Post Date: 03/2/2011

On Wisconsin

Wisconsin is in the news because of a confrontation between its Republican governor and public employees over state budget problems. This state has the same kind of problem that many other states do, including California. One of the significant areas of budget shortfall in many states nationwide is unfunded pensions promised to public employees. The governor of Wisconsin blames unions for this problem and his bęte noir is the teachers’ union. From his public and private pronouncements we know that the governor would be opposed to unions whether or not they had contributed to the current crisis. At this specific time, the governor’s argument is that the teacher’s union and, by extension, all other unions of public employees caused a lot of the budget shortfall by collective bargaining for and winning benefits for their members that the state can no longer afford to pay. So he proposes to cut back on those benefits and withdraw by statute the right for unions of public employees to bargain collectively. These actions, in his reasoning, would prevent a significant part of the current budget shortfall from occurring again. The governor and many other conservatives frequently say that public employees are better paid than private sector employees in similar jobs so this is a further reason to cut back on their benefits and restrict their right to collective bargaining which legislatures and other public officials apparently have been powerless to resist. But, let’s look deeper into this problem.

First, some personal disclosures. I have been a public employee for my entire career in medicine. I recently retired as a Professor of Clinical Pathology at the School of Medicine of the University of California, San Diego. I was paid primarily by the Veterans’ Affairs Medical Center where I was Chief of Pathology and Laboratory Medicine for 30 years. This job involved running the clinical laboratories at a large, university affiliated medical center that had a training program for both medical students and residents in all medical specialties with the obvious exceptions of Obstetrics and Gynecology and Pediatrics. So I practiced Pathology, taught Pathology, did research, and administered a clinical laboratory with about 90 employees. My salary and the salaries of all the other professors that I knew was less than I would have made in the private sector with less responsibility. The rewards that made working for less money up front were that I got to do research and teach medical students and residents which I loved doing. And, I retired with a defined benefit pension and excellent health care through Government Employees Blue Cross, Blue Shield. A further illustration of the level of salaries of government employees can be seen by the fact that, for all my 30 years as chief of the laboratory, I had difficulty in timely hiring of new technicians and technologists because the salaries we paid were lower than the average in the rest of the community. The University of California, Kaiser, and Scripps all consistently paid more than the VA did for my entire career. This does not mean that we could only hire the dregs of the workforce. Many of the employees that we hired and that remained with us for long periods made the specific decision that they were willing to trade short term salary for long term benefits. This is a calculation that anyone can make when planning a career. President Bush tried to sell his proposal to privatize Social Security by telling people that the money that they paid into Social Security was their own money and they should be able to do with it what they wanted now. He suggested investing in the stock market and going shopping. Those options were available to me in the VA. When I joined there was one retirement system, the Civil Service Retirement System. This required a specific deduction from each paycheck that went into a fund, with some contribution from the VA, that gave a guaranteed payout upon retirement based on years of service and salary level. At about the middle of my career, a new system was offered, optional to older employees, and mandatory for all new hires. This was the Federal Employee Retirement System. In this plan, money was deducted from each paycheck, with a contribution from the government, which was invested in stock or bond funds that the employee could designate. After the massive securities fraud committed by the financial industry in recent years, the employees who retired in the CSRS still received their defined benefit while those in FERS lost from a third to a half of their retirement fund as did most investors in the private sector. Now many of my younger colleagues who are still working cannot afford to retire.

With that background, let’s look at the budgetary problems affecting so many states. Whenever their contracts come up for renewal, unionized public employees have been facing governors and legislatures nationwide who say that they simply cannot meet their salary demands, no matter what cost of living increases there may have been. If legislatures were to raise the salaries of public employees, they would have to fund those expenditures immediately and that might involve raising taxes, which most voters find distasteful. The voters do not find receiving public services distasteful but paying for them is. Legislators fear being turned out of office. So unions, realizing that the legislatures really won’t raise the pay of their employees, ask for future benefits such as guaranteed pensions and health care. Legislatures nationwide have agreed to these benefits but, and this is a big ‘but,’ they have not put aside the money to fund these future benefits. This is both incompetent and dishonest. It shifts a problem from today until sometime in the future. However, in California, Wisconsin and elsewhere, the future is now. I believe that any objective assessment of the current budget deficits in most states will show that the scenario that I have just described is a significant part of the problem, perhaps most of it. Unions bargained in good faith for the benefit of their members. Governors and legislatures were dishonest, incompetent, and fearful of the voters. Voters also do not emerge guiltless from this story. They continue to want, even demand continued public services without voting for legislators who will make the voters pay for them. This is perhaps not true of Libertarians who want to discontinue most public services because they think that they can do everything for themselves. These folks are ignoring or have failed to grasp the significance of the history of the rise of civilization that started with farming in the Middle East about 11,000 years ago. As we moved from being nomadic hunter-gatherers to settled farmers and city dwellers, it became apparent that cooperative efforts of farmers, toolmakers, shopkeepers, weavers, carpenters, masons, ceramics makers, healers, religious and civil authorities and so forth, facilitated the growth and welfare of society as a whole. Division of labor and expertise require cooperation among all societal elements and thinking about the good of the whole for a society to function efficiently. This is noted in the preamble to the United States Constitution wherein “We, the People…” note that one of our reasons for establishing the Constitution is to “…promote the general Welfare...” Whether the libertarian views of the current Tea Party will turn out to be more like a boil on the ass of the body politic or a cancer of the anus, constipating all governmental movement, remains to be seen.

What is to be done? Since it is common to search for a scapegoat, I would nominate all present and past members of state legislatures. I doubt that anyone is going to charge them with criminal malfeasance but I would recommend that all their pension and health care benefits be canceled forthwith. I would also recommend this action for current legislators who want to cancel pensions and health care benefits for other public workers. I would note that all members of Congress benefit from a publicly funded health care plan and a publicly funded pension with a guaranteed benefit. To my knowledge, only one Representative, Paul Gosar (R-AZ) has turned either of these down. I really doubt that there are more than a handful of similar ideological purists. Secondly, all budgets have both income and expenditure columns. There are always programs that can be canceled, but curing fiscal problems only by cutting expenditures will prove draconian and insufficient even when all the poor, the elderly, the children, the sick, and mentally incompetent have had all public assistance taken away. We simply don’t give them enough money to solve our budgetary problems by stopping. We lose much more by giving tax breaks to the rich and to corporations. Our society is now structured so that the few citizens who are rich actually have most of the money. These figures are widely available. The rich have benefited enormously from living in this country and they can afford to pay more taxes for the privilege. They won’t want to, but they really can afford to. Apologists for the rich argue that they are the ones who create jobs. Dr. Arthur Laffer’s concept of “trickle down,” giving the rich more money so that they will use it to create jobs for the rest of us, has failed. Look what happened to jobs after the Bush era tax cuts and the massive bank frauds of 2008. In our recovery, rich folks are doing quite well, amassing capital which they are sitting on while job growth remains slow. Reading history we learn that rich people tend to want more money. The super rich want even more. “Trickle down” in practice turns out to be “pinkel down.” (Pinkel is a slang German word. Look it up if you can’t guess what it means.) Furthermore many, if not most jobs that are currently being created by our rich and by our corporations are being created overseas where salaries and benefits are much lower and safety and pollution regulations are more lax or non-existent. One comment we frequently hear is that we have too many regulations and that they stifle job creation. But if you look at the history of labor in this country you will find that the organized labor movement started precisely because large employers were exploiting their employees through low wages, non-existent safety precautions, excessively long work weeks, using child labor, and so forth. In some foreign countries where some of our companies are creating jobs, these same opportunities for worker exploitation still exist. American companies take advantage of them. Do we really want to solve our financial problems and bring jobs back home by cutting our salaries and benefits for average American working people to Chinese levels? If not, who will make employers act responsibly and observe our modern American values of compassion and decency and consideration of the “general Welfare?” In the past it has been Unions who bargain collectively and the government enforcing regulations. If not they, then who?

Lastly, let’s think about this. A major motivation for the conservative drive to emasculate unions is that unions give most of their money to liberal political candidates, usually Democrats. Liberal Democrats have historically been much more sympathetic to the labor movement than conservative Republicans have. Because the Supreme Court recently ruled that money in political campaigns is just free speech, eliminating unions would have the political effect of silencing liberals, or so Republican strategists hope. Conservative businessmen would be relatively unopposed in their ability to fund campaigns of candidates of their choice. Both union and governmental oversight of business practices would suffer. Look at what the Republican Party is trying to do right now. The cure for the ever growing influence of money, money, money in elections is to make all elections publicly financed and only publicly financed. I might suggest that all private donations to politicians be considered bribes, which is not far from the truth. I might further suggest that such bribes be made a capital offense, but some would think this is going too far.
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