Michael Maiello's picture

    Unions and Utopians

    The most ridiculous critique of civil service unions I've heard so far this week goes like this: "It isn't fair that the union members can vote for the people who will ultimately meet them on the other side of the negotiating table.  Even worse, the unions contribute money to campaigns and thus have undo influence over there negotiating partners in government."

    I wonder if these critics are also concerned that the Chamber of Commerce contributes money to elections and that its members vote.  If they are concerned about that, then by all means lets talk about public election financing and ending political contributions, including personal contributions from wealthy candidates to fund their own campaigns, entirely.

    But somehow I don't think these people are so worried about money as a corrupting force in politics -- just union money.  Because we all know that teachers and people who clean the town parks are way more corrupt than bankers.  You all recall the great $800 billion teacher bailout of 2008, right?

    I wrote more about unions for The Daily this week.  I actually focused on something the Wisconsin employees are willing to give on -- the sanctity of pension promises.  I really think the Wisconsin workers are making a financial mistake by giving on that, even if the politics make sense.  When you tell some one that you're going to pay them less now in exchange for deferred compensation later, which is all a pension really is, then you can't renege on the deferred comp as the bill comes due.  Private companies certainly don't.  Dick Cheney even received deferred compensation payments from Halliburton while he held public office and though his critics raised an eyebrow at it, everyone eventually agreed that Halliburton had made a promise and that Cheney had the right to collect on it.  Why do we hold teachers to a different standard than that?  And don't even get me started on AIG again.

    I'm reading a wonderful book about economists called The Worldly Philosophers by Robert L. Heilbroner.  It's a survey of the important economic philosophers that I frankly skipped over in college and had only learned about through reference and anecdote in the years that followed.  I'm on a chapter about 19th century social Utopians -- people who tried to build planned cooperative economic communities that would spare people the unhappiness of capitalism.  The author is respectful of these people but decidedly believes they are on the fringe and is more worried that his readers will think they're so fringe that the chapter may as well be skipped.

    He defends them like this: "They lived in a world that was not only harsh and cruel but that rationalized its cruelty under the guise of economic law."

    Surely, true.  But I still can't believe that such a smart contemporary scholar would write a sentence like that in the past tense.

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    Comments

    I remember that teacher bailout. I took my money and bought chalk. Good times.


    Union thug!


    All chalk, no action.


    Okay, smart guy. Some of the boys will be taking you behind the builidng to "clap the erasers."


    When you tell some one that you're going to pay them less now in exchange for deferred compensation later, which is all a pension really is, then you can't renege on the deferred comp as the bill comes due.  Private companies certainly don't.

    Private companies certainly don't?  You may want to recheck your sources on that statement.   Maybe ask the UAW about how GM (and maybe the other automakers as well) coerced them into taking over its unfunded liabilities in that area.  

    Also maybe check out a short history of the Pension Benefit Guaranty Corporation and how private companies use(d) bankruptucy to offload their long-term liabilities onto the federal government.  

    One other thing, about using Dick Cheney as an example of private companies fulfilling their deferred compensation promises:  unless laws have changed employers are allowed to provide different benefits to different classes of employees.  Officers and management often have much better and more secure benefits than the rank and file.  Then, too, you are talking about Dick Cheney whose "pension" from Halliburton was likely negotiated as part of his original compensation package.  Most people do not have that kind of clout going into a job.

    One last thing,  whenever you hear noise about problems with Social Security, you may want to check out what the noise is being made about private pension bailouts but be careful.   Sometimes it is just traders making noise to churn the bond market. 


    All good points, Emma.  At least in the GM reorganization, the unions who took on the pension costs were compensated with substantial equity in the new (and profitable for the first time in 7 years) company.  But that's because Obama got involved.  I didn't mean to be flip about private corporations keeping their promises to workers except to say that it whenever this "special class" of workers sees a promise threatened, everybody gets all sanctimonious about the importance of contracts.  Union contracts seem a level below and public union contracts one notch further down.


    Absolutely right.  A Frontline several years back went into detail on the machinations behind the United Airlines bankruptcy.  It was obvious the company's strategy, with the help of the US bankruptcy judge overseeing the proceedings, was to raid the employees pension fund in order to payoff secured creditors.  Of course, UA execs the n turned around and gave themselves huge bobuses for this decision.  But this was the first time I fully understaood how tenuous those promises of a defined retirement benefit are.   


    But brew, those executives deserved those bonuses.  Look how they turned around the company they destroyed!


    Ah, yes.  Who among us does not love late stage capitalism, US style?


    promises

    Sometimes it's extra easy to pick out the key word in a paragraph...

    (cf, "I am Roger II, pretender to the Visigoth throne")  (ed note: It is positively unkind to call the laid-off monarch the pretender....can't we find a less perjorative designation?)


    Great closing line Destor.


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