Thursday, December 30, 2010

Wrecking The Living Wage

I took the following excerpt from The Automatic Earth (TAE) where the discussion was focused on how to cope with state defaults that appear imminent in 2011. Unlike TAE I have no respect for Mike Shedlock a one sided shill for corporate robbery at all levels across the US. As postulated here, actually by TAE, his "solutions" require anyone with any kind of living wage to disrobe and take corporate thievery up the ass. And as TAE explains eloquently enough, removing the living wage from the equation means the "70% of the economy driven by consumers" fades away into nothingness and our corporate leaders continue to send jobs overseas to peasants in countries paid even less than we are. Not much of a solution at all, as we shall see as this crisis inevitably plays out to our detriment.
Mike Shedlock (we have a ton of respect for him) wrote on the same issue earlier today, and I want address what he says. I agree with Mish on many points; we famously are about the sole voices insisting that deflation is the only option going forward. But I don't like the so-called libertarian stuff. Mostly because it never really turns out to be.

Mish defines the following as solutions for the financial crisis in the American states:

Six Common Sense Solutions

•Scrap Davis-Bacon and all prevailing wage laws.

•Scrap collective bargaining for public union workers entirely.

•Implement national right-to-work laws.

•Outsource every public sector job possible including police and fire departments to the lowest cost private sector provider.

•Kill defined benefit pension plans for all new hires and for all public employees that do remain in the system.

•Tax public union retiree benefits over a certain amount.

And that, in my view, leads nowhere.

• The Davis-Bacon Act is a 1931 piece of legislation under Herbert Hoover that was basically meant to prevent a developer from bringing in hundreds of dirt-cheap and abused Chinese workers into a community where unemployment was huge, in order to build a bridge or railroad at prices that wouldn’t have allowed the local population to persist. What is so bad about that?

• Implement "National right-to-work-laws" sounds good, but not if you don't add "for a living wage". Indeed, if you don't, it doesn't sound good at all. It sounds like Hoovervilles to me.

• "Outsource every public sector job possible... " is something I’m very much against.

Mish includes police and fire departments, and undoubtedly means to include health care and schooling too. But a community needs to keep its basic needs in its own hands; food, water, sewage, safety, healthcare, you name it. You don't ever want to hand those things over to people 1000's of miles away who only got into the game to make a profit.

Your water, your health care, your kids' schools, they shouldn't be profit based. They should be community based. If, for example, a private enterprise takes over a prison, it will have to show growth from one year to the next. In other words, next year it will have to either have more prisoners or give the existing ones even worse services. Ditto for schools; ditto for hospitals. This is a major reason why the US has 5-10-50 times more domestic incarcerations than any other country that calls itself civilized. Profit.

Yes, government-run institutions are often poorly-run. But you still have no choice but to re-organize them, since the only alternative is to lose control of what you really can't afford to lose control of. I don’t want to cover all services right here and now, but you don’t for instance want to let some private company uphold and police the law in your community. After all, what would be next? Let them make the laws too? What, we’re not close enough to exactly that yet? Really, you tell me, what's the difference between making the laws on the one hand versus interpreting the existing ones on the other? Blackwater, anyone?

"Outsource every public sector job possible", Mish? I don't think so. It's the road to hell, because the Carlyle Group and Blackrock and a bunch of Chinese and Arab multi-billion dollar enterprises and sovereign wealth funds will wind up telling you what you can do and say, what health care you can get, and whether or not you’ll have clean water in the morning. And the decisions between these options will be based on profit, not on whether your kids get a good education, or a good doctor, or whether they can drink their tap water or not. "Sorry, no profit in that."

Most of all, Mish goes against his favorite enemy: unions. However, as much as there may be wrong with unions, especially the public employee variety, "Scrap collective bargaining for public union workers entirely" sounds just plain silly.

If you support a free market system, as Mish obviously does, then you will need to accept that parties within that market system have the right to organize. It’s either that, or nothing. It's either that or you must also ban the Chambers of Commerce (where employers gather), at every level they exist. Certainly on the federal level, they are at least as destructive a force as the unions are. They are the no. 1 donor, bar none, to political campaigns in the America.

If you want to prevent workers from organizing, you must also prevent employers from doing so. That said, there are plenty of astonishing instances of firemen walking away with $100,000-+ pensions. But how is that a direct and inevitable result of employees organizing? It looks more like a cancer growth to me, a fault in the system, instead of a systemic fault, but a single tumor is still not a reason to throw out the entire body.

You need to re-negotiate all contracts, all over the country, both for those who have retired and for those who are still working or will start doing so. You want to do this on an individual basis? You sure? "Scrap collective bargaining for public union workers entirely"? Sorry, I think that would be a really counterproductive idea. What you need to do is tell people that they inevitably will face a huge drop in income and benefits, no matter what. And then try and figure out a way to find middle ground.

Sure, that will be hard. But banning any and all workers' associations, be they public or private, is not an answer at all. That just makes you a free marketer telling Karl Marx he was right all along. "No collective bargaining for you": we're going to play you all against each other, until you make as much as a Chinese peasant.

And no-one can afford a Chevy anymore. Which dooms GM. Or a home. Which dooms the real estate sector, and the banks.

We have a long way down, say after me: down, to go. The fate of the individual states will guide our way down there. They can't exist on hot air anymore than we as individual people can.

We all try though!

Hey, I’ve said it for ages now: this is not a financial crisis.

This is a political crisis.

How do you know? Well, people keep on saying: "Hey, the stock markets are up, we must be recovering". But the stock markets are up only because the states are going bankrupt, and homes are foreclosed upon, and there's millions upon millions of Americans who haven't had a job for over a year. It's all about priorities. Political priorities.

Washington has elected to taper and paper over what's really awfully wrong and lost, and it's done so at the expense of the people. Any and all bail-out money spent so far, and what is it, $15 trillion, $20 trillion?!, has gone towards banks, not people. While it's the people's money to begin with.

That is a choice. It's not an inevitable one, it’s simply a choice. In this case, one that tells you who holds the real power. And it isn't you.


Danette said...

One day we'll wake up...

and it will be too late.

in other news, one that relates to you in another way on I was reading something about the Gulf-- but since most of it came from here: I thought you'd rather have this link. The headline reads: "The Gulf of Mexico is dying" they are following up on the results of the spill and releasing some of the data. Not good news to say the least.

Conchscooter said...

The Gulf Of Mexico is out of the front pages and still a horrible disaster. To gauge how big a disaster just ask anyone of they would eat Gulf harvested shrimp.

Anonymous said...

I again leave a link to an article for your consideration. I take asking for your time seriously and feel this one this adds to the theme. The blunt style in it is refreshing.

Conchscooter said...

anon: absolutely - long and detailed and very smart. read joe bageant all the time.