Tuesday 29 March 2011

$4.5b Hole: O'Farrell Won't Rule Out Cuts

According to the local media (see here and here), after an independent audit, the new O'Farrell state government has found an unexpected $4.5 billion "black hole".

Not ruling out the possibility of unspecified budget cuts, Mr. O'Farrell did say:

"We do believe that by growing the state's economy that we can generate the revenue, not just to help fill this hole, but also to provide the quality services that people rely upon, to deliver that infrastructure that we're committed to."

Having followed the events in Wisconsin, I can't help a feeling of déjà vu in relation to the above.

However, it appears at least some local trade union members have been following the Wisconsin conflict (see here):

"Nurses, police, teachers and others public servants are hopeful the Coalition will deliver on promises of more resources, with unions warning the new government's overwhelming victory could be a one-off if they start to slash and burn.

"Public Service Association NSW general secretary John Cahill said public servants will hold new Premier Barry O'Farrell's government to account on his commitment that he believes in a bigger public service and won't cut jobs.

" 'He said that he wants to increase the number of public sector workers rather than decrease them, so he's saying all the right things, but we'll just have to make sure that he sticks to it,' Mr. Cahill said.

" 'But if there is a u-turn on some of these things that were said before the election, we'll certainly bring that to everyone's attention.' "

Update on election results:

Labor seem to have lost a seat in the Legislative Assembly to the Liberal/Nationals Coalition.

More importantly, the Greens seem to have lost a Legislative Council (upper house) seat to anti-immigration right wing independent Pauline Hanson. Together with the 4 seats of the smaller right-wing parties (Shooters and Fishers and Christian Democratic) and the 19 of the Liberal/Nationals Coalition, this gives the right wing of the Legislative Council 24 votes out of 42.

Sunday 27 March 2011

Joe Bageant, 1946-2011.

From the back-cover of Deer Hunting with Jesus:

"By turns brutal, tender, incendiary, and seriously funny, Deer Hunting with Jesus is a potent antidote to what Bageant dubs 'the American hologram' -the televised, corporatised, virtual reality that distracts us from the insidious realities of American life".

A good book, reflecting his own author.

My sympathies go to his wife and children.

I guess, we'll never have that beer, after all. Rest in peace, my Yank friend.

That's Free Trade, for You.

It has happened before. Our forefathers lived through it. And they fought so that we could be spared.

It's happening now, but nobody cares. It's far away, you don't know these people, you can't see the images.

And it can't happen to us. After all, we are so fucking smarter and we deserve so much more.

And, boy, do we like cheap shit, don't we?

Well, maybe I'm mistaken; but if I'm right, it will happen again. And perhaps it will happen much closer to home next time, to people we care about.

Laugh if you like.

WARNING: Extremely disturbing images.

Saturday 26 March 2011

Post-Election NSW

The NSW State elections took place yesterday.

The results have been variously characterized, accurately one might add, as a "landslide election defeat", or more colorfully, as "bloodbath", and "carnage".

The Australian newspaper, in its election blog, with uncharacteristic moderation, said "O'Farrell crushes Labor". [*]

Whatever the adjectives one might chose to describe the results, and although definitive figures are yet to be announced, the provisional figures (as of Sunday 27-03-2011 16:50) by themselves are enough to qualify NSW Labor's defeat as historical:

ABC. Legislative Council, and Legislative Assembly.

As can be seen, no deals are needed for the Coalition to pass legislation in the lower house of Parliament, unless the piece in question has additional, much more stringent, requirements. But if simple majority vote is required, the legislation project is as good as approved.

In the upper house, with 19 votes, the Liberal/National Coalition needs to deal with the minor parties (Shooters and Fishers, and Christian Democratic Party). To the extent that those parties have political stances coincident with the Coalition, or are amenable to make deals with the Coalition, a similar situation obtains.

The results seem similar to those after the last Wisconsin elections.

[*] For foreign readers: there are two main parties in Australian politics, the Liberals/Nationals Coalition (right) and Labor (notionally left). Additionally, there are a constellation of smaller parties, some strictly local, some at national level (chief among them, the Australian Greens). In these elections, Labor was the incumbent party.

Wednesday 16 March 2011

"This is What Democracy Looks Like"

Three days ago Paul Krugman was asking:
"The big question about Wisconsin has been whether the controversy would just fade away, or whether it would serve as a rallying cry for an extended period. If yesterday’s crowds were any indication, this is a long way from over."
Krugman was referring to protests and public demonstrations held in Madison, on the 12-03-2011 and included the photo below in his post:

"Michael Sears. Protesters flood the streets of Madison around the Capitol to welcome the 14 Democratic senators and protest the passage of the budget-repair bill".
Source: Journal Sentinel Online.

According to Crooked Timber, 85,000 people were there at its peak.

One of the speakers that day was Tony Schultz, farmer from Athens, Wisconsin (a small town with a population of less than 2,000 people).

Mr. Schultz spoke the words that inspired this post and serve as its headline (more of his speech in the following video on YouTube):

The real American people are waking up, Koch, Walker and co.

They are pissed off, they are getting themselves organized and they are ready to strike back. And they will hit the only thing sacred to you, your only love and loyalty: your pockets.

This is how Wisconsin firefighters did it this time:
"Union leader tells crowd of protesters that M&I [my comment: Marshall & Isley Bank] executives donated significant funds to Scott Walker’s gubernatorial campaign. Union firemen responded by withdrawing $192,000, before M&I shut  down to prevent a run on the bank."

Friday 11 March 2011

"It’s Not Over Until We Say it’s Over”

AFL-CIO president, Richard Trumka, was quoted as having said those words. If by we he meant the American workers, he is right.

Useful links:

Thursday 10 March 2011

"What Have you Done?"

Let's not fool ourselves: this is a dark day for the working class and for democracy, not only in Wisconsin and the whole US, but, more broadly, the whole world over.

After last week's news from Ohio, the Koch brothers and their State puppets circumvented the Wisconsin constitutional system. See here and here.

They did this by stripping the Budget Repair Bill (BRB) of its fiscal content.

Apparently, after approval in the State House of Representatives, non-fiscal bills require a simple Senate majority vote, unlike bills with a fiscal content, which also require a Senate quorum.

Given that the 14 Democratic State senators fled to neighbouring Illinois (not Indiana, as I mistakenly reported earlier) in order to delay the bill's approval by the Republican steamroller, that was the trick the Republicans used.

So a Budget Repair Bill, allegedly stripped of its budgetary provisions and unconnected to the State budget, was approved by the Republican senators (with the opposing vote of Rep. Sen. Dale Schultz), without any discussion of what was removed, as required by law.

As the fiscal provisions contained in the original BRB were allegedly removed, the resulting "non-Budgetary" Budget Repair Bill seems to aim exclusively at restricting the State employees unions, eliminating collective bargaining and implementing the increased paycheck deductions.

I don't know if it contains the measures that would enable the State Executive to arbitrarily sell energy assets (see previous post for more details on this).

In view of these irregularities, Mike Konczal (from Rortybomb) argues that there are jurisdictional avenues to dispute this "non-Budgetary" Budget Repair Bill. (I urge the readers to view the YouTube video below, also linked at Rortybomb).

For all I know, Konczal is right and this problem could still be solved through courts. I am no lawyer to discuss the finer points of law involved or the likely outcome.

It seems worth a try, in any case. And whatever the final outcome of a process of legal challenge, it will have at least one positive result, for it will require the organization and mobilization of workers.

Richard Trumka, national president of AFL-CIO, has welcomed the opportunity of a debate on the situation of the American working class and believes Scott "Walker's 'overreaching' has ignited labor unions".

But I would like to remind our friends in Wisconsin that, while this may yet prove to be a painful defeat, it does not need to be THE defeat.

For your good, and the good of your children and your country; for the good of all of human kind, it better not be THE defeat.

As a friend and a Marxist, I say this with honesty: neither victory, nor defeat, are certainties or definitive. Whatever your fate, it is you who will make it and who will pay its costs or reap its benefits.

Trumka, in the links above, said "it’s not over until we say it’s over". If by we, he meant the American workers, he is right.

In this dark moment, the only tiny spark of hope I can give you is this piece of wisdom:

"Freeman and slave, patrician and plebeian, lord and serf, guild-master and journeyman, in a word, oppressor and oppressed, stood in constant opposition to one another, carried on an uninterrupted, now hidden, now open fight, a fight that each time ended, either in a revolutionary reconstitution of society at large, or in the common ruin of the contending classes." Karl Marx and Friedrich Engels, The Communist Manifesto.
And this appeal to your responsibility before history. You are free to take it or to leave it.

Tuesday 1 March 2011

The Shape of Things to Come

For those not in the know, which (judging by the lack of interest shown by Australian media) must be pretty much everybody, especially journalists: public servants in several states of the American Union are confronting their employers, the respective state governments.

The new governor of Wisconsin, Scott Walker (Rep.), having achieved decisive majority in both houses of the State legislature, is trying to have a law (Budget Repair Bill - BRB) approved.

The professed rationale for the BRB is to solve the current State budget deficit: currently of US$ 136 million, projections estimate it to reach US$ 3.6 billion in the next few years.

The BRB contemplates to increase to 12.6% the employee contribution to health insurance, plus a further 5.8% toward retirement pensions, for a combined deduction of 18.4% of public employee's pay (not counting income tax, other taxes and deductions), on the grounds that State public employees are overpaid, being that the reason the State budget is in deficit.

However, even though it is difficult to compare public and private compensation packages, empirical evidence concludes that Wisconsin public-sector workers are undercompensated, by figures oscillating between 8.2% and 4.8%, when compared to private sector workers. (See Update 05-03-2011).

Additionally, further empirical studies cast doubt on the claim that Wisconsin (or other states in general) are indebted because excessive retirements granted to their public employees: "to a very large extent, the pension shortfall has emerged just since 2007, thanks to the financial crisis, and even then it’s not nearly as big relative to future state incomes as widely imagined" (see here; see also Update 05-03-2011).

Further, the BRB also includes measures completely unrelated to the budget: it would end the automatic payment of union dues and force public employee unions to hold votes each year to recertify their status as bargaining units. The only exception would be the State Police and Firefighters unions, which allegedly supported Walker's campaign.

According to Wisconsin State AFL-CIO, local peak union body, those changes would affect 175,000 employees, at the state level, out of a population of some 5.7 million.

However, the situation does not stop at Wisconsin. Robert Barro (Harvard, who supports Walker) believes similar conflicts could arise in Indiana, Michigan, Pennsylvania, Maine, Florida, Tennessee, Nebraska, Kansas, Idaho, North and South Dakota. Tellingly, in all but Nebraska, the Republican Party dominates the state legislatures.

Further, BRB contains a disposition (clause 16.896) enabling the State government to sell energy assets "with or without solicitation of bids, for any amount that the department determines to be in the best interest of the State", raising concern among commentators like Paul Krugman.

Faced to a Republican congressional steamroller, the 14 standing State Democratic senators fled to neighbouring Indiana, so as to avoid arrest by Wisconsin State troopers, denying the quorum legally required for the approval of the BRB project.

At the same time, increasingly large numbers of protesters peacefully took the State legislature (including firefighters). The protesters accept the extra deductions as a concession, but demand the elimination of the anti-union dispositions. Walker has refused to negotiate.

Again according to Wisconsin State AFL-CIO, over 100,000 people rallied the 26-02-2011 in Madison, the State capital, against the BRB.

Against this backdrop a series of disturbing events are taking place, with unpredictable consequences.

"Use Live Ammunition"

"On the 19-02-2011, when Mother Jones staffers tweeted a report that riot police might soon sweep demonstrators out of the Wisconsin capitol building-something that didn't end up happening-one Twitter user sent out a chilling public response: 'Use live ammunition'."

The Twitter user happened to be a Jeff Cox, at the time an Indiana deputy attorney general. After the incident was made public, the Attorney General office sacked Cox and issued a reprimand.

The Buffalo Beast Prank Call

On 23-02-2011 the website Buffalo Beast published an alleged phone conversation between Scott Walker, and an activist, impersonating billionaire and Republican/Tea Party donor, David Koch. To the best of my knowledge, nobody has challenged the content of the conversation as false.

The following exchange took part during the conversation:

Activist impersonating David Koch: "We'll back you any way we can. What we were thinking about the crowd was, uh, was planting some troublemakers".

Scott Walker: "You know, well, the only problem with that-because we thought about that…"

Tea Party Counter-Demonstrations

A number of Tea Party counter-demonstrations are being held in the vicinity of the Wisconsin capitol building. And although these pro-Walker demonstrators have the same right to demonstrate assisting the anti-Walker ones, the possibility of armed confrontation seems alarming, considering the temptation to "plant troublemakers" among the peaceful demonstrators.

Why Should We Care?

So far, I've struggled to be impartial and objective; the reader will forgive me if now I use a more personal tone. In any case, I won't tell you what to feel; only what I feel.

The move to destroy unions will obviously hurt labour compensation, not only of State public servants directly involved, but eventually of the whole American working class. As I have written a piece on a related subject, I will not go further into arguing this point.

And this comes at a time when inequality in the US has reached historical peaks.

But all the gobbledygook above does not really depict the true situation: we have a bunch of common people trying to make a living by providing services to their community.

These are their faces, this is what they have to say:

Source: Neara Russell.

We are talking about nurses, teachers, clerks, customer service officers. And they are demonstrating peacefully, making use of their constitutional and human rights in a country that regards itself as a democracy.

And suddenly some arrogant, irresponsible psychopaths threaten them with violence? Is that what democracy is about? Are we to remain silent?

Why is it they have to pay to fix the shit banksters and their paid and bought politicians and regulators left behind?

For me, it's a matter of simple decency, and that's reason enough for me to care about it.

Unfortunately, there is much more to it than that. And it's better if I try to keep a more controlled stance.

I suspect this episode may be part of a broader power struggle between Republicans and Democrats.

Like Labor in Australia, the Democrats in the US enjoy an asymmetric relationship with the organized labour movement: both parties are supported by organized labour (from donations to manpower), without any real commitment to a true working class policy.

However, Liberals in Australia and Republicans in the US can count on big business donations to fill in their financial needs.

The unions' demise will hurt the Democrats in the short term, and that's good for the Republicans. In the longer term, however, organized labour funding could be entirely replaced by big business donors.

Don't get me wrong: I don't give a shit about the Democratic Party (or Labor, for that matter).

But with this, the Democratic Party's journey towards becoming a Republican Party twin brother will be complete: the US will become more and more a plutocracy.

Thus, workers in Wisconsin may be the first "collateral damage" in this conflict, but will hardly be the last. This could result in a process decades long.

And I do care about the "collateral damage" and an even more plutocratic US, exporting their monstrous model all over the world.

But there's a more direct, immediate, parochial reason for Australians, especially in NSW, to be worried about.

Walker, his donors and their Tea Party cannon fodder feel emboldened to attack a weakened labour movement because (1) they achieved a decisive majority in the State legislature and because (2) the labour movement is frankly quite unpopular.

The same conditions could obtain after the next NSW State elections.

We could see similar abuses much closer to home. Is that the shape of things to come for us?

03-02-2011. CBS: Ohio Senate Bill 5 passes, restricting unions
This is a sad day for me. Congratulations to the blood-suckers who feed on human misery.

04-03-2011. NYT: Wisconsin Governor Says He Will Begin Issuing Layoff Warnings to Unions.
ABC (7:30 Report - Stateline): Antony Green (ABC's election expert) believes the Coalition could win both houses of the NSW State Parliament, with Democrat Christians and Shooters and Fishers Party. No Greens votes required.

05-03-2011.Scott Walker's claims that (1) Wisconsin State public employees (in general, State employees) are overpaid when compared to their private sector counterparts, and (2) Wisconsin (or other states, in general) are indebted because excessive retirement benefits, were hard to consider impartially and required further research.

For instance, there are services which are provided by the State only, like law enforcement: how to assess if they are more or less paid?

For this reason, Walker's claims had been left out of the text until now.

However, recently even conservative commentators seem to concede that at least one of the two claims above is false:

"I think, for state and local workers, their wages on average across the country are pretty well in line with the private sector [my comment: are not higher; that is, claim (1) is false]. (...) It's the benefits where the state and local workers have a huge advantage. (...)
When you adjust for education and experience (...) some of the studies show that the state-local workers earn a little bit less in wages. Others show that they're about equal." Chris Edwards (Cato Institute).