Another Worm Turns

 | 

I have reflected before on the pivotal battle fought by Republican governor Scott Walker in Wisconsin to modify the collective bargaining rights of most public employees. Despite an unprecedentedly brutal fight, with union-backed Democrat legislators fleeing to a different state to deny the Republicans a quorum, an extraordinary anti-Walker and anti-Republican propaganda blitz bankrolled by the unions, massive demonstrations organized and also bankrolled by them, Walker and the Republican legislators succeeded in pushing through their reform bill.

The unions then doubled down, running a multi-million dollar campaign to replace an independent state supreme court judge with a union stooge committed to nullifying the law. That failed, and the unions were stunned. They have seldom met with such abject failure before; the experience is beyond ken, and their ability to comprehend.

Now another blow to union domination has been struck in of all places — Massachusetts!

Yes, lawmakers in the Massachusetts House of Representatives have voted to cut back municipal employees’ ability to bargain collectively for healthcare benefits. (The Massachusetts bill, by the way, includes the police. It thus goes farther than the Wisconsin law, which exempted police and firefighters from the new rules). And they did so by an almost 3-to-1 margin.

In particular, the law would give local authorities (such as mayors) of the more than 350 cities in the state the power to modify municipal employee healthcare benefits, such as by setting deductibles and copayments. The unions are pushing an alternative: if municipal officials and municipal union negotiators cannot reach an agreement, the dispute will go to binding arbitration. This is a common union ploy. Unions know that arbitrators don’t have to face the electorate, and don’t have to balance budgets, either.

Even more remarkable is the fact that the move to rein in Massachusetts’ public employee unions was and is led in great part by Democrats. This is the most dramatic illustration of a growing split in the Democratic Party coalition: more and more Democrats are seeing that their cherished progressive programs are being defunded by the boundless greed of the public employee unions, bogarting all the tax revenues collected by the progressive states. In the case of Massachusetts, healthcare benefits for municipal workers have more than doubled in a decade. And the compensation packages (pay, pension, and healthcare benefits) for municipal workers are consuming about three-quarters of the average municipal budget.

As in Wisconsin, the unions fought viciously to stop the bill they did not want, but to no avail. And shocked they were at the turn of the worm. Robert Haynes, head of the Massachusetts’ AFL-CIO (which represents over 175,000 municipal employees), squawked, “It’s pretty stunning. These are the same Democrats that all these labor unions elected. The same Democrats who we contributed to in their campaigns. The same Democrats who tell us over and over again they’re with us, that they believe in collective bargaining, that they believe in unions. . . .” You can just hear his outrage: dammit, in the good old days, when you bought off politicians, they stayed bought!

Haynes vowed that the unions would keep fighting the reforms to “the bitter end,” and that the union myrmidons would target those renegade Democrats as surely as they target Republicans. His union is planning to expand its demonstrations, bringing in police and firefighters to participate, increase the ads run, and increase the lobbying.

Speaker of the House Robert DeLeo, a Democrat, offered a couple of large concessions to the unions and to members of his own party who are frightened by the unions. The first would give public employees 30 days to argue against proposed changes in their healthcare plans (though without the power to stop the changes), and would give union members 20% of any savings for the first year from contested healthcare changes that local officials impose. (Considering that the bill will likely save taxpayers $100 million a year, this is a pretty good deal.) The proposal brings the bill closer to what Governor Deval Patrick has himself offered. But the unions are still opposed.

It is unclear whether the bill will make it through the Massachusetts Senate, and if it does, whether Patrick will sign it. He is a very progressive liberal Democrat, but his state faces a nearly $2 billion deficit.

However, the win in the Massachusetts House is already telling. It says that we are coming to the place where voters are no longer ignorant of how much the public employee unions have been ripping them off. This awareness is only beginning to grow. It will accelerate quickly as the retirement of the Boomers brings to light just what massive fiscal frauds the employee unions have committed, and as people see their social services begin to crumble.

It also says that there is a limit to how long Democrats will do the unions’ bidding. Under public choice theory, we assume that all actors in the political process (voters, special interest groups, and politicians) are motivated primarily by self-interest. The politician wants to be reelected, and he knows that in most situations, the public isn’t paying attention to what laws are being enacted, while the special interests, such as unions, are. So it makes sense to screw the voters in exchange for special interest financial support. But when the public is aware and concerned, the politician knows that special interest money won’t compensate for the lost votes. In such cases, where voters are no longer rationally ignorant, the politician will be forced to defy the special interests.

We may be reaching that point.




Share This


Causes and Consequences of the Great Election

 | 

With the Republicans scoring a decisive victory in the Nov. 2 election, the salient questions are: why did it happen, and what effect if any will it have on this country’s governance?

Let me amplify my remark that the Republicans scored a decisive win. As of this writing, the GOP has gained a net of 61 House seats, with the possibility of picking up more (as close races get sorted out). This is the greatest gain in House seats in 60 years. The Republicans have taken a net of six senatorial seats; and they have netted six, possibly seven, governorships. Flying under the mainstream media radar, but hugely consequential, is the net gain of 20 state legislatures and about 700 state legislative seats — consequential, because the state governors and legislators have great redistricting power, and redistricting will necessarily follow the 2010 census. There is just no way to spin away the fact that this was a severe pounding for Obama's party.

For all their mistakes, the Republicans, like hedgehogs, got the one big thing right: they made the election a referendum on Obama and his policies.

So why did the Republicans score such a victory? Several factors are important. To begin with, Obama’s two years in office have revealed him as a narrow-minded leftist ideologue, and a shallow-thinking one at that, who lied about all manner of things. His foreign policy failures have been exceeded only by his domestic policy failures, making him already appear worse than Jimmy Carter, in only a fraction of the time it took Carter to reveal himself as bad. After two years in office, Obama's habit of whining about everything being Bush’s fault rings especially hollow.

For all their mistakes, the Republicans, like hedgehogs, got the one big thing right: they made the election a referendum on Obama and his policies, and the voters responded accordingly.

And there is the undeniable role played by the populist Tea Party organization. This loosely-knit group of populists consists mainly of people discontented about the fiscally ruinous policies that the Troika of Obama, Reid, and Pelosi implemented. The tea partiers brought enthusiasm to the election cycle, and they rightly saw the need to get rid of RINOs such as Mike Castle and Lisa Murkowski. For this they deserve praise. My major criticism is that they stink at vetting candidates — they chose some whose backgrounds were shaky at best (such as Christine O’Donnell, Sharron Angle, and Carl Paladino). Angle, for instance (a candidate whom I reluctantly supported financially), proved to be not exactly a polished public speaker. She lost to Reid in what should have been an easy pickup.

I generally support groups that are unafraid to challenge liberal or overly “moderate” Republicans in primary contests. I'm thinking of such organizations as the Club for Growth, which helped to fund Pat Toomey’s defeat of Arlen Specter in the primary and Toomey’s victorious run for the Senate for Specter’s old seat. But going RINO hunting only makes sense when you have done your homework and identified outstanding candidates to replace the RINOs. Notable here was the Club for Growth’s support of the seasoned and powerfully articulate Marco Rubio — a man with a compelling life story. His candidacy was precisely the way to dump an unprincipled “moderate” hack such as Charlie Crist.

The Tea Partiers show the normal drawbacks of populists. I share their dislike of big government, but I don’t think that the traits of ignorance and passion sit well together. The Tea Party won’t go away, and I wouldn’t want it to; but some coherent thought about what is wrong with the government and what can be done to fix it would be useful. Interesting in this regard was a poll of Tea Party members, showing that 62% of them opposed cutting Medicare and Social Security.

Populists usually profess support for free market economics, but curiously oppose many of the practices that define the system.

I believe that passionate populism was the main reason why the election went the way it did. I also believe that anti-government sentiment will continue to grow, and that the passion we have witnessed so far will reach a public-choice tipping point regarding the welfare state. As the baby boomers age, the expenses of massive entitlement programs will rise inexorably. Ever increasing deficits will wreak havoc with our economy, and we will see repeated outbursts of anti-government populism.

But populism is a two-edged sword. Anti-government populism can get out the vote, but it is an incoherent position, containing within itself the seeds of its own incompetence. The populists hate political pros, and want only neophyte Mr. Smiths going to Washington. But that sets the stage for many more Carl Paladino meltdowns: the populists get charmed by a seemingly likeable outsider (someone who never held any political office, not even a freaking school board seat) and give him the primary victory over more established candidates, only to find numerous defects exposed in the main campaign.

Worse, populists usually profess support for free market economics, but curiously oppose many of the practices that define the system. For example, free market economists from Adam Smith on have stressed the importance of free trade. But populists on both the Left and the Right reject it, espousing a mercantilist philosophy that Smith fought hard to overturn centuries ago. Obama claims that he is creating jobs, but in stoutly opposing free trade, he ensures that job creation will remain lower than it would otherwise be. Many populists would do likewise.

Again, many populists (especially those of the Right) hate the free flow of labor, aka immigration; and the arguments they use make it clear that they are just as opposed to legal as to illegal immigration. They believe that immigrants cost large numbers of jobs, result in lower wages, and (this is usually directed at Latinos) that they refuse to assimilate. Of course, if these ideas are sound — and I do not think that they are — then they argue against all immigration, legal or illegal.

Yet again, many populists (especially those of the Left) love government programs that supposedly help the working class. As I noted earlier, even the majority of Tea Partiers have passionate feelings for Medicare and Social Security. Indeed, Republicans made great hay of pointing out that Obamacare cuts $500 billion from Medicare. But let’s be honest: even without Obama's dramatic expansion of governmental healthcare and the comparatively modest expansion under Bush’s senior drug assistance program, the system of Medicare, Medicaid, and Social Security have been admitted to be unsustainable even by its own trustees.

The Republicans gained from the populist anti-government surge. But the question is what they will be able to do with it, and here I remain skeptical. What are the chances they will actually be able to repeal Obamacare? Rather small. And even if they did repeal it, would that solve the entitlement explosion built into Medicare, Medicaid, and Social Security? Certainly not. The dirty secret is that while people rage against big government, even tea partiers love certain government programs, at least until those programs explode.

And what are the chances the Republican House will be able to get America back on track towards free trade? Again, almost nil. As to the chances of the Republicans getting comprehensive immigration reform, one that insures a reasonable flow of labor to American business, well, these are completely nil also.

The Republicans will be able to do some modest good, such as stopping the proliferation of bailout and stimulus bills, and the creation of new entitlements. And I suspect they may save Bush’s tax cuts, including those for the wealthy. But the bankruptcy of the nation still looms. It is doubtful that, in the near term at least, Republicans can institute the radical changes that are needed to bring entitlement programs into sustainability, or to expand our free market economic system — slashing regulation, lowering corporate income taxes, reforming immigration, getting more free trade agreements enacted, and expanding free choice in education.




Share This


Google's Tax Dodge

 | 

Curiously, most of the money that computer and internet-related companies give to political causes goes to Democratic candidates. For example, of the $12.9 million the high-tech industry contributed to candidates in this election cycle, over two-thirds ($8.4 million) went to Democrats.

A particularly strange case is that of Marissa Mayer, a top executive at Google. She held a fundraiser at her mansion to help Democratic politicians. Guests paid over $30,000 each to attend. Obama was the star performer, and had nothing but praise for Google. Amazingly, he showed none of his usual business bashing. The intense love shown on both sides was deeply touching. Who would have thought that these captains of industry would support so staunchly a man committed to raising taxes on the rich?

Mayer was not unique in her support for our neo-socialist president — 75% of all donations by Google employees went to the Democrats.

Yet even as the Google crew partied with Obama, news surfaced showing that Google had used tricky strategies to pass most of its foreign profits through Ireland and the Netherlands to Bermuda. These strategies — with cute names like “Double Irish” and “Dutch Sandwich” — saved Google over $3 billion in taxes, lowering its effective overseas tax rate to a measly 2.4%.

So it is that even as key elements of Google’s management attempted to help elect the party devoted to raising taxes, especially on the hated rich, the corporation itself dodged taxes artfully. Pretty slick for a company that has the boastful motto, “Do no evil.” It should be, “Pay no taxes.” And while they’re at it, maybe the Google high-fliers should google-search the word “hypocrisy”...




Share This


The Lonely Lunch Bucket

 | 

Usually when one side in politics loses big, its defenders will deny that the people rejected their ideas.

Republicans said so in 2008 and partisans of the Democrats began saying so even before the election of 2010.

Here is Michael Lind, writing in Salon (November 2). He notes that the Democrats have joined other center-left parties in Germany, Italy, France, and Britain in electoral banishment.

The reason, he argues, is that all these parties “abandoned their traditional working-class constituents in order to woo bankers and professionals.” Instead of pushing for more social benefits and a higher minimum wage, they have embraced the market and refocused their progressivism on “non-economic causes like renewable energy, mass transit, the new urbanism, gay marriage, identity politics and promotion of amnesty for illegal immigrants.”

The Democrats have hardly given up on social benefits — see Obama’s health-insurance law — but they did go for renewable energy, gay marriage, etc., as Lind says. They do have pals on Wall Street — and more of them perhaps than they traditionally had (though even FDR had his Bernard Baruch). But imagine if the Democrats had defined themselves exclusively as a pro-union, lunch-bucket Hubert-Humphrey-and-Walter-Mondale party. They would have been even deeper in the woods than they already are.

The gist of Lind’s argument is that the Democrats are losing because they don’t have the courage and wisdom to agree with Michael Lind. That argument allows Lind to make the further claim that the people do agree with him. And some do. I know them — and they are feeling politically very lonely.




Share This
Syndicate content

© Copyright 2018 Liberty Foundation. All rights reserved.



Opinions expressed in Liberty are those of the authors and not necessarily those of the Liberty Foundation.

All letters to the editor are assumed to be for publication unless otherwise indicated.