152

Understanding Wisconsin

The “Moonlight and Magnolias” strategy is based on the idea a competitive state is a low-tax, low-wage state


 

While we don’t know yet how the Wisconsin situation will end, I wanted to highlight what I think is one of the better pieces I’ve read about the whole thing: Ed Kilgore’s “Dixie Madison.” Kilgore is a moderate-to-liberal Southern Democrat who used to be policy director for the now-defunct (and very Southern-oriented) Democratic Leadership Council, and having been through all this before, he explains Scott Walker’s policies in the context of what governors and other legislatures have been doing for decades in the U.S. South. It’s the “Moonlight and Magnolias” strategy, which is partly ideological and partly pragmatic, and based on the idea that the best way for a state to be competitive is to be a low-tax, low-wage state.

So just as businesses move overseas to take advantage of the lower taxes, wages and regulations, businesses within a country may be tempted to move to the state that offers low taxes and a mostly non-union workforce (in the private sector, so labour is cheaper, and in the public sector, so taxes can be lower). As Kilgore notes, it’s unclear that this is actually the best strategy for increasing economic growth in a state, particularly in the long run. But that’s where ideology comes in as well, as Kilgore describes:

Why is this model of economic growth so appealing to the Tea Party? For one, it tends to jibe very well with the Ayn Randian belief in producerism: the idea that “job creators”—business owners—are the only source of economic growth in society, and that everyone else—the workers, government employees, and the poor—are just “useless eaters” shackling those who exercise individual initiative. While many Democrats are baffled by Scott Walker’s attack on the unions—shouldn’t he be focused on jobs rather than eliminating workers’ protections? they ask—the fact is that today’s conservatives believe this is the right and only way to create jobs… [The] conviction that rolling back the public sector, and in the process impoverishing the middle-class families that depend on its services, is essential to keep any costs low enough for corporations to work their magic.

Walker’s decision to strip most public employees (except policemen and firemen, because they’re Real Americans or something) of most collective bargaining rights came as a surprise to many people, who are used to thinking of non-Southern Republican governors as being more liberal than Southern Republicans — or, in some cases, even Southern Democrats. But as Ronald Brownstein points out in The Atlantic, the new crop of Republican governors, particularly those elected in the 2010 sweep, are very conservative; more than that, they are committed to the idea that certain types of investment in the state are not actually helpful, or that they’re traps to run up the state’s indebtedness to the federal government.

This doesn’t have much to do with fiscal responsibility and budgets per se, since they aren’t worried about balancing budgets (that’s a stereotype associated with the older breed of non-Southern Republican, who might cut spending while also raising taxes). They believe, instead, that the future of their states depends on lower taxes, less unionization and less regulation of business. Whatever you think about that, it can’t be explained just be mentioning corporate donors or the Koch Brothers, as some are doing. And it can’t be explained by reference to the Tea Party movement, which, as Joe Carter points out in the conservative publication First Things, essentially consists of traditional religious/economic activists under a different umbrella name. It’s just a sign that Republicans are getting more conservative — and, ideologically at least, more Southern — all over the U.S., and that the two parties continue to split along ideological lines.


 
Filed under:

Understanding Wisconsin

  1. Elections have consequences that just keep coming. The new crop of Republican governors are direct pushback from the results of 2008, and reaching a little further back, to the giggly, unserious adulation-masquerading-as-news-coverage that so many journalists worked so hard on to get Obama elected in the first place. The left pushed too far, and now it is a very realistic possibility that union-busting can be popularly supported in the backlash. How's that hope and change working out for you now?

    (Also, stick to TV, please.)

  2. Elections have consequences that just keep coming. The new crop of Republican governors are direct pushback from the results of 2008, and reaching a little further back, to the giggly, unserious adulation-masquerading-as-news-coverage that so many journalists worked so hard on to get Obama elected in the first place. The left pushed too far, and now it is a very realistic possibility that union-busting can be popularly supported in the backlash. How's that hope and change working out for you now?

    (Also, stick to TV, please.)

    • Oh I like this MUCH better than TV

  3. Please explain why a blog post on US politics is in "TV Guidance".

  4. Please explain why a blog post on US politics is in "TV Guidance".

    • "TV Guidance" originally started as a separate blog category on the site, before Blog Central started. I put all my posts in the "TV Guidance" category because that's the name of my blog, but when I have a change-of-pace post it does get confusing. I try not to do it too often though.

    • 1) because the other blogs on US politics are the standard village gossip.

      2) because US educational programming (Fox) is on …. TV ?

    • Please explain why a request is under "Comments".

      • Nice hat. Tell me, do you really keep a catheter under it?

        • There's a vaporizer and a fan. You can't see in the pic, but it's actually two feet high with an exhaust vent on top.

          • That's some fancy kit.

  5. "TV Guidance" originally started as a separate blog category on the site, before Blog Central started. I put all my posts in the "TV Guidance" category because that's the name of my blog, but when I have a change-of-pace post it does get confusing. I try not to do it too often though.

  6. Mmmm the race to the bottom is in full swing.

  7. Mmmm the race to the bottom is in full swing.

  8. 1) because the other blogs on US politics are the standard village gossip.

    2) because US educational programming (Fox) is on …. TV ?

  9. Oh I like this MUCH better than TV

  10. Please explain why a request is under "Comments".

  11. Of course, the laughable part is that you can't really do anything to stop collective bargaining. All you can do is stop making it easy for yourself.

    Consider: the members of the union, instead of "collectively" striking, all go to their managers individually, present a list of demands, and threaten to walk out on a certain day if those demands aren't met.

    Are they acting collectively? No, they're acting on their own, sure, the union may have sent out flyers suggesting the course of action to them, but it was up to them as individuals to decide to do it.

    How long before gov't figures out that it's a hell of a lot easier to deal with a couple of elected reps for the whole group, rather than each individual?

  12. Of course, the laughable part is that you can't really do anything to stop collective bargaining. All you can do is stop making it easy for yourself.

    Consider: the members of the union, instead of "collectively" striking, all go to their managers individually, present a list of demands, and threaten to walk out on a certain day if those demands aren't met.

    Are they acting collectively? No, they're acting on their own, sure, the union may have sent out flyers suggesting the course of action to them, but it was up to them as individuals to decide to do it.

    How long before gov't figures out that it's a hell of a lot easier to deal with a couple of elected reps for the whole group, rather than each individual?

  13. Nice hat. Tell me, do you really keep a catheter under it?

  14. Yet the governor had no problem making changes to the tax law to reduce taxation upon the favoured bracket, resulting in a loss of $117 million in revenue. No wonder he now has to stick it to the unions, there isn't any money left. It is a brilliant strategy… give away all the money to run the state so everybody has an equally miserable time (well, almost everybody, wink wink) with the added bonus that the Tea Party will now have extra terrible service from an unfunded government to re-enforce their bad opinion of government!

  15. Yet the governor had no problem making changes to the tax law to reduce taxation upon the favoured bracket, resulting in a loss of $117 million in revenue. No wonder he now has to stick it to the unions, there isn't any money left. It is a brilliant strategy… give away all the money to run the state so everybody has an equally miserable time (well, almost everybody, wink wink) with the added bonus that the Tea Party will now have extra terrible service from an unfunded government to re-enforce their bad opinion of government!

  16. Jaime Weinman is now carrying Blog Central. This may not be a bad thing.

  17. Jaime Weinman is now carrying Blog Central. This may not be a bad thing.

  18. There's a vaporizer and a fan. You can't see in the pic, but it's actually two feet high with an exhaust vent on top.

  19. Every anti-union complainer I've ever met is a freeloader. If they want higher wages for themselves they're free to go in to their boss and negotiate for it. And if they're dissatisfied with what they get, they're free to quit their job and look for a better one. But they've got no business sticking their noses into the financial arrangements of their neighbors. How's that?

  20. Every anti-union complainer I've ever met is a freeloader. If they want higher wages for themselves they're free to go in to their boss and negotiate for it. And if they're dissatisfied with what they get, they're free to quit their job and look for a better one. But they've got no business sticking their noses into the financial arrangements of their neighbors. How's that?

    • "But they've got no business sticking their noses into the financial arrangements of their neighbors."

      Except if they're paid for in taxpayer dollars.

      • If you want to pay less taxes, that's your personal responsibility to work out for yourself. Sink your income into funds or bonds or offshore companies or whatever people are doing this season, if it's that important to you. It'll be more direct and more effective, and you'll have the pride of being able to say you did it yourself for yourself.

        If you do that, great. But of course, most people who come out against unions don't do that. They hide behind elected officials who promise to "end the waste" that's allegedly produced by paying people enough to buy a home and send their kids to university without having to rack up a ton of debt. Somehow they imagine they'll be living in a better society once the bus driver has to bus to work because he or she can't afford to be a car owner anymore.

        Every registered business is eligible for tax breaks of one sort or another purely through virtue of being a registered business, and that subsidy comes from me as a taxpayer too. But I don't go to the owners and managers of those businesses and try to strongarm them into paying their employees less so that my personal tax bill can go down.

        The fact that government departments are not businesses does not axiomatically guarantee that the people who work for them are going to be treated well; unions generally don't occur in workplaces where people are already satisfied and feel valued. Why would happy workers being fairly dealt with choose to unionize? Far more frequent is when poorly treated workers don't unionize, for fear of how much worse things will get for them when the company outsources, downsizes, or otherwise displaces the ethical costs of doing business onto the backs of the least compensated members of their "team".

        When I as a private citizen am legally entitled to walk into any major bank or corporation and demand to see their books, then it'll also be the right time for the "government workers shouldn't be allowed to unionize" argument.

        • Sorry I wasn't going to read all that.

          I'm the taxpayer. I'm the boss of the public sector workers. If they are not willing to work for the wages we lay out then we will find someone who will. I do not choose to negotiate with public sector labour unions, because they are in it for themselves, whereas I am only looking for someone to provide services. If they want to charge obscene rates, fine, but I will then take my business elsewhere.

          Let government workers unionize. But I will not hire them.

          • Sorry I wasn't going to read all that.

            Cool, then we aren't having a conversation, which is much easier. I will eat cookies.

        • "When I as a private citizen am legally entitled to walk into any major bank or corporation and demand to see their books"

          Uh, why should you be able to? Do you own shares? Are you an employee? You might as well be entitled to see my books as well, since you're just as required to do business with me as you are with the major banks or corporations.

          • They get my money, so I get to demand what ever I want. I'm the taxpayer, so I'm the boss of whoever gets my money. I don't live in a society.

        • ""When I as a private citizen am legally entitled to walk into any major bank or corporation and demand to see their books"

          Now if you had said instead you should be legally entitled to walk into any government office and see their books you may have a point, since you have no choice but to pay taxes and you are a stakeholder. I am a stakeholder in government. So are you. Just like with owning stock, I want top value for my dollar, and I get that by not allowing myself to be tied down by union demands that politicians have far too frequently acquiesced to now helping to put us in the situation where we are unable to flexibly deal with budgets because some people have been given entitlements that were never truly affordable.

        • Ok I read it all.

          "that's allegedly produced by paying people enough to buy a home and send their kids to university without having to rack up a ton of debt"

          This is my concern, why? If you are picking up garbage, why should I pay you $20 an hour to do so? Anyone can do it. And many would do it for far less, aka the market rate. Now if you have a university degree and are performing some sort of management job that requires expertise in a particular field, you may be in a position where yes, you can be paid enough to buy a home and send your kids to university without debt.

          But it isn't determined by wishy-washy feelings of "well you should be able to get this", it must be determined by what the market (aka the taxpayers) can afford. If your position is unaffordable, then you aren't hired. If garbage collection is too expensive, do you continue to pay for it even though you can't afford it? No! Either you go without (because this is what reality is dictating that you do) or you find a way to make it happen that doesn't cause you to go broke. In the case of public sector unions, it can be likely that the reason you cannot afford it is because they've ensured they are entitled to their entitlements and you are stuck with them.

          • Because picking up garbage sucks. Which is why neither you nor I are doing it. If someone is willing to do a job that sucks, and which nobody else wants to do, there is absolutely no reason at all that they shouldn't be paid more in compensation for absorbing all that suckitude. That's assuming, of course, that an economy is a way for a society to transfer goods and services to each other.

            On the other hand, if an economy is a game for sociopaths to play with numbers, and to incidentally do damage to the quality of life that their neighbors enjoy in the process, then by all means, a person who sits in an office writing email and taking phone calls all day may well justify receiving way more money than a person who helps make sure we don't catch the plague by taking our collective refuse out of the cities.

            I certainly wouldn't take out garbage for less than $20 an hour.

          • Picking up garbage definitely sucks. That's why it's called work and not play.

            But where did you get the idea that "nobody else wants to do it"? Many people have crummy jobs and many others can't even find crummy jobs, and they would be happy to be garbagemen for much less than $20 per hour. When public sector unions collude with the politicians they put in power to force the wage rates for superlatively unskilled labour way above where they would otherwise be, the result is that less of that labour will be purchased. Permitting a select group of unskilled workers to live way above their abilities comes at the cost of many other unskilled workers living way beneath theirs.

          • When public sector unions collude with the politicians they put in power…

            Collusion, really? And if it weren't for union influence different politicians would be elected?

            …less of that labour will be purchased.

            If the union garbage men were replaced with non-union garbage men, municipalities wouldn't really buy more garbage pickup with the savings, would they?

          • The unions, together, are a big group, with definite interests in electoral outcomes and money to contribute to campaigns. If the uproar around here is any indication, their endorsements also carry weight.

            Municipalities would certainly not be buying more garbage pick-up with any privatisation-induced savings because they are already so in debt thanks to their existing wage policies. But if the debt were paid-down and savings returned to the citizenry as lower taxes, then jobs would be allowed to be created because there would no longer be protected groups "earning" three, four, or five times their market rates.

          • So that's a no to "collusion", as in a secret agreement between unions and politicians..

            Savings: Agree that whatever money a municipality saved by being able to hire cheaper garbage men would not be likely to be spent on more garbage men. Indeed, those savings might be used to pay down municipal debt, or it might be used to fund some other wish list project, or it might even be "given" back to tax payers in the form of a reduced tax take. All of which would create new spending in those areas at the expense of less spending by the garbage men.

            Do you have a source for the suggestion that there are protected groups that earn three, four or five times their arket rate? A factor of five strikes me as unlikley, but I am interested to know which protected group has managed to wangle that deal for themselves.

          • So money CAN buy electons then?

          • That is not what I said.

            If you observe my comments, you will find that none of my objections to public sector unions is that they can give money to their preferred candidates. My objections concern the protections given to the unions by the governments. This is about buying politicians, not elections.

            If your complaint about Conservative Party campaign financing were that it allows interest groups to trade money for privileges, then I might be inclined to agree with you. However, I view the problem as being that politicians have the power to grant privileges, not that they are allowed to spend on their campaigns the money that citizens voluntarily give them.

        • A tax break is not a subsidy. Not taking is not equivalent to giving. If you disagree, why have you not thanked me for every time I gave you money by not taking your wallet?

      • "Somehow they imagine they'll be living in a better society once the bus driver has to bus to work because he or she can't afford to be a car owner anymore. "

        Why can't I be that overpaid bus driver? It's not for lack of skills, or desire. It's for an inability to get it because someone has it due to seniority. Why aren't cashiers "overpaid?" Because they cannot be! Only the government can "overpay" because they always have the taxpayers, or even just borrow more money and have the next generation of taxpayers instead pay for it. Because who cares about those who haven't even been conceived yet!

        The only reason we're at this point in time where this problem has become evident, is because it has allowed to become the problem that it is. Successive politicians, desperate to keep voters happy, borrow to pay for unions. It is win-win. Taxpayers avoid a strike, taxpayers avoid higher taxes (in the short term), and the union supports the politician.

        What we are seeing now, beginning in Wisconsin, is the end of public sector unions. It is the beginning of the fight, and it will not be lost this time by the taxpayers.

        • Why can't I be that overpaid bus driver?

          Why can't you buy the last donut when the donuts are all gone? Because someone else got there first. Such is life. Have a cookie!

          Is anyone who can afford to live their lives with a car and a house overpaid, or just the ones who didn't get a desk job?

          (And of course it'll be lost by the taxpayers. The taxpayers of Wisconsin will get nothing from this "revolution".)

          • Well hey look, I'm sorry for being derogatory at all in my earlier comments.

            I simply believe that unions, in general, are a lag on productivity, because they "protect" the worker from their job. Public sector unions I find are much worse in this regard because not only are they protected, they are well compensated.

            What is wrong with expecting to be able to pay people what their job is worth? If they do well, perhaps they get a bonus even. Why not pay for performance?

          • I'll certainly grant that I've seen union members abuse their privilege. And I'm very glad you chose to debate me on my initial post, which was totally argument bait (which isn't to say I don't believe what I said).

            My basic position is that you don't combat union corruption and other malfeasance by shutting down unions, any more than you combat corporate corruption and other malfeasance by shutting down corporations. They both exist for a reason, and if we didn't need them we probably wouldn't have them.

          • What on earth suggests to you that companies are paying people what their job is actually worth?

            There's whole factories in China that refute you.

          • China doesn't have the same individual freedoms that we do.

            If you choose not work here in North America, you simply go without. You're free to do so. I would not assume the same is true in China.

  21. That's some fancy kit.

  22. Funny how no one speaks about the Ponzi pensions that state will have to face….

    Oh yeah, I forgot… we don't want to see the plie of s**** we are in because of the PENSIONS of our own unions.

    Lazy…

  23. Funny how no one speaks about the Ponzi pensions that state will have to face….

    Oh yeah, I forgot… we don't want to see the plie of s**** we are in because of the PENSIONS of our own unions.

    Lazy…

  24. "But they've got no business sticking their noses into the financial arrangements of their neighbors."

    Except if they're paid for in taxpayer dollars.

  25. If you want to pay less taxes, that's your personal responsibility to work out for yourself. Sink your income into funds or bonds or offshore companies or whatever people are doing this season, if it's that important to you. It'll be more direct and more effective, and you'll have the pride of being able to say you did it yourself for yourself.

    If you do that, great. But of course, most people who come out against unions don't do that. They hide behind elected officials who promise to "end the waste" that's allegedly produced by paying people enough to buy a home and send their kids to university without having to rack up a ton of debt. Somehow they imagine they'll be living in a better society once the bus driver has to bus to work because he or she can't afford to be a car owner anymore.

    Every registered business is eligible for tax breaks of one sort or another purely through virtue of being a registered business, and that subsidy comes from me as a taxpayer too. But I don't go to the owners and managers of those businesses and try to strongarm them into paying their employees less so that my personal tax bill can go down.

    The fact that government departments are not businesses does not axiomatically guarantee that the people who work for them are going to be treated well; unions generally don't occur in workplaces where people are already satisfied and feel valued. Why would happy workers being fairly dealt with choose to unionize? Far more frequent is when poorly treated workers don't unionize, for fear of how much worse things will get for them when the company outsources, downsizes, or otherwise displaces the ethical costs of doing business onto the backs of the least compensated members of their "team".

    When I as a private citizen am legally entitled to walk into any major bank or corporation and demand to see their books, then it'll also be the right time for the "government workers shouldn't be allowed to unionize" argument.

  26. Sorry I wasn't going to read all that.

    I'm the taxpayer. I'm the boss of the public sector workers. If they are not willing to work for the wages we lay out then we will find someone who will. I do not choose to negotiate with public sector labour unions, because they are in it for themselves, whereas I am only looking for someone to provide services. If they want to charge obscene rates, fine, but I will then take my business elsewhere.

    Let government workers unionize. But I will not hire them.

  27. "When I as a private citizen am legally entitled to walk into any major bank or corporation and demand to see their books"

    Uh, why should you be able to? Do you own shares? Are you an employee? You might as well be entitled to see my books as well, since you're just as required to do business with me as you are with the major banks or corporations.

  28. ""When I as a private citizen am legally entitled to walk into any major bank or corporation and demand to see their books"

    Now if you had said instead you should be legally entitled to walk into any government office and see their books you may have a point, since you have no choice but to pay taxes and you are a stakeholder. I am a stakeholder in government. So are you. Just like with owning stock, I want top value for my dollar, and I get that by not allowing myself to be tied down by union demands that politicians have far too frequently acquiesced to now helping to put us in the situation where we are unable to flexibly deal with budgets because some people have been given entitlements that were never truly affordable.

  29. Ok I read it all.

    "that's allegedly produced by paying people enough to buy a home and send their kids to university without having to rack up a ton of debt"

    This is my concern, why? If you are picking up garbage, why should I pay you $20 an hour to do so? Anyone can do it. And many would do it for far less, aka the market rate. Now if you have a university degree and are performing some sort of management job that requires expertise in a particular field, you may be in a position where yes, you can be paid enough to buy a home and send your kids to university without debt.

    But it isn't determined by wishy-washy feelings of "well you should be able to get this", it must be determined by what the market (aka the taxpayers) can afford. If your position is unaffordable, then you aren't hired. If garbage collection is too expensive, do you continue to pay for it even though you can't afford it? No! Either you go without (because this is what reality is dictating that you do) or you find a way to make it happen that doesn't cause you to go broke. In the case of public sector unions, it can be likely that the reason you cannot afford it is because they've ensured they are entitled to their entitlements and you are stuck with them.

  30. "Somehow they imagine they'll be living in a better society once the bus driver has to bus to work because he or she can't afford to be a car owner anymore. "

    Why can't I be that overpaid bus driver? It's not for lack of skills, or desire. It's for an inability to get it because someone has it due to seniority. Why aren't cashiers "overpaid?" Because they cannot be! Only the government can "overpay" because they always have the taxpayers, or even just borrow more money and have the next generation of taxpayers instead pay for it. Because who cares about those who haven't even been conceived yet!

    The only reason we're at this point in time where this problem has become evident, is because it has allowed to become the problem that it is. Successive politicians, desperate to keep voters happy, borrow to pay for unions. It is win-win. Taxpayers avoid a strike, taxpayers avoid higher taxes (in the short term), and the union supports the politician.

    What we are seeing now, beginning in Wisconsin, is the end of public sector unions. It is the beginning of the fight, and it will not be lost this time by the taxpayers.

  31. Sorry I wasn't going to read all that.

    Cool, then we aren't having a conversation, which is much easier. I will eat cookies.

  32. They get my money, so I get to demand what ever I want. I'm the taxpayer, so I'm the boss of whoever gets my money. I don't live in a society.

  33. Because picking up garbage sucks. Which is why neither you nor I are doing it. If someone is willing to do a job that sucks, and which nobody else wants to do, there is absolutely no reason at all that they shouldn't be paid more in compensation for absorbing all that suckitude. That's assuming, of course, that an economy is a way for a society to transfer goods and services to each other.

    On the other hand, if an economy is a game for sociopaths to play with numbers, and to incidentally do damage to the quality of life that their neighbors enjoy in the process, then by all means, a person who sits in an office writing email and taking phone calls all day may well justify receiving way more money than a person who helps make sure we don't catch the plague by taking our collective refuse out of the cities.

    I certainly wouldn't take out garbage for less than $20 an hour.

  34. Why can't I be that overpaid bus driver?

    Why can't you buy the last donut when the donuts are all gone? Because someone else got there first. Such is life. Have a cookie!

    Is anyone who can afford to live their lives with a car and a house overpaid, or just the ones who didn't get a desk job?

    (And of course it'll be lost by the taxpayers. The taxpayers of Wisconsin will get nothing from this "revolution".)

  35. A moderate-to-left liberal 'southern Democrat' is a wingnut bordering on communist to a 'moderate-to-right person. How come people who don't get indexed pensions love government workers who do? Likely the result of brainwashing at commie incubators laughingly referred to a institutions of 'higher' learning. The 'higher' refers to the drugs the students and faculty are on.

  36. A moderate-to-left liberal 'southern Democrat' is a wingnut bordering on communist to a 'moderate-to-right person. How come people who don't get indexed pensions love government workers who do? Likely the result of brainwashing at commie incubators laughingly referred to a institutions of 'higher' learning. The 'higher' refers to the drugs the students and faculty are on.

  37. Well hey look, I'm sorry for being derogatory at all in my earlier comments.

    I simply believe that unions, in general, are a lag on productivity, because they "protect" the worker from their job. Public sector unions I find are much worse in this regard because not only are they protected, they are well compensated.

    What is wrong with expecting to be able to pay people what their job is worth? If they do well, perhaps they get a bonus even. Why not pay for performance?

  38. Walker exempted the cops and the firefighters because they backed him in the election.

  39. Walker exempted the cops and the firefighters because they backed him in the election.

  40. A tax break is not a subsidy. Not taking is not equivalent to giving. If you disagree, why have you not thanked me for every time I gave you money by not taking your wallet?

  41. Picking up garbage definitely sucks. That's why it's called work and not play.

    But where did you get the idea that "nobody else wants to do it"? Many people have crummy jobs and many others can't even find crummy jobs, and they would be happy to be garbagemen for much less than $20 per hour. When public sector unions collude with the politicians they put in power to force the wage rates for superlatively unskilled labour way above where they would otherwise be, the result is that less of that labour will be purchased. Permitting a select group of unskilled workers to live way above their abilities comes at the cost of many other unskilled workers living way beneath theirs.

  42. When public sector unions collude with the politicians they put in power…

    Collusion, really? And if it weren't for union influence different politicians would be elected?

    …less of that labour will be purchased.

    If the union garbage men were replaced with non-union garbage men, municipalities wouldn't really buy more garbage pickup with the savings, would they?

  43. The unions, together, are a big group, with definite interests in electoral outcomes and money to contribute to campaigns. If the uproar around here is any indication, their endorsements also carry weight.

    Municipalities would certainly not be buying more garbage pick-up with any privatisation-induced savings because they are already so in debt thanks to their existing wage policies. But if the debt were paid-down and savings returned to the citizenry as lower taxes, then jobs would be allowed to be created because there would no longer be protected groups "earning" three, four, or five times their market rates.

  44. I'll certainly grant that I've seen union members abuse their privilege. And I'm very glad you chose to debate me on my initial post, which was totally argument bait (which isn't to say I don't believe what I said).

    My basic position is that you don't combat union corruption and other malfeasance by shutting down unions, any more than you combat corporate corruption and other malfeasance by shutting down corporations. They both exist for a reason, and if we didn't need them we probably wouldn't have them.

  45. What on earth suggests to you that companies are paying people what their job is actually worth?

    There's whole factories in China that refute you.

  46. The new US motto is Government of the Poor by the Rich for the Rich.

  47. The new US motto is Government of the Poor by the Rich for the Rich.

  48. China doesn't have the same individual freedoms that we do.

    If you choose not work here in North America, you simply go without. You're free to do so. I would not assume the same is true in China.

  49. So that's a no to "collusion", as in a secret agreement between unions and politicians..

    Savings: Agree that whatever money a municipality saved by being able to hire cheaper garbage men would not be likely to be spent on more garbage men. Indeed, those savings might be used to pay down municipal debt, or it might be used to fund some other wish list project, or it might even be "given" back to tax payers in the form of a reduced tax take. All of which would create new spending in those areas at the expense of less spending by the garbage men.

    Do you have a source for the suggestion that there are protected groups that earn three, four or five times their arket rate? A factor of five strikes me as unlikley, but I am interested to know which protected group has managed to wangle that deal for themselves.

  50. If you don't like "collusion" let us just say "partnership". It is no secret that there are labour-friendly politicians. And there is nothing wrong, on its own, of labour having representatives in government. However, if a labour representative is in negotiation with the labour unions, we do not have the typical negotiation of buyer and seller, lowest price vs. highest price, but a negotiation biased towards a higher settling price.

    As for wages, why don't we start with TTC fare collectors who earn over $100 000 per year?

    When I was in high school, I had friends who worked in movie theatres taking tickets from patrons. It seems to me that this is on par skill-wise with a TTC fare collector. My friends in that job earned minimum wage plus a free-movie every two weeks. The article I linked to above states that the base salary is $54 000, which I would say is about 2.5 times the market rate for equivalent labour. Of course, these employees also receive benefits, which, if we go by this chart seems could be worth about $4 thousand per year.

    Then comes overtime, which the first article states starts at time and a half. One must understand that the market rate for any type of labour does not vary with the number of hours already performed by the worker that week. The price of labour is a function of the productivity of that labour (so, if anything, overtime should be paid less than regular time because the worker would theoretically be less productive due to fatigue). Also, even though higher rates for overtime are mandated by law in the private sector, very few employers can afford to pay the premium, so they find someone who hasn't maxed his/her hours to take shift. Workers who want to make extra money usually have to find a second job, and, thus, don't earn any premium rates. So, if we multiply the minimum 1.5 overtime rate by the 2.5 base rate, we find that the workers are earning a minimum of 3.75 times the market rate of their labour (plus benefits) during their overtime hours.

  51. It's not that I dislike the word "collusion" per se, it's more that it's the not the best word to describe the relationship. Collusion has additional negative connotations that don't deserve to be attached to the relationship.

    …the typical negotiation of buyer and seller, lowest price vs. highest price…

    I agree that the relationship described there is the purest or simplest version of the "market", but I'm less convinced that that is the actual typical relationship, even between two private entities. I will suggest that a large majority of market transactions include all sorts of other criteria in addition to lowest price vs highest price.

    I get a little bit worried when you compare the skills required for a TTC fare collector to the skills required to be a movie theatre ticket taker; that seems like a trip down the old pay equity path, and I'm surprised to see a staunch free marketer such as yourself (at least that's the way I perceive you to be) try to use the pay equity technique, to justify lower wages for the TTC person. ;-)

    If we actually did let the market set the wages of a TTC fare collector and the wages of a movie theatre ticket taker I would be very surprised if those two wages came out to be essentially the same. I would not be at all surprised if the TTC fare collector wage was at a premium relative to the movie theatre job, mostly on the basis of the clients that the employee needs to deal with. But 2.5 does seem higher than I would expect.

  52. It's not that I dislike the word "collusion" per se, it's more that it's the not the best word to describe the relationship. Collusion has additional negative connotations that don't deserve to be attached to the relationship.

    …the typical negotiation of buyer and seller, lowest price vs. highest price…

    I agree that the relationship described there is the purest or simplest version of the "market", but I'm less convinced that that is the actual typical relationship, even between two private entities. I will suggest that a large majority of market transactions include all sorts of other criteria in addition to lowest price vs highest price.

    I get a little bit worried when you compare the skills required for a TTC fare collector to the skills required to be a movie theatre ticket taker; that seems like a trip down the old pay equity path, and I'm surprised to see a staunch free marketer such as yourself (at least that's the way I perceive you to be) try to use the pay equity technique, to justify lower wages for the TTC person. ;-)

    If we actually did let the market set the wages of a TTC fare collector and the wages of a movie theatre ticket taker I would be very surprised if those two wages came out to be essentially the same. I would not be at all surprised if the TTC fare collector wage was at a premium relative to the movie theatre job, mostly on the basis of the clients that the employee needs to deal with. But 2.5 does seem higher than I would expect.

    • Quality is obviously involved in a market transaction. I doubt you will buy a new car from me over one from Ford or Toyota, even if I will give it to you for half the price of the major companies, if I make mine in my garage with cardboard boxes, masking tape, and Crayola markers.

      I am talking about highest vs. lowest price for equal, or near equal, value.

      It is not a "trip down the old pay equity path" to compare the skills required for one job to those of another. It is a way of establishing the market rate for similar labour. It is also helpful to determine how difficult it would be to move new people into that job, an interesting datum when one is assessing the truthfulness of the statement of TTC spokesman Brad Ross, regarding the high overtime rates of fare collectors:

      “It's cheaper for us to pay overtime to ensure adequate staffing levels than it is for use[sic] to hire more people and pay them salary and benefits.”

      Why would a TTC fare collector possibly earn more than a movie theatre ticket taker? For one thing, movie theatres rarely let their employees take naps during their shifts.

      • Pay-equity…market rate….

        Isn't the market rate simply set by the market? That sounds glib, but it's not meant to be……..assume that the TTC operation was privatized, and now it was time for TTC management to hire some fare collectors. They might start by looking at what they assume to be jobs that require similar skills elsewhere (eg movie ticket takers) and then set their initial wage offering at that same rate.

        Some people would apply for those jobs, and management would hire the best of those who applied. If management finds that they actually had way more qualified applicants than spots to fill they could correctly deduce that they could have offered a little less.

        • Quite right.

          But when the market does not exist, one who is trying to figure what the market rate would be needs to find reasonable comparisons in the markets that do exist.

          • Sure, using reasonable comparisons as a starting point, we agree on that.

            From there it is my suspicion that the fare collecting job would garner a premium, maybe slight, maybe even substantial, probably in between.

            Now I've not been to TO for a long time, and even then I don't believe that I used the TTC, so I'm not really sure what the job entails. But I'm guessing that it might be less desireable than the movie ticket taker on the basis that a fare collector "gets" to deal with more folks who are generally more ornery than movie goers, and the job has a greater amount of isolation.

          • I find that unlikely for a job that has zero educational requirements.

          • You could be correct (obviously). Sadly I'll likely be dead by the time we get the opportunity to prove which one of us is correct. ;-)

      • From the NP link…

        One station collector outworked all his colleagues last year, earning $125,247.

        “He must be an executive ticket taker,” quipped councillor Doug Holyday (Etobicoke Centre). “And he's got benefits on top of that. He's got executive pay for a menial job. That doesn't happen very many places.

        I chuckled….did you know that executives only make $125K or so?

        Speaking of, the typical method for establishing senior executive compensation seems to have similarities to the friendly arrangement that you suggested exists between unions and union friendly politicians.

        Perhaps both ends of the pay scale setting "apparatus" need some adjusting.

        • What executives?

          • Regarding a salary of $125K, the executives to which councillor Doug Holyday was referring.

          • Doug Holyday sits on the City of Toronto Executive Committee. His salary, as a City Councillor, is $ 99 619.52

          • Ahhh, I see.

            Maybe Holyday should apply for a TTC job? ;-)

          • Interesting that, isn't it.

            I'm not convinced that some private sector CEOs are worth the remuneration that they seem to be able to convince the Board to authorize, but I'm equally unconvinced that our mayors, premiers and prime ministers are worth as little as we pay them.

  53. Overtime….

    You correctly (I suspect) identify that the value provided by overtime hours is probably less than a non-overtime hour. From that you suggest that the price of an overtime hour should be less than the price of a non-overtime hour. But you yourself have said that the price of a product or service is not really based on the value of the product or service, it is actually based on balancing the supply and the demand, and in the case of overtime hours, the supply is low, which will drive the price up. It then falls to the purchaser to decide if they wish to pay the higher price, especially considering that the value has probably dropped as well.

    Our private sector experiences must be very different. I've worked in the private sector, non-union, for decades, and I've seen plenty of examples of overtime hours being filled by folks who then get paid at least time and a half. This trend, rather than being a function of the union/non-union divide, is probably more industry specific.

    Originally you mentioned that union pay was three, four or even five times the market rate, but so far your example can only get to 3.75, and that is based on a marginal, overtime rate. Not saying that your basic premise is wrong, but in my view this exaggeration cuts into your credibility.

  54. Overtime….

    You correctly (I suspect) identify that the value provided by overtime hours is probably less than a non-overtime hour. From that you suggest that the price of an overtime hour should be less than the price of a non-overtime hour. But you yourself have said that the price of a product or service is not really based on the value of the product or service, it is actually based on balancing the supply and the demand, and in the case of overtime hours, the supply is low, which will drive the price up. It then falls to the purchaser to decide if they wish to pay the higher price, especially considering that the value has probably dropped as well.

    Our private sector experiences must be very different. I've worked in the private sector, non-union, for decades, and I've seen plenty of examples of overtime hours being filled by folks who then get paid at least time and a half. This trend, rather than being a function of the union/non-union divide, is probably more industry specific.

    Originally you mentioned that union pay was three, four or even five times the market rate, but so far your example can only get to 3.75, and that is based on a marginal, overtime rate. Not saying that your basic premise is wrong, but in my view this exaggeration cuts into your credibility.

    • But you yourself have said that the price of a product or service is not really based on the value of the product or service, it is actually based on balancing the supply and the demand

      Supply and demand are the values of the product. Demand is the value of the product to the consumer. Supply is the value to the producer of what the product can be exchanged for.

      Overtime hours are not demanded. Hours are. It doesn't matter if workers who've already worked a full week do not want to perform the labour, there are other people (new hires) that do–the lower the skills required, the more easily new people can enter the employment, which is why there should be no overtime premium for the least skilled jobs.

      If you are some sort of eccentric entrepreneur who has some kink for hiring only workers who've already put in 40 hours of work that week, yes, you will pay a premium, but if you are looking for labour in general your rates will not be affected by this tiny sliver of market.

      As for my credibility:

      First, I didn't even get into public sector pensions because I couldn't find a good break-down of their details. Second, one must consider the intangible (or unquantifiable) "effort" factor. I think that an hour of labour in the public sector is (in general) much less onerous than one in the private sector (for similar work), for example, I linked somewhere above to the TTC fare collector who was sleeping during his shift. I remember one summer when I had a job at a private gold course. It was the worst job I'd ever had. That same summer, I had friends working in public golf courses. They said those jobs were their best.

      • If you are some sort of eccentric entrepreneur who has some kink for hiring only workers who've already put in 40 hours of work that week, yes, you will pay a premium, but if you are looking for labour in general your rates will not be affected by this tiny sliver of market.

        My admittedly anecdotal evidence is that paying overtime rates to employees that are already on staff rather than hiring extra workers at the nominal rate, so as to get extra work done, is not at all limited to eccentric entrepreneurs.

        • 1) Overtime rates are not a market phenomenon, but are the result of law. These laws intended to help low income people actually end up hurting them because their employers won't give them overtime hours and it forces them to find other jobs.

          2) If a business for some anomalous reason finds itself with a sudden burst of extra work, and it expects this burst to be temporary, it will make more sense to give its existing staff more hours than to hire more people. The more difficult a job is, the more costly it is to the employer to hire more people (in terms of finding and training them). The TTC is evidently giving out copious amounts of overtime for jobs that require little training. How does it make sense for a city to pay a premium for workers to work extra hours at the same time that it gives other people money because they can't find any employment hours?

          • Sure, there are laws around overtime rates. But I'm not sure that all overtime rates occur due to law. All sorts of contracts get signed between purchasers and suppliers of engineering services, and I'm pretty sure that every one I have seen includes overtime rates. And no, in my experience, those overtime rates are not there to cover off the employees wage, since the actual workers are either on salary or if they are being paid an hourly rate they have an agreement that only allows them to bank extra hours for use at straight time later on.

            The need for some other worker to work extra hours (which might end up being supplied as overtime hours) isn't all that anomalous – people are ill, someone is away on a training course, people are away on compassionate leave, a delivery arrives late, a customer's truck shows up near the end of the day and needs to be loaded.

            OTOH, I do agree with your concern about the discrepancy between paying people who can't find employment hours – even if you didn't get them to cover off those TTC overtime hours, couldn't the city at least get them to pick up trash on city streets, work that wouldn't otherwise get done at all?

          • Sorry. Picking up trash on city streets is union work.

          • Is it really?

            If it is, is there nothing that we could get those folks to do?

          • Jobs could open up in the private sector if business taxes were reduced. But then how would we afford our public sector employees?

            Here is an article that lists a City of Toronto "litter picker" wage at $21.11/hr.

      • Regarding supply and demand and value….

        I'm pretty sure that I understand the basic theory that you have reiterated, although I am a bit confused by the exact wording that you are using. Regardless of that, the actual reason that I queried you was because you mentioned that you thought the quality of an overtime hour might be lower than a regular hour – ultimately does this really matter?

        • No. I'm willing to call a regular hour and an overtime hour equal.

          I just observed on CP24 news this morning (really yesterday morning) that it is required by law to have an "off-duty" officer on the scene at all road construction projects in Toronto (why he/she must be off-duty while the work is part of his/her duty is unknown to me). Because these officers are off-duty, they are paid at the premium rate of $65/hr. An article on the topic can be found here.

          • The "reason" that it "has" to be an off-duty officer is so that that assignment does not take away an on duty officer from regular patrol or criminal chasing activities.

            Regarding the requirement, in general terms, to have some type of security/law enforcement/traffic control presence at this type of event or that type of event or whatever, I'm sure that all of these individual decisions seemed sensible (and probably even harmless (cheap)) at the time that they were made.

            But I have to agree that all of those little decisions over the years have certainly created quite a mess today, and I'm not going to try to defend that schmozzle. I would certainly support a review of the entire situation. That review should include:
            – is a presence really required at all?
            – if so, does it have to be a police officer?
            – if that presence really needs to be a police officer, should city taxpayers cover that cost or should the event organizers have to cover the cost?

            At the end of that I would be tempted to estimate the total number of hours (now a smallish number) that still require a tax-payer paid police presence and then think very seriously whether using off duty is the best way to cover those hours.

  55. Quality is obviously involved in a market transaction. I doubt you will buy a new car from me over one from Ford or Toyota, even if I will give it to you for half the price of the major companies, if I make mine in my garage with cardboard boxes, masking tape, and Crayola markers.

    I am talking about highest vs. lowest price for equal, or near equal, value.

    It is not a "trip down the old pay equity path" to compare the skills required for one job to those of another. It is a way of establishing the market rate for similar labour. It is also helpful to determine how difficult it would be to move new people into that job, an interesting datum when one is assessing the truthfulness of the statement of TTC spokesman Brad Ross, regarding the high overtime rates of fare collectors:

    “It's cheaper for us to pay overtime to ensure adequate staffing levels than it is for use[sic] to hire more people and pay them salary and benefits.”

    Why would a TTC fare collector possibly earn more than a movie theatre ticket taker? For one thing, movie theatres rarely let their employees take naps during their shifts.

  56. But you yourself have said that the price of a product or service is not really based on the value of the product or service, it is actually based on balancing the supply and the demand

    Supply and demand are the values of the product. Demand is the value of the product to the consumer. Supply is the value to the producer of what the product can be exchanged for.

    Overtime hours are not demanded. Hours are. It doesn't matter if workers who've already worked a full week do not want to perform the labour, there are other people (new hires) that do–the lower the skills required, the more easily new people can enter the employment, which is why there should be no overtime premium for the least skilled jobs.

    If you are some sort of eccentric entrepreneur who has some kink for hiring only workers who've already put in 40 hours of work that week, yes, you will pay a premium, but if you are looking for labour in general your rates will not be affected by this tiny sliver of market.

    As for my credibility:

    First, I didn't even get into public sector pensions because I couldn't find a good break-down of their details. Second, one must consider the intangible (or unquantifiable) "effort" factor. I think that an hour of labour in the public sector is (in general) much less onerous than one in the private sector (for similar work), for example, I linked somewhere above to the TTC fare collector who was sleeping during his shift. I remember one summer when I had a job at a private gold course. It was the worst job I'd ever had. That same summer, I had friends working in public golf courses. They said those jobs were their best.

  57. Pay-equity…market rate….

    Isn't the market rate simply set by the market? That sounds glib, but it's not meant to be……..assume that the TTC operation was privatized, and now it was time for TTC management to hire some fare collectors. They might start by looking at what they assume to be jobs that require similar skills elsewhere (eg movie ticket takers) and then set their initial wage offering at that same rate.

    Some people would apply for those jobs, and management would hire the best of those who applied. If management finds that they actually had way more qualified applicants than spots to fill they could correctly deduce that they could have offered a little less.

  58. Quite right.

    But when the market does not exist, one who is trying to figure what the market rate would be needs to find reasonable comparisons in the markets that do exist.

  59. If you are some sort of eccentric entrepreneur who has some kink for hiring only workers who've already put in 40 hours of work that week, yes, you will pay a premium, but if you are looking for labour in general your rates will not be affected by this tiny sliver of market.

    My admittedly anecdotal evidence is that paying overtime rates to employees that are already on staff rather than hiring extra workers at the nominal rate, so as to get extra work done, is not at all limited to eccentric entrepreneurs.

  60. Sure, using reasonable comparisons as a starting point, we agree on that.

    From there it is my suspicion that the fare collecting job would garner a premium, maybe slight, maybe even substantial, probably in between.

    Now I've not been to TO for a long time, and even then I don't believe that I used the TTC, so I'm not really sure what the job entails. But I'm guessing that it might be less desireable than the movie ticket taker on the basis that a fare collector "gets" to deal with more folks who are generally more ornery than movie goers, and the job has a greater amount of isolation.

  61. 1) Overtime rates are not a market phenomenon, but are the result of law. These laws intended to help low income people actually end up hurting them because their employers won't give them overtime hours and it forces them to find other jobs.

    2) If a business for some anomalous reason finds itself with a sudden burst of extra work, and it expects this burst to be temporary, it will make more sense to give its existing staff more hours than to hire more people. The more difficult a job is, the more costly it is to the employer to hire more people (in terms of finding and training them). The TTC is evidently giving out copious amounts of overtime for jobs that require little training. How does it make sense for a city to pay a premium for workers to work extra hours at the same time that it gives other people money because they can't find any employment hours?

  62. I find that unlikely for a job that has zero educational requirements.

  63. You could be correct (obviously). Sadly I'll likely be dead by the time we get the opportunity to prove which one of us is correct. ;-)

  64. From the NP link…

    One station collector outworked all his colleagues last year, earning $125,247.

    “He must be an executive ticket taker,” quipped councillor Doug Holyday (Etobicoke Centre). “And he's got benefits on top of that. He's got executive pay for a menial job. That doesn't happen very many places.

    I chuckled….did you know that executives only make $125K or so?

    Speaking of, the typical method for establishing senior executive compensation seems to have similarities to the friendly arrangement that you suggested exists between unions and union friendly politicians.

    Perhaps both ends of the pay scale setting "apparatus" need some adjusting.

  65. What executives?

  66. Regarding a salary of $125K, the executives to which councillor Doug Holyday was referring.

  67. Sure, there are laws around overtime rates. But I'm not sure that all overtime rates occur due to law. All sorts of contracts get signed between purchasers and suppliers of engineering services, and I'm pretty sure that every one I have seen includes overtime rates. And no, in my experience, those overtime rates are not there to cover off the employees wage, since the actual workers are either on salary or if they are being paid an hourly rate they have an agreement that only allows them to bank extra hours for use at straight time later on.

    The need for some other worker to work extra hours (which might end up being supplied as overtime hours) isn't all that anomalous – people are ill, someone is away on a training course, people are away on compassionate leave, a delivery arrives late, a customer's truck shows up near the end of the day and needs to be loaded.

    OTOH, I do agree with your concern about the discrepancy between paying people who can't find employment hours – even if you didn't get them to cover off those TTC overtime hours, couldn't the city at least get them to pick up trash on city streets, work that wouldn't otherwise get done at all?

  68. Regarding supply and demand and value….

    I'm pretty sure that I understand the basic theory that you have reiterated, although I am a bit confused by the exact wording that you are using. Regardless of that, the actual reason that I queried you was because you mentioned that you thought the quality of an overtime hour might be lower than a regular hour – ultimately does this really matter?

  69. Doug Holyday sits on the City of Toronto Executive Committee. His salary, as a City Councillor, is $ 99 619.52

  70. No. I'm willing to call a regular hour and an overtime hour equal.

    I just observed on CP24 news this morning (really yesterday morning) that it is required by law to have an "off-duty" officer on the scene at all road construction projects in Toronto (why he/she must be off-duty while the work is part of his/her duty is unknown to me). Because these officers are off-duty, they are paid at the premium rate of $65/hr. An article on the topic can be found here.

  71. Sorry. Picking up trash on city streets is union work.

  72. Ahhh, I see.

    Maybe Holyday should apply for a TTC job? ;-)

  73. Is it really?

    If it is, is there nothing that we could get those folks to do?

  74. Jobs could open up in the private sector if business taxes were reduced. But then how would we afford our public sector employees?

    Here is an article that lists a City of Toronto "litter picker" wage at $21.11/hr.

  75. The "reason" that it "has" to be an off-duty officer is so that that assignment does not take away an on duty officer from regular patrol or criminal chasing activities.

    Regarding the requirement, in general terms, to have some type of security/law enforcement/traffic control presence at this type of event or that type of event or whatever, I'm sure that all of these individual decisions seemed sensible (and probably even harmless (cheap)) at the time that they were made.

    But I have to agree that all of those little decisions over the years have certainly created quite a mess today, and I'm not going to try to defend that schmozzle. I would certainly support a review of the entire situation. That review should include:
    – is a presence really required at all?
    – if so, does it have to be a police officer?
    – if that presence really needs to be a police officer, should city taxpayers cover that cost or should the event organizers have to cover the cost?

    At the end of that I would be tempted to estimate the total number of hours (now a smallish number) that still require a tax-payer paid police presence and then think very seriously whether using off duty is the best way to cover those hours.

  76. OK, JW, almost the end of the line, I'd say, thanks for sticking with me….

    So, what does the end game look like in your view? The setup:
    – let's just limit ourselves to the garbage men (and the litter pickers, who are probably a different job classification) and the TTC fare collectors
    – with or without union involvement, somehow the wages for those three categories of workers have been cut (for the sake of discussion from above $20/hr down to $12/hr each
    – some old workers have stayed on, some have quit, other people have been hired, total number employed is unchanged
    – savings (lets use $200M, could be half, could be a few times more) are being passed along to taxpayers in the form of a lower mill rate

    Presumably quite a few of the workers who stayed on can't afford their accommodation any more, so they are competing with the previous low income earners for low end houses and apartments, which is already in short supply (?) so I'm not sure how that all shakes out.

    The taxpayers (those who directly pay taxes) have a few hundred dollars to spend…they might buy an appliance or go to a concert or what? Does it matter? Will renters see any/some/all of the lower tax savings that the landlord is getting? Right away or only after the rental market adjusts? Can we know who the new rental equilibrium will favour?

    Hopefully you catch my drift. I'm not trying to be facetious here. I get that taxpayers will have more money, and they will spend it on this and that and that aggregate demand from them will increase and that this has spinoffs. But how does that translate for the workers?

    There are winners and losers in this scenario, yes?

  77. OK, JW, almost the end of the line, I'd say, thanks for sticking with me….

    So, what does the end game look like in your view? The setup:
    – let's just limit ourselves to the garbage men (and the litter pickers, who are probably a different job classification) and the TTC fare collectors
    – with or without union involvement, somehow the wages for those three categories of workers have been cut (for the sake of discussion from above $20/hr down to $12/hr each
    – some old workers have stayed on, some have quit, other people have been hired, total number employed is unchanged
    – savings (lets use $200M, could be half, could be a few times more) are being passed along to taxpayers in the form of a lower mill rate

    Presumably quite a few of the workers who stayed on can't afford their accommodation any more, so they are competing with the previous low income earners for low end houses and apartments, which is already in short supply (?) so I'm not sure how that all shakes out.

    The taxpayers (those who directly pay taxes) have a few hundred dollars to spend…they might buy an appliance or go to a concert or what? Does it matter? Will renters see any/some/all of the lower tax savings that the landlord is getting? Right away or only after the rental market adjusts? Can we know who the new rental equilibrium will favour?

    Hopefully you catch my drift. I'm not trying to be facetious here. I get that taxpayers will have more money, and they will spend it on this and that and that aggregate demand from them will increase and that this has spinoffs. But how does that translate for the workers?

    There are winners and losers in this scenario, yes?

    • Why would we limit ourselves to the garbagemen, litter pickers, and TTC fare collectors? They are just the tip of the iceberg. How about, for example, the people who cut municipal grass (parks, etc.) for $25/hr?

      It can be a little deceptive to look at the workers wages only. What matters is the cost per unit of output. Thus, productivity must be factored in. If, for example, a public sector worker earns double that of his private sector counterpart per hour, and works just half as hard, then the product of his labour is costing taxpayers 4 times what it would cost from the free market.

      An unfettered economy does not have winners and losers, it is not zero-sum. Redistribution, on the other hand, is zero-sum. When money is taken from some people and given to some others, there is a definite loss to some and gain to others.

      In your scenario, the "winners" are merely those who are getting back what was theirs to begin with. That isn't winning, it's just not losing anymore.

      Why it is a good thing for the private sector to stop losing is because it means the incentives in the economy are shifting from unproductive work to productive work (where they need to be). To the extent that business taxes are reduced, more money will be spent on capital investments, which are the primary source of rising real wages.

      • I only limited my query to three jobs because I thought that would make it easier for us to explore the impacts of moving jobs from a union environment to a market environment. I chose those three because they had already come up in our discussion. I don't dispute that there could be other examples.

        I restricted my query to wages only (ignoring possible productivity effects) also for the sake of simplifying the discussion. I believe that including productivity effects would make the impacts that I'm trying to understand even more significant.

      • The rest…

        I agree that redistribution is a zero-sum game.

        I agree that I have arbitrarily "declared" taxpayers to be winners and the workers to be losers because I started the scenario from the existing situation – starting from "where we are" seemed reasonable – and further agree that if the starting point is an unfettered economy, then today's taxpayers are already the losers and the workers in question are already the winners.

        But what I am really trying to figure out is what happens after we move to the unfettered economy – the three sample groups of workers in question would indeed see their yearly incomes reduced to about half, at least in the short term.

        In the longer term businesses have more money so maybe they make some capital investments, or maybe not. Would those investments create jobs for which the workers in question could reasonably apply (have the skills)? Basically are the workers in question eventually going to benefit a lot from the changes, or is it more that they share in the overall economic gains that would occur with everybody else?

        • The workers will not directly benefit from the changes, certainly not in any way that they would perceive. They will not make the same amount of money for equivalent work in the private sector. They have been benefiting for far too long already, we are trying to correct the imbalance.

          However, the workers will enjoy the "unseen" benefit of a stronger economy, higher real wages despite lower nominal wages. When the economy devotes so many resources to unproductive work, it is like a huge parasitic weight that the economy must haul around. Freed of this burden, the economy will be able to soar to unknown productive heights.

          Also, the displaced workers would be free to acquire skills that would boost them to their old levels of income–and, this time, the income would be legitimate.

          • Again, not trying to be facetious, just trying to understand the ideas you are putting forth, in particular the difference between real wages and nominal wages….when the workers in question go to Loblaws to buy groceries or to the bank to make their mortgage payment, are they spending real money or nominal money, if you catch my drift? A little chart or table might be helpful.

            Regarding acquisition of new skills…..I agree that the workers would be able to try to acquire new skills, so as to get them back towards their previous income level (or higher, one supposes), but I do wonder what percentage just don't have that capacity, no matter how much training they receive. Any concerns there?

          • The rest, again…

            As well, acquiring those skills will probably require an outlay of cash which is likely to be in short supply and a commitment of time which could further cut into the now reduced nominal income. Do you see any role for the City of Toronto in assisting their affected workers with the transition? If such assistance was available/offered, do you suppose that would help make a move to an unfettered economy more likely to occur (ie have enough public support from the citizens of Toronto)?

            Or maybe the election of Rob Ford is a strong enough indication that the wages we've been chatting about should be brought into line with market wages immediately, without worrying too much about the cacophany that might ensue.

            OK, Justin, I'm all tired out, I'll keep an eye out for a reply from you, but I'm going to try very hard to let our discussion end there. Thanks very much.

  78. Interesting that, isn't it.

    I'm not convinced that some private sector CEOs are worth the remuneration that they seem to be able to convince the Board to authorize, but I'm equally unconvinced that our mayors, premiers and prime ministers are worth as little as we pay them.

  79. The public sector union leader thugs in the U.S. and Canada showed their true colours over the past 20 years by ignoring the issue of mass immigration (legal and illegal) and its detrimental effects on workers in the private sector. They don't care because it does not affect them or their members. Now, they expect sympathy from the general public? After years of collaborating with the immigration lobby instead of standing up for ALL workers?

  80. The public sector union leader thugs in the U.S. and Canada showed their true colours over the past 20 years by ignoring the issue of mass immigration (legal and illegal) and its detrimental effects on workers in the private sector. They don't care because it does not affect them or their members. Now, they expect sympathy from the general public? After years of collaborating with the immigration lobby instead of standing up for ALL workers?

  81. Why would we limit ourselves to the garbagemen, litter pickers, and TTC fare collectors? They are just the tip of the iceberg. How about, for example, the people who cut municipal grass (parks, etc.) for $25/hr?

    It can be a little deceptive to look at the workers wages only. What matters is the cost per unit of output. Thus, productivity must be factored in. If, for example, a public sector worker earns double that of his private sector counterpart per hour, and works just half as hard, then the product of his labour is costing taxpayers 4 times what it would cost from the free market.

    An unfettered economy does not have winners and losers, it is not zero-sum. Redistribution, on the other hand, is zero-sum. When money is taken from some people and given to some others, there is a definite loss to some and gain to others.

    In your scenario, the "winners" are merely those who are getting back what was theirs to begin with. That isn't winning, it's just not losing anymore.

    Why it is a good thing for the private sector to stop losing is because it means the incentives in the economy are shifting from unproductive work to productive work (where they need to be). To the extent that business taxes are reduced, more money will be spent on capital investments, which are the primary source of rising real wages.

  82. I only limited my query to three jobs because I thought that would make it easier for us to explore the impacts of moving jobs from a union environment to a market environment. I chose those three because they had already come up in our discussion. I don't dispute that there could be other examples.

    I restricted my query to wages only (ignoring possible productivity effects) also for the sake of simplifying the discussion. I believe that including productivity effects would make the impacts that I'm trying to understand even more significant.

  83. The rest…

    I agree that redistribution is a zero-sum game.

    I agree that I have arbitrarily "declared" taxpayers to be winners and the workers to be losers because I started the scenario from the existing situation – starting from "where we are" seemed reasonable – and further agree that if the starting point is an unfettered economy, then today's taxpayers are already the losers and the workers in question are already the winners.

    But what I am really trying to figure out is what happens after we move to the unfettered economy – the three sample groups of workers in question would indeed see their yearly incomes reduced to about half, at least in the short term.

    In the longer term businesses have more money so maybe they make some capital investments, or maybe not. Would those investments create jobs for which the workers in question could reasonably apply (have the skills)? Basically are the workers in question eventually going to benefit a lot from the changes, or is it more that they share in the overall economic gains that would occur with everybody else?

  84. The workers will not directly benefit from the changes, certainly not in any way that they would perceive. They will not make the same amount of money for equivalent work in the private sector. They have been benefiting for far too long already, we are trying to correct the imbalance.

    However, the workers will enjoy the "unseen" benefit of a stronger economy, higher real wages despite lower nominal wages. When the economy devotes so many resources to unproductive work, it is like a huge parasitic weight that the economy must haul around. Freed of this burden, the economy will be able to soar to unknown productive heights.

    Also, the displaced workers would be free to acquire skills that would boost them to their old levels of income–and, this time, the income would be legitimate.

  85. Again, not trying to be facetious, just trying to understand the ideas you are putting forth, in particular the difference between real wages and nominal wages….when the workers in question go to Loblaws to buy groceries or to the bank to make their mortgage payment, are they spending real money or nominal money, if you catch my drift? A little chart or table might be helpful.

    Regarding acquisition of new skills…..I agree that the workers would be able to try to acquire new skills, so as to get them back towards their previous income level (or higher, one supposes), but I do wonder what percentage just don't have that capacity, no matter how much training they receive. Any concerns there?

  86. The rest, again…

    As well, acquiring those skills will probably require an outlay of cash which is likely to be in short supply and a commitment of time which could further cut into the now reduced nominal income. Do you see any role for the City of Toronto in assisting their affected workers with the transition? If such assistance was available/offered, do you suppose that would help make a move to an unfettered economy more likely to occur (ie have enough public support from the citizens of Toronto)?

    Or maybe the election of Rob Ford is a strong enough indication that the wages we've been chatting about should be brought into line with market wages immediately, without worrying too much about the cacophany that might ensue.

    OK, Justin, I'm all tired out, I'll keep an eye out for a reply from you, but I'm going to try very hard to let our discussion end there. Thanks very much.

  87. Nominal vs. real values usually applies when comparing an economy over time. The real wage is supposed to factor in price-inflation to give a more accurate analysis of what has happened. If, for example, over some time period wages (nominal) double, but so do prices, then real wages have remained the same (ie., one hour of labour X, buys the same basket of products).

    When the worker goes to Loblaws, he is spending a wage that has a nominal value and a real value. In nominal terms his wage has decreased (from $20 to $12 in your example above). I do not mean to say that the worker's wage will have increased in real terms–that's a lot of ground to cover–but wages in general easily could ($12 buys more than it did before). The reason to expect real wages to increase is because of the increase in total output due to moving workers out of unproductive work and into productive. Also, prices of consumption goods will no longer be being bid upwards by a group with artificially high wages. And to the extent that we stop punishing business for being business it will allow the engines of goods production to start revving.

    I don't know why one should be concerned about the workers who don't have the capacity to acquire new skills. There are lots of people without that capacity who have never had the privilege of earning multiples of what their labour is worth. What I am concerned about is that our current system resembles a lottery–if your number doesn't come up, you deliver newspapers and are poor, if your number does, you deliver mail and are well-off. Also, I think it is appropriate to consider the amount of money the workers currently receive that is above their market rate to be charity. If you really think these workers, in their new positions, will be unable to make ends meet, would it not be better to cover the difference in official charity instead of charity masquerading as income thereby qualifying for E.I. and some of the most generous (taxpayer-funded!) pension plans?

    I don't think there is any hope for a transition to an unfettered economy, excepting a total collapse–which won't be very pleasant. There is simply too much at stake for the unions to concede, even if we did soften the blow as you suggested. I think the public is generally not supportive of privatising public services. Sure, they get angry when a union pushes too far, like during the recent Toronto "Garbage Strike", but for the most part they feel that to eliminate a public service would be to lose something they own–funny, I don't remember getting a dividend or refund from the savings during the garbage strike.

    There really isn't much Rob Ford can do. Previous mayors have granted strong protections to the unions and it is very difficult to eliminate positions, as this video explains. Also, Ford has reportedly added jobs.

    Thanks for sticking around.

  88. So money CAN buy electons then?

  89. That is not what I said.

    If you observe my comments, you will find that none of my objections to public sector unions is that they can give money to their preferred candidates. My objections concern the protections given to the unions by the governments. This is about buying politicians, not elections.

    If your complaint about Conservative Party campaign financing were that it allows interest groups to trade money for privileges, then I might be inclined to agree with you. However, I view the problem as being that politicians have the power to grant privileges, not that they are allowed to spend on their campaigns the money that citizens voluntarily give them.

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