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).

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