Tuesday, September 7, 2010

Those Damn Unions

The latest manifestation of escalating social acrimony is in the form of union bashing, especially public sector unions. Certain blogs and far right journalists have taken upon themselves to launch a vindictive crusade against a sector of the economy that is the last bastion of the American Middle Class. We've hollowed out the private sector middles class, so why not get to work on the public sector as well? Amazingly and appallingly, these "journalists" (to the extent such a profession still exists) and bloggers who attack the public sector unions are seeking to blame the sorry state of the economy on organized labour.

I am not a union member, never have been in one and do not personally have use for one. That said, to blame the perceived or real union bureaucratic inefficiencies in any way for this current economic debacle is absolute and total disinformation. Basic commonsense indicates that the incidence of some nurses, teachers and police officers earning $100k/year after 25 years of service is not at the root of this economic disaster. I fully understand that state and local governments are de facto bankrupt. After all, I predicted that scenario 3 years ago and I am constantly amazed that so few have officially declared bankruptcy at this juncture. Therefore, I also understand that public sector unions will no doubt bear their share of the economic pain, however, that does not mean that they share a proportionate share of the blame for this ongoing fiasco, nor should we think that adding more job losses and salary cuts is going to fix the economy.

Here are a few facts to correct the purveyors of this line of bullshit:

1) Unions and their members did not create the Subprime/financial debacle

Remember, that was Wall Street and their well heeled minions who on average make as much in a month as the average American family earns in a year. That's a lot of pay for adding exactly zero value to the economy and yet being permitted to fuck it (the economy) up all at the same time. Wall Street made tens of billions securitizing garbage loans of all types and then stuck the American Tax Payer with the clean-up bill of roughly $11 trillion. How much is $11 trillion dollars you ask? Well, it's enough to pay all 6 million teachers in the U.S. $60k per year for the next 30 years ! i.e. according to the union-bashing bloggers, we can't afford to pay teachers, but Wall Street can get the equivalent of 30 years of teacher salary basically overnight. Is this a great system or what ! There are some serial disinformers who think that $11 trillion is way overestimated because it includes all of the "assets" (shitty loans) that the Federal Reserve purchased and will eventually sell back to the markets. Ok, whatever...I happen to own this bridge over here...

2) Public sector union members make more money than the average worker: This became true only very recently, since for most of U.S. history it was the other way around. This "crossover" in pay scales is more a function of declining private sector pay as it is from rising public sector pay.

Total (private/public sector) union membership has declined steadily for the past 60 years from a peak of around 36% in 1945 to where it is now at around 12%. During this time, public sector union membership has actually risen from 10% to 36% i.e. public sector union membership is the last holdout of what's left of the American Middle Class. Those who decry "high" union wages apparently want public sector employees to suffer the same fate as their private sector brethren i.e. outsourcing, relentless job turnover/job insecurity and stagnant or declining wages. Contrary to popular assertions, forcing all Americans to have their pay checks slashed in half is not going to fix the economy. Back in the Roaring '90s when Dot Coms were all the rage and many private sector employees were enjoying the fruits of their stock options and bonuses, I don't recall too many people wanting to become a teacher at a $30k/year starting salary. Now that the shoe is on the other foot, public sector employees who have been steadfastly working with little or no upside relative to the economy will be obliged to share in the economic pain of the private sector i.e. no upside, all downside.

3) Public Sector Unions did not outsource millions of jobs to China and India and otherwise liquidate the private sector middle class.

Remember, that was the country-club salesmen CEOs (at the behest of Wall Street), who knew nothing about engineering or manufacturing and took the easy way out by handing all of this country's IC (Intellectual Capital) to America's competitors.

Now we have official unemployment stuck at 10% (unofficially at 16%) with absolutely no sign whatsoever of robust job creation on the horizon. Total debt equating to 350% of GDP is just too big a burden to offset, despite having thrown unprecedented fiscal and monetary stimulus at the economy - way beyond anything attempted during the Great Depression ! So, you can full well expect that unemployment will only continue to rise inexorably from here.

I have said it before and will say it again, any country that trades openly with nations that do not have a labour or environmental standard, will itself substantially degrade its own labour and environmental standards. That my friends is called industrial arbitrage.

Again, I personally don't care about unions, but behind these big bad unions are every day people trying to make ends meet, who do not need to be vilified by half-baked bloggers and pseudo-journalists who are just redirecting vast bottomless reservoirs of rage at the last vestige of the middle class.