Suggests? (Public Unions Must Go!)
The Market Ticker ® - Commentary on The Capital Markets
Posted 2012-06-10 12:34
by Karl Denninger
in Politics
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Suggests? (Public Unions Must Go!)
 

It's time folks.

On the heels of Wisconsin Gov. Scott Walker's history-making recall victory,  the governor of nearby Indiana with his own record of curtailing union benefits  suggested public-sector unions are past their prime and should be abolished.   

"I think, really, government works better without them," Indiana Gov. Mitch  Daniels told "Fox News Sunday," when asked whether public-worker unions should  even exist.

Public unions are inherently a scam.  Since they effectively sit on both sides of the table, as they are part of the people who elect management, there is no true adversarial process.

The AFL-CIO needs to go too.

She said the debate should focus on how the private sector can offer better  retirement benefits, not on how the public sector can offer fewer  benefits.

There is no such thing.  The simple fact of the matter is that you (all of us, to one degree or another) have lived a lie, born out of debt-financed leverage, and that what we (and they) tried to "achieve" is a ponzi scheme.

All of these schemes are public frauds as they rely on ever-higher amounts of debt to create "credit money" that is then spendable as if it was actual economic surplus.  But it is not and never can be, and for this reason all such attempts are doomed to fail.

It is long past the time where we must hold the fraudsters, including those who made promises like this that were never able to be kept, to public account for their acts.  Intentional and willful disregard for basic mathematical facts is not a mistake, it is fraud and it needs to be identified as such and then prosecuted.

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Wjkins
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I will raise my Sunday coffee mug,and drink to that!
Flappingeagle
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Quote:
Public unions are inherently a scam. Since they effectively sit on both sides of the table, as they are part of the people who elect management, there is no true adversarial process.


I agree with that statement 100%.

We have a faculty union here in PA that I either have to join or, pay 91% of the dues and then get no say in the process. A lose-lose proposition as far as I'm concerned. Also, good luck on getting promoted without being in the union.

Flap

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The January 2015 AMZN put at $130 (cost $4.25) will be a winner.
Marvinmartian
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Not saying you are wrong, KD, but this kind of fraud goes back centuries.

Example: Alexander Hamilton and the national debt.

The fledgling United States took on all the revolutionary war debt of the original Colonies. I dont know about all of his motives; but he was using indebitedness to inspire loyalty. Speculator cronies of his made a killing.

The speculation of bankers was one of the prime causes of Shay's Rebellion.

Not really different today; Spain the country has taken over the debt of the individual regions and municipalities.
Ghopper
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Bshj
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and it really does not matter does it? After all, if there is ever a financial problem, there is always a willing government to provide a bailout. Regardless as to what is said about what cannot be done or should not be done or even simple math, THAT future never arrives.
Widgeon
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The true bone-headed & wasteful decisions are made by the management & administration of the "public sector." Those "leaders" who are ineligible for "union membership" by virtue of their "leadership" positions. While it is true that the unions are of no use whatsoever as currently engaged, the true waste & fraud is occurring above the union's purview. I have generally supported "the unions" on the basis that there is really no one watching the "managers", "supervisors", and "administrators" in the public sector - except "the unions" to a very limited degree. When the unions are gone there will be no supervision or threat at all about disclosure of the misdeeds of public sector management. I mean really, Mitch Daniels? The facilitator of the the GW Bush budget frauds of the early 00's. He's definitely part of the corporato-fascist problem. All Mitch Daniels wants is more force behind is boot heal as he stands on or neck.

Still, yes, let's get rid of the unions so then the true blame can be visibly seen where it has always rested - w/ the entrenched and unaccountable "leadership" of the public sector agencies, writ large.

Noodleman
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It's an old game for sure. The unions buy off the politicians who negotiate the collective bargaining contracts that give the government workers golden pensions allowing them to retire @ age 50-55 with 80%-100%+ of their last paycheck. Meanwhile, the ones footing the bill must work to age 65-67 and collect a social security check that averages about $15 grand a year. As Karl mentioned - you got Dracula on one side of the table negotiating for the government workers and Frankenstein on the other negotiating on behalf of the taxpayers. Dracula asks for unlimited access to the local bloodbank and Frankenstein concedes. It's about as democratic as the activity you see taking place over in Syria. Nothing will change until it all collapses. The corruption is too ingrained and deep into the system.

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"Ammunition beats persuasion when you are looking for freedom." Will Rogers, 4 Nov 1879 - 15 Aug 1935

Abn0rmal
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The ironic thing is that over 90% of the members of public sector unions don't want to be in the union and we know that because when states change laws to make union dues voluntary less than 10% of the members choose to keep paying.

Irishblues
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While public union benefits need to be reformed, way too often the people pushing that message [KD isn't one of them] ignores the other side of the coin: fraud in the financial system committed on a massive scale, which not only goes unpunished but is implicitly encouraged. It would be nice to see Walker et. al. also go after that part - but sadly their next step usually turns to "God, gays, guns" under the banner of "freedom for all."
Noodleman
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Irish, I don't think anyone denies that the overall financial system is a racket. Particularly at this website. But the subject matter here is the public unions. And the corruption that goes on between the public unions and the poltical system to rake the taxpayers over the coals cannot be diminshed or downplayed by what goes on between Wall Street and the political system. The bankrupted pension funds are breaking the backs of the taxpayers on a local level - in county and state governments. And there can be no denying that. The claim that Frankenstein is bad - but not as bad a Dracula - is not an effective argument. All of them must be called out and called out hard.

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"Ammunition beats persuasion when you are looking for freedom." Will Rogers, 4 Nov 1879 - 15 Aug 1935

Quads4444
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The******of the taxpayers has hit a wall. That doesn't fly anymore.

So now they (the federal govt) just default to plan (B) which is borrow and/or print. If the credit markets don't accommodate the borrowing at low rates then you always have the FED able and willing to just print more money or accommodate more credit.

In Japan, taxes cover less than 50% of Govt spending. The rest is funded with debt.

Here in the US, taxes only cover 62% of Govt spending. The rest funded with debt.
Widgeon
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Essentially/Virtually 50% of all public sector employees are "in management" - that is, they do the "negotiating" w/ a unions and are not eligible to be union members because of their "management" positions.

For all the abuses, which 50% (managers viz union members) gets the bigger salary and sweeter retirement/pension deal? Which 50% decides what overpriced contractor to give your tax dollars to, maybe w/ an implicit understanding about future employment and opportunities? Which 50% has the motive & means to participate in fraud? Which 50% has un-accountably "negotiated" on "our" behalf?

Just saying, when the unions are removed the unaccountable 50% will not suddenly be "accountable." No, their opaqueness will have only been enhanced with predictable consequences.

Peterm99
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Your 50% number seems like total BS to me. I'd be interested to see a source for that.

Secondly, there are ways to make the currently unaccountable public sector employees accountable that do not involve continued taxpayer rape. Politicians need to be forced to stop kowtowing to the public sector employees/unions and institute performance accountability, cost controls, and the like into all areas of gov't employment. The private sector seems to have little problem implementing them fairly effectively in virtually all non-government-teat-sucking businesses.

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Mrbill
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Quote:
The private sector seems to have little problem implementing [accountability, cost controls] fairly effectively in virtually all non-government-teat-sucking businesses.


I would argue they don't do this effectively or in all places. They just have an automatic, unforgiving punishment when they skip this part and fail.

The public sector will likely never have that.
Pika-steph
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If anyone has any doubts who these union leaders actually work for, and how selfish they are, watch this interview from this morning:

http://video.foxnews.com/v/1682994074001....

The whole thing is worth watching. Both the guests have no good answer when asked point blank: In San Francisco, the Democrat mayor cut public union benefits in order to open 4 libraries, retain firefighters and police - "Isn't this better for the PEOPLE, than paying for exorbitant benefits beyond what is even available to equivalent private sector workers?"

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Mannfm11
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I agree public unions are a political scam. Especially in the local area, where turnout for elections is already low and it merely takes a group, like the employees of the city involved to pretty much elect a panel of politicians who agree to raise the pay of those very employees. This feature then allows for all the fat cats to get aboard this gravy train.

I believe I heard the other day the budget for the city of New York was $68 billion. That is what the budget of Texas is for nearly 2 years. That is about $7000 per person in NYC. In comparison, Plano, where I live has a budget, including capital improvement of a little over $400 million. The population of the city of 265,000 doubled the past 20 years, so there is still capital improvement going on. Plano is considered the safest city in the US, has the highest per capita income for a city over 200,000 and spends 1/5th per capita what NYC spends. There are no public unions in Texas.

http://www.plano.gov/Departments/Budget/....

This makes one wonder what the $5500 per capita extra costs in NYC are, who pays them and who gets them. Based on this budget, it appears they got $6.5 billion for the Federal government and $11 billion from the state. The NYC budget also includes nearly $20 billion for education, something not in the Plano budget.
http://www.nyc.gov/html/omb/downloads/pd....

The point here is that not all of this is paying for the cost of living in Mid town Manhattan or where ever the high dollar part of NYC is. Population density is about 30,000 per square mile, much of it concentrated on Manhattan. Density here is about 4000. Deducting education, we are down to triple the per capita costs. Where is the difference? I suspect public unions and crony capitalism are 2 of the main culprits. BTW, I didn't see any Federal grants

If local government is rigging labor costs to the benefit of the government workers, what else are they rigging? Look at both of these budgets and you see a lot of municipal debt. What are the fees? Who gets them? Who gets the construction contracts? What unions are brought in on these? Who is going to bail all this stuff out when it goes broke. NYC will be begging Congress in a few years and Plano might as well, as they show $43 million in interest expense.

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Peterm99
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Mrbill -

Point taken from your first two sentences.

However, I disagree with your last sentence. I believe that the same types of consequences that private sector employees are subject to need to be applied to public sector employees at all levels (lowest level janitor to highest level administrator) for failure to adhere to real performance standards, failure to stay within negotiated budgets, "waste, fraud, & abuse", etc., etc., just like in the private sector. Getting from here to there will be very difficult, but it is not impossible, IMO.

In theory, the elected politicians are ultimately responsible for "management" of all public employees and are answerable for quality of their management (or lack thereof) to the voters. Given the susceptibility of the electorate to be manipulated, it is this last level of accountability that will be the most difficult to achieve, IMO.

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". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwell’s imaginings falls into place." - Fred Reed
Mrbill
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What is the "or else"?

Do they lose their business, their equity and investment? Or do they just lose an election?

Even if voters hold them accountable after the fact, there's just not much downside to ****ing them in the meantime.

The revolving door welcomes all who loot the public.
Uppity_peasant
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Quote:
(AFL-CIO Deputy Chief of Staff Thea Lee) said the debate should focus on how the private sector can offer better retirement benefits, not on how the public sector can offer fewer benefits.


Gosh, that's easy, Thea:

Just allow the private sector to rob citizens at gunpoint for the extra pension money, and shoot or jail them if they resist.

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Peterm99
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Mrbill -

Obviously, it would require a complete rethink of the current system.

One option, IMO, is to change the compensation scheme for politicians to one of a very low base salary plus a "bonus" (with explicit long-term "clawback" provisions tied to regular, public, independent audit results, adverse court judgements, etc., etc.) Places like California would find it easier to implement these types of changes than others, because here we have the initiative process which allows an enraged populace to actually create new laws and change our Constitution completely independent of politicians. There are probably many other ways that could work.

As far as the "revolving door", something along the lines of a non-compete clause (as is currently used to prevent someone from obtaining certain types of employment after leaving a job) in a politician's employment contract might be made to work.

(I wrote in my previous post that it would be difficult!)

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". . . the Constitution has died, the economy welters in irreversible decline, we have perpetual war, all power lies in the hands of the executive, the police are supreme, and a surveillance beyond Orwell’s imaginings falls into place." - Fred Reed

Reason: grammar fixes
Mrbill
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I think what's important is that absent a large scale change there's no accountability or "or else" in the system.

I think the changes you describe are at least as large, but probably much larger than reducing the leverage public unions hold on the current system. As we can see, unions are being challenged but there's no progress on the greater politician accountability problem.
Dji
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Should be ALL UNIONS MUST GO fixed for ya Gen

Maybe we can export them to China and see how that works out for them

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Genesis
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I have no quarrel with private unions, provided management can fire them ALL collectively, just as they can strike collectively.

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Noodleman
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As someone who has worked in both the fed government and in the private sector -I can say without hesitation it was like the difference between night and day. There were guys in the government who I worked with who had work performance and disciplinary jackets as thick as a phone book - and the supervisors were unable to fire them due to their employment rights which entailed one appeal after another. The only one I recall getting fired was someone who lied on an expense voucher over hotel room charges and pocketed the difference between the claimed and actual room expense. But as far as work performance or disciplinary matters - repeated violations never ended in termination. And there were some real losers. On the flip side, in the private sector the employee got one warning for poor performance. He or she was put on 'goals', which was the last stop before the door. Insubordination got no warning at all, unless it was an unusual situation when another exec stepped in and overruled. As a result of these polar opposite employment conditions the productivity in each sector was as different as watching bees gather honey on a hot summer day to observing a sloth exhibit at the local zoo. The transformation from one to the other was eye opening and it took awhile to adjust.

The public unions are responsible for blessing public employment with bullet proof job security and driving down rates of productivity. It's human nature for workers to slack off on the job if they know they are protected from getting fired for substandard performance. And the irony of it all is that the public workers who hold much less risk in the employment arena are, on average, getting larger salaries and much bigger retirement packages than the ones who carry the most risk and must toe the line just to keep their jobs.

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"Ammunition beats persuasion when you are looking for freedom." Will Rogers, 4 Nov 1879 - 15 Aug 1935

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