions, from Argentina's devaluation and serial defaults, to my own government nationalizing GM.  The unthinkable gets thunk surprisingly often.

http://www.theatlantic.com/business/archive/2011/06/what-a-greek-default-looks-like/239856/

This is the logical end of government control of an economy, as manifested through unions.  Guess who will be harmed the most?  Not the rich, they got out or covered their bets long ago.

Why Unions Are Bad For Workers

Cafe on Boeing

This case, the NRLB ruling that Boeing cannot build airplanes in a southern, right-to-work state, perfectly illustrates why unions are bad for workers and why they exist in the first place - to give some workers an advantage against other workers.  In this case, Washington based union members are given the benefit of no competition, not just against the non-union workers in their state which they've had for the life of Boeing, but also against the non-union workers in the Carolinas.  The idea that unions help workers is only possible to accept if you don't see who the workers are helped 'against' - other, non-union workers.