Yes, this is precisely the “race to the bottom” that Professor Mead was talking about in one of his recent posts. I think he is right; the public sector unions are merely experiencing what private sector unions started experiencing more than a quarter century ago.
Public sector employees are about to live through what the vast majority of other Americans are living through; they are about to get poorer and they are about to experience a decline in their standard of living. In this, they are exactly like the vast majority of other Americans with the exception of a few financial hot shots who are abile to reap tremendous financial gains from their ability to get the government to shoulder the risks of their bad decision making.
The question is when, if ever, this will usher in some new form of capitalism that Professor Mead swears is on the horizon but doesn’t seem willing or able to provide any details about.
I do remember what ushered in the last “new” version of capitalism otherwise known as the “Blue State” model; it was the Great Depression and the growing awareness on the part of the nation’s elites that an increasingly poor, desperate and angry working class was becoming unviable from a political point of view. Will the next version of capitalism be ushered in when all of those working people who used to have union protections, but no longer do, become so desperate, furious and engaged that they’re no longer willing to tolerate a tiny sliver of society getting wealthier while they become more destitute?
The 60th anniversary of the Triangle Shirt Waist fire is only 26 days away. It helped spark a movement in which working people, to use a phrase from the movie “Network” shouted, “We’re mad as hell and we’re not going to take it anymore.” Similar anger from America’s working and middle classes today may seem impossible for some to contemplate, but no one familiar with American history should discount the possibility. Is it possible that the anger currently on display in Madison and elsewhere could morph into something more like the anger that’s being expressed in the Middle East? It would be very foolish to think that it is impossible, especially in the fullness of time.
I do have one more bone to pick with Professor Mead’s analysis. In this post he alludes to the bankruptcy of Greece and the looming bankruptcy of Spain but he does not allude to the financial security of Germany. In fact, Germany is the most prosperous nation in Europe and it has achieved that prosperity with a very high degree of union protections.
In fact, the protections of the “Blue State” model that Mead alludes to are far less generous in the bluest of American blue states than they are in Germany; yet Germany thrives. Mead’s comparison between American blue states and Greece and Spain is specious; American blue states offer far less to its public and private employees than Germany offers to its workers.
Unless Mead can explain how Germany can offer rigorous union rules and an incredibly (compared to American standards) social safety net and still prosper while American states can’t, his analysis is a little hard to take seriously.
Forgive my mistake. In my last comment, I meant to say that March 25, 2011 would be the 100th anniversary of the Triangle Shirt Waist fire. I regret the error.
Quoting Walt: “Labor activists would like to blame this on union-busting efforts by corporations, and it is certainly true that corporate resistance to unions has stiffened over the last thirty years. But what really drove this process was the market. With offshore competition and onshore automation cutting demand for unionized labor in the US even as immigration and a surge of women into the labor force increased supply, unions could not repeal the law of supply and demand.”
You got that right. However, public policy does bare responsibility for these developments. There’s no need to dwell on the fact that our trade and immigration policies (based on legislation passed in 1965 and 1993) increase the supply and decrease the demand for labor in America, low-skilled labor most of all, thus penalizing the poorest and most vulnerable among us, African-Americans especially, and young African-American males more than anyone. How do you justify that?
Consider this telling anecdote. During the reconstruction in the aftermath of Katrina some young African American males were complaining to a building contractor that they weren’t getting hired; the contractor explained that, unlike his Mexicans, African-Americans weren’t willing to sleep out on the ground at night.
Public policy (or in this case the lack of it) also is responsible for the decline in the demand of labor caused by labor-saving technologies. I mean the failure to adjust our wage-and-hour laws to compensate for these developments. Historically and in theory this is the ONLY way to insure that the fruits of technological progress are shared by all the members of society.
Right now many low-income parents are forced to hold three and sometimes even four full- and part-time jobs in order to support their families. Imagine the boon to them and their children of legislation establishing a 30 hour standare workweek with time-and-a-half or even double wages for overtime.
So, no, unions can’t fix these problems, while private corporations and those in the top 20 percent have no interest in doing so because they profit from them, at least in the short-run.
I suspect it will take a kind of noblesse oblige on the part of our educated elites, or some of them, to deal with these realities. There are enlightened ways of doing this which would not penalize workers in places like Mexico and China, nor diminish the incentives for growth and innovation in our own domestic economy.
But if we continue on the path we are on we are headed for economic and political disaster both here and abroad.
At the risk of being accused of squatting on Professor Mead’s real estate in cyberspace, one other thought comes to mind.
It is important to remember that what is replacing the Blue State model that Mead correctly suggests is in extremis is not some mythical new incarnation of capitalism that the Professor promises is on the way. The Blue State model is being replaced by something far more familiar; it’s called the Red State model.
We already know alot about the Red State model; it relies on more or less unregulated free enterprise and offers few constraints on the owners of capital and few protections for working people.
It’s not like we don’t have experience with what the Red State model will bring; we’ve already lived through it. Prior to the Great Depression and the invention of the Blue State model, the United States experienced an unrelenting cycle of booms and busts. Bank failures were a regular occurrence. Serious depressions as opposed to mere recessions were a fact of life. Working people unable to find work at a decent wage could easily end up living in shanty towns or on the streets. Workers were locked up in factories that were little more than fire traps. It was the adoption of the Blue State model that eradicated that bleak reality; the death of the Blue State model will do little but bring us back to a sadder day in American history.
Professor Mead might enjoy looking at a chart that outlines per capita gross domestic product by U.S. states. It can be found here,
As he will see, 7 of the 10 most prosperous states in the United States are blue states. All ten of the poorest states in the United States are red states (his native South Carolina is the 47th poorest state in our nation). Of the 10 most wealthy states, the only red states on the list are Wyoming and Alaska which have tiny populations and alot of oil wealth and Virginia (which is really a blue state because the source of the states wealth is to be found in the D.C. suburbs where most people work for government.)
As the Blue State model disintegrates, we really are going to experience that race to the bottom that Mead assures us won’t happen. The more California, Connecticut, Massachusetts and New York abandon the blue state model the more they will come to resemble the failed states of Mississippi, South Carolina and Arkansas. It’s hard to imagine a race to the bottom more pathetic than that. It would be like Germans aspiring to live more like Bulgarians.
On a completely unrelated note, I wanted to thank Professor Mead for his recent article in Foreign Affairs that I just had the opportunity to read today; it was very thought provoking.
For an opinion piece, if I may so describe it, this is certainly good news. And yet, and yet …
And yet every president since Eisenhower has warned us that Social Security (Social Insecurity?) is not sustainable. LBJ’s Medicaid program is equally unsustainable, and Obama takes steps that will guarantee that Medicaid will go broke sooner rather than later. LBJ’s War on Poverty cost $6.6 trillion over a thirty-year period, and was wasteful, corrupt, and destructive for poor families, not to mention the negative impact on the economy. WoP removed an average of $220 billion each year for thirty years from investment capital and utterly wasted it on ineffectual social programs. Immediately after the WoP began removing capital from the economic system, the DOW flat-lined for seventeen years (look it up), with three recessions culminating in the Carter Catastrophe. Reagan restored growth to the American economy, but even that was not a sufficient wake-up call for agenda-driven Democrats, and thirteen additional years of waste and fraud were required before citizens and overburdened state governors forced Clinton to end the War on Poverty, which he then replaced with the order-of-magnitude more destructive Democrats’ Unaffordable Housing Project Bubble
“Can’t anybody here play this game?” – Casey Stengel.
This sort of depends on what game is being played. The dotty Marxist professors in the self-described elite universities have substantially poisoned the minds of a generation of elitist journalist, lawyers, priests, academics, and politicians. Following 160 years of Marxist history, practice, and deception, a retreat by Rahm Emanuel and his ilk must be considered a tactical move until conditions improve for the final triumph of Marxism. Emanuel, Cuomo, and Shumlin have not suddenly become classical Jeffersonian liberals but remain faux liberals in the Democratic Party.
But Dr. Mead’s article is good news from the war front.
There is no successful blue state model today that isn’t already disintegrating because it does not fit economic reality. There are no blue state model parallels in Germany. It’s easy for unions to protect an income level that is already low and forfeits higher taxation in exchange for social services than any blue state (or red state) citizen is prepared to face. It’s been like that since I lived there in the early 1970s. You want it? Go get it.
Wig Wag –
You have confused per cap income with the financial status of the state. Washington DC has the greatest per cap income and the USA is the brokest country on God’s green earth, Dr. Mead’s three personified examples, Illinois (Emanuel), NY (Cuomo), and Vermont (Shumlin), are in desperate financial straits, not to mention California, New Jersey, Virginia, Rhode Island, etc.
You could make an excellent argument that these states and this Republic are broke because we overpay government workers and government unions. The irony is that LBJ’s War on Poverty added $6 trillion to the national debt and the Democrats’ Unaffordable Housing Project has added $5 trillion and counting to the national debt, and the poor who were supposed to be served by this government largesse are worse off than at any recent time. The big cities ghettos in Chicago and Los Angeles are poor hot spots despite the high per cap income of Illinois and California. Regardless, the poor continue to reliably vote Democratic, even the dead ones.
And the taxpayers end up like Tennessee Ernie Ford’s coal miner, another day older and deeper in debt.
“…explain how Germany can offer rigorous union rules and an incredibly (compared to American standards) social safety net…”
That’s easy – they’ve been free-riding on our defense spending for 65 years. The 3-5% more of their own GDP that they would have had to spend on their own defense is a helluva annual “stimulus” compounded over all those decades.
Let’s pull our troops out of Germany and out of any mutual defense pacts we have with them. Let’s let Russia begin licking it’s chops over them again, and see what happens to the Socialist Workers’ Paradise of Germany.
“I suspect it will take a kind of noblesse oblige on the part of our educated elites”
for what – to advocate for more unsustainable handouts? More ‘green’ nonindustry? Further restrict energy production? More taxes on the middle class?
I enjoy Mr. Meade’s pieces immensely but I must say, again, that this entire piece could be summed up in Margaret Thatcher’s statement: Socialism works until you run out of other people’s money to spend.
I cite this quote because it fits a large narrative I see at play: smart people aren’t really much smarter than anyone else. The so-called common man, the uneducated, the simple people, have many, many idioms and aphorisms which capture the largest of thoughts. Graduates of Ivy League school may run the world and tell people how it really is — as when they told us that unless we bailed out AIG and friends credit would freeze up like the ice in Vonnegut’s novel “Cat’s Cradle,” — but really, when you get right down to it, they aren’t so smart after all. We common folk thought, What the? Why should we believe you people who brought on the whole “crisis” anyway? Furthermore, really? The financial world would stop overnight, in defiance of every other “world” we have ever witnessed?
I just don’t give much credence to intellectuals anymore. They have a fancy way of saying things that we simpler folk knew all along … at best. At worst they use their fancy words to hookwink the common folk. Either way, the curtain has been pulled back from their world and a little wizard is all we find.
That said, I do enjoy your pieces, Mr. Meade. They confirm what I already knew.
We hear from the Right that teachers make too much. We hear from the Left that teachers make pathetically little. What’s going on?
Teachers’ Unions have negotiated low salaries but high pensions. Unfortunately, the high pensions may not be sustainable over the long term. Not enough money has been set aside for them. The unions got the high pensions because management didn’t need to pay for them right away, and so they deferred the problem.
It seems likely that most high pensions are going to be cut in some way or another, and that will mean the teachers’ unions are essentially worthless – they have neither managed to bargain high salaries or sustainable high pensions.
So indeed the unions are fighting for their life, since as soon as teachers understand the situation, they will realize the union isn’t even in their narrow self-interest.
Probably the worst part about the coming public sector layoffs around irresponsible, wastrel blue state America is that they will be based on seniority. The young people who are just starting their adult working lives with school debt and no assets are going to be the first ones fired, while the aging Baby Boomers are going to be the ones who get protected. In a more rational society, these fossils would be retiring now with plenty of wealth, but sadly many of them have squandered their savings on far too expensive homes, cars, fine dining, and luxurious vacations to Europe and the Caribbean, because they assumed that “the government” would be able to take care of their needs forever. Instead of being able to retire, they will now have to continue working into their seventies, or even beyond, to maintain their lavish lifestyles.
Take a look at the youth unemployment rate in places like Spain; I fear that is the direction in which we are now headed. We are deep, deep trouble, and I certainly don’t know what the answer is.
Your analysis is quite correct, Mr. Mead. The public sector unions are dead-men walking.
Now go to the next level and look into what the demise of the public-sector unions will mean for the Democrat Party.
I belive it will force the Democrats to restructure their party back to respectability that it lost in the crazy McGovern reforms of the 1970s.
The leftist leaders of the public sector unions finally ran our of other peoples money to loot. Just like the private sector looted their companies until they went broke or moved off shore, now public sector unions have bankrupted their golden goose, and have run out of taxpayers to loot.
The dems have to be a bit more quiet when they kill their unions, but they still have to, because there is no more money. For awhile, under Obama, they could loot the fed gov, but the new repub congress has now stopped that as well.
Leftist democrats cutting public employee unions? It just doesn’t fit the narrative and is definitely not politically expedient. Remember when “everyone” was against the War on Terror, Gitmo and The Patriot Act? That certainly changed after the 2008 election. Remember when “everyone” was all about “civility” after the Arizona shooting? Well that certainly didn’t last when it came time to support the fat cat leftist unions. The point is that our mainstream media is really nothing more than shills for the democrat party. It’s quite obvious to anyone not infected by willful amnesia. Propaganda has always been the left’s favorite tool, followed by intimidation and violence.
Great article, one Does not have to go very far to see what the federal govt did in 1985 !! They imposed changes to pensions as they saw the handwriting on wall. We pay about 500.00 a month for a health care and we can contribute up to12% into a 401k like pension. They merely grandfathered employees hired before 85!
Ah. Yes. Far too much labor saving equipment in America. The only way to save the workers is to see that the new equipment doesn’t save much money.
That will work.
“We already know alot about the Red State model; it relies on more or less unregulated free enterprise and offers few constraints on the owners of capital and few protections for working people.”
The only protection the working people have is to become more valuable each passing day.
And you have to take the long view. Standard Oil Money paid for my college education.
Despite the predictions of doom and gloom from wigwag, I believe there will emerge a middle ground rather than a return to the days of robber barons and sweatshops. Regulation of business regarding working conditions, safety, working hours, etc will not disappear with the reduction of public sector unions. In the private sector less than 7% of the workforce is now union and we do not see a great trend to abuse of workers. And let’s face it, government has always been a relatively benign employer in most regards. The world has changed from the bad old days of overly powerful corporations being able to force labor to work under terrible conditions. Those changes are now enshrined in the national psyche and in law, they are not the sole preserve of an antiquated union movement. Any attempts to take us back to anything approaching those days would be soundly, and deservedly, rebuked by the populace. Reduction of the influence of public sector is not a return to yesteryear, it is a step forward in coping with a dynamic world. Trying to maintain the union system as we have known it for the past 100 years is an ultimately futile attempt to stop the clock and lock us into the past.
Margaret Thatcher was right: eventually you DO run out of other people’s money.
February 28, 2011 at 9:35 am
Luke says: “I suspect it will take a kind of noblesse oblige on the part of our educated elites”
Bandit says: “for what – to advocate for more unsustainable handouts? More ‘green’ nonindustry? Further restrict energy production? More taxes on the middle class?”
Read more carefully please. I advocated adding to our reform agenda new restrictions on trade and immigration and a shorter standard workweek, not more handouts.
Which is not to deny the need to contain and then substantially lower the share of GDP we currently spend on health care. Obamacare may or may not fix that problem. If it doesn’t then a shift to a single payment system may be the only answer — but I don’t really know.
Obviously there will need to be higher taxes, too, but mainly on the top one percent not the broad middle-class.
And, yes, there is apension and Social Security crisis that will have to be faced. Part of the answer, I suspect, is that children are going to have to start supporting their parents more than they do currently. That implies a return to some form of the three generation family and a re-imagining of the institution of retirement. Here is my own “utopian vision” of what that might look like:
Note that the lifestyle described is one that is designed to make a more efficient use of our limited resources. On paper it will look like a poorer standard of living (when measured in per capita GDP) but in reality it will increase human welfare for reasons that are clearly explained.
Referring in part to lots of low wage immigration: “So, no, unions can’t fix these problems, while private corporations and those in the top 20 percent have no interest in doing so because they profit from them, at least in the short-run.”
Lots of people have supported tighter border controls which would have helped firm up the low end of the wage scale but the liberal union allies have fought this tooth and nail. I guess they are finally seeing what we were talking about. (yeah I’m in the top 20% and been in favor of limiting low wage immigration for years)
Maybe the unions and union supporters should ask Reid, Pelosi and Obama why they didn’t address this over the last couple years.
Nobody seems to be talking about how these deficits and implicit generational conflict between boomers and their kids are related to relatively new demographic phenomenon. The phenomenon is the vast expansion of elderly. When in human history have we had so many people live so long with such high expectations? The modern pension system was largely a Prussian invention, correct? What was the lifespan at that time? Did people really expect tens of thousands of pensioners to remain on the rolls for decades? This is a bigger issue than Social Security and its solvency. This issue includes private and public pension plans and any discussion must consider the implicit conflict of interest between retirees, older workers with company stock and younger people. Perfect example of this conflict of interest is offshoring.
As the Blue State model disintegrates, we really are going to experience that race to the bottom that Mead assures us won’t happen.
Funny, I live in Texas but I haven’t noticed anyone starving in the streets. Come to think of it, if the Red state model is so horrible, why are all the Blue staters migrating to Red states?
I mean, I guess I live at the “bottom” in a wretched poor Red state but frankly things look pretty good from here. If this is the “bottom”, I would love to see the “top”.
As he will see, 7 of the 10 most prosperous states in the United States are blue states.
Strangely enough, “Prosperous” states are also those with the highest cost of living. People may make more money but they have to spend more money as well. You can have a middle-class lifestyle in Texas for the same money that gives you a poverty line lifestyle in San Francisco. Plus, you can have a pony.
One major factor left out of the Blue state “prosperity” is the very real fact that the Blue states for decades used unions to extort above market prices for the products of their states. Union’s in the Great Lake states could non-union Americans to buy union made products at whatever price the union demands. For 40 years, if you wanted a car, it was built by the UAW and you paid the UAW price. If wanted steel, you paid the USW’s price. And so on…
Unions didn’t take money from the upper classes or capitialist as their mythology says, they took it from consumers. Most of those consumers both inside American and without had to work for free-market wages but pay union monopoly prices.
The Blue states are resting on their laurels much of them won by historical accidents of war and geography. Since 1970s they have been progressively forced out of their monopoly and they don’t know how to deal with it. All they can think to do is to reestablish the monopoly somehow.
We do face serious challenges in employing millions of Americas who don’t have more valuable work skills than an illiterate 3rd world peasant fresh off the rice patty. However, setting up monopolies so that privileged minority of such people can extort wages from workers without privileges, is not the answer.
The unions are going to have to reckon finally that their jobs and benefits are just like FICA and Medicare…IPY’s from politicians. “I Promise You…”. And even a lot of union boyos I guess would laugh about that line and its value. But they bought it in their selfishness.
Monopolies cannot stand, even when backed by brute force. The money runs out, people change and the time warp ends. Trumka’s nice job and prestige as a WH visitor may be the apex for the head of AFL-CIO.
And politicians, with all their law about the employee-employer relationship, helped. That body of law removes a major reason unions got started.
A brave new world is coming.
Wig Wag and geokstr –
Geokstr is correct about the free ride Germany got after the Soviets collapsed in 1991, but it goes beyond that. Germany has a culture that is disciplined and businesslike. And while Americans’ attention spans seem to be measured in minutes or less, Germans have a firm memory of the Weimar Republic and the hyperinflation that resulted, when a trip to the grocery store required a wheelbarrow to carry the money for the daily groceries.
When inflation, interest rates, and unemployment rates all hit double digits in the Carter Catastrophe, it seems not to have made a lasting impression, but not to worry. You will have an opportunity to observe major inflation up close and personal when Obama gets through with you, and you might want to pay attention this time around.
With all of the discussion of the decline of unions in the private sector, none of the analysis has picked up on the possibility that the utility of labor unions has run its course in the United States. WigWag mentions the Triangle Shirt Waist Fire, apparently as a justification for the continued existence of unions and their protections. However, the issue of workplace safety is now codified as a public policy in OSHA. This is just one example, as the majority of the protections traditionally negotiated by unions on behalf of their members such as medical leave, health benefits, retirement, and wages are now enacted in federal law. (See the FMLA, HIPAA, ERISA and the FLSA). Additionally, some states, such as California, go further to provide higher minimum wages and other protections.
The enshrinement in our legal system of these protections was in large part the result of effective advocacy by union representatives. In effect, the unions have negotiated themselves out of their jobs by raising the minimum standards for everyone as a matter of law.
Typically, the private sector realized that unions no longer serve a signficant purpose to protect employees before government did. It just requires more time for government to address the issue as it is not motivated by the same brutal efficiency as is required by a successful business.
It is time to acknowledge our society’s debt to labor unions, both public and private by throwing a party at which they receive a thank you and a gold watch. It’s not surprising that several states have now sent out the invitations.
The US industries and labor force benefited immensely right after WWII since we were the only industrialized country that didn’t have its industries pounded into dirt clods. This allowed our labor force to demand and get premium salaries and US companies to charge premium dollars for their goods/services due to a total lack of foreign competition. This is what fueled the Blue State model as WigWag points out.
The reality is that the foundation of this model began to crumble very soon after it was built since foreign countries didn’t waste any time re-building and modernizing their industries. Add to that the fact that the US has been a leader in promoting globalization. While this mostly benefited multi-nationals due to savings accumulated with workforce outsourcing, it also helped, and continues to help, lift enlightened 3rd World countries out of poverty; albeit, at the cost of lowering the US workforce costs.
While I support the overall global approach, mostly from lessened security concerns over have-not countries deciding to “even the play-field” using non-symmetrical warfare means, I also accept that it will mean that there may be a lessening of our standard of living, especially in the ability to purchase big-ticket items like homes.
While I am hopeful, I am anxious to find out if those ponies hidden underneath will offer meaningful and decent paying jobs to our mostly unskilled workforce or just have a bunch of shovels and “Help Wanted” signs soliciting Manure Clean-Up McJobs?
I think that it is clear there is no more “more” in the public sector. Where I live,we have a number of alternative and charter schools,which are doing more with less and creating better jobs for teachers and educational experiences for students.
Thanks for the interesting analysis. Where do you think California fits into this equation? From my perspective Jerry Brown is using a slowly boil the frog approach to get another tax hike that he and his supporters then hope to make permanent in five years. Everytime there is a crisis there is a “temporary” tax hike. Then later on CA voters are told to vote to make it permanent since we are already used to the higher rates and therefore a vote to make them permanent does not represent a tax hike.
Think of the U.S. with next to no military spending and you have Germany.
“Democrat or Republican, red or blue, when there isn’t any money. . . .”
Not true even though it is repeated over and over. Did the money just evaporate? Did States lose 10 percent of their land mass through erosion? I guess more people died than were born. Maybe it was the rapture and taxable people just disappeared.
The will to tax is slipping is all. Because the electorate is ignorant of the proper scope of government, all government is now bad and wasteful. Voters once apathetic are waking up and their eyes are still glassy.
Despite the TEA party thrust to lower spending, the latest House budget is more business as usual. The duped electorate is riled up against middle class government workers while multinational industry siphons more and more money to foreign shores. There is your loss of a tax base. Take money from Americans and give it to foreigners.
The heated controversy over public employee collective bargaining is an indicator that something is amiss. What should be clear is that the fault does not lie with the unions, nor even with the right of such employees to collective bargaining, a right that exists throughout the private sector. But there is something wrong with the system. Let us look for a moment to see how the private sector works.
Samual Gompers, who founded the AFofL, was asked what he wanted for his members. His answer: ”More.” Let us take him as a qualified voice for those in both public and private workforces. Let us also allow that there may be a limit to how much “More”. The UAW wants More from Ford Motor, and they enter into collective bargaining. Ford management considers many factors, but chief among them must be, “how much more can we afford?” Should the UAW get too much, something’s gotta give. Return to stockholders, in the form of dividends or appreciation in stock values, is one place. Another, is in holding down labor costs through strategies such as automation. But at some point price increases are the last resort to cover increased hourly costs. What then? Maybe we all go buy Hondas.
But “we” can’t go elsewhere for firemen, policemen, teachers or all the others in the public sector, except to move to a lower tax state. Of course, many do just that. Then “we” have many roles: taxpayer, voter, public service customer. In the election of our government officials we delegate the types of decisions faced by corporate management. Perhaps there’s the rub.
Our government officials are either politicians, or controlled by politicians. They have power, and one of our oldest adages is that power corrupts. It’s to be expected. That corruption affects the collective bargaining in the public sector. How can we fix it?
Absent going elsewhere, we must find a way to make the officials more responsive to our wishes. They must negotiate labor costs more in line with what we feel is a fair price for services received, or we must move on to Hondaland. How can that be addressed?
My suggestion is to make labor contracts in the public sector expire at, or shortly after, elections. Then place on the ballot union demands and public officials’ best offers. We vote on which to adopt, and it becomes the basis for the contract. It’s returning the decision on these contracts to a referendum. Of course, we may not feel the official offer is acceptable. What the? Well, elsewhere on the ballot are the elected officials names. If we are dissatisfied, we have plenty of opportunity to change those too.
This might even improve the performance of the public sector workforce, along with improving the methods of delivering that performance.
Why not give it a try?
Exactly who are those employed in public-sector unions?
Well, we can say they’re usually law-abiding people. But they have marginal educational skills — nothing special, really.
And as a group, they are respo0nsible for no innovations. Indeed, as a group, the public-sector people fight innovations and retard all types of reforms. Just look at the teachers’ unioins.
For the best of them, all you can really say is that the public-sector employees show up and do what relatively little is asked of them without causing trouble. And for that, these people get extraordinary compensation & job security.
No more. The public sector unions are going down. They’ve had a good ride on the gravey train, but now the conductor is coming down the asile and the freeloaders are being put off.
Wig Wag wrote: “Unless Mead can explain how Germany can .. still prosper while American states can’t”
Um, have you actually lived in Germany? I did for several years. Later I worked for the Dept of Human Services (Welfare Dept) stateside AND for a nonprofit jobs program. I can tell you firsthand that the poorest emigrant families in Texas would not likely not tolerate living like a ‘middle class’ German. Toy appliances, unaffordable car insurance for the over-priced tiny trucks and cars that run on $9 a gallon fuel (in other words – one car per family), few television channels, pillbox apartments, little privacy, tiny boxes of cereal for prices double the price in NYC .. I could go on. I won’t get into the attitude the locals have towards the specifics of that revered “social safety net” .. but it is probably similar to that of the audience of a circus act where the tightrope is placed two feet above a silky plush real life safety net – great for safety net fans, not so much for everyone else. I suppose it depends on one’s definition of “prosper”.
Quoting Shannon Love: “Come to think of it, if the Red state model is so horrible, why are all the Blue staters migrating to Red states?”
I think Steve Sailer has the best explanation: “The best indicator of whether a state will swing Red or Blue? The cost of buying a home and raising a family.”
See below for details:
Shannon also mentions: “We do face serious challenges in employing millions of Americas who don’t have more valuable work skills than an illiterate 3rd world peasant fresh off the rice patty.”
As Milton Friedman once pointed out, you can have open immigration or a welfare state but you can’t have both. However the top 20% in a state like Texas can certainly afford a middle-class standard of living and not just because of the low price of real estate. An abundance of low-skilled workers increases the return to those who possess an abundance of human capital, i.e., above average intelligence and a college education.
At America barrels towards a racially-stratified class society those in the top 20% will do better and better. They are the beneficiaries automation, free trade, and mass immigration. Not so for everybody else.
I can’t imagine this is the kind of society almost anybody wants. Yet we are silenced by the mind-forged manicles of political correctness. Moral realism takes courage.
Quoting Steve Smith: “Think of the U.S. with next to no military spending and you have Germany.”
A better comparison would be between Germany and Great Britain. Germany has low immigration, high tariffs, fewer hours on the job per worker, and a vocational education system which is the envy of the world.
Tom Beebe, The full Gompers quote:
“What does labor want? We want more schoolhouses and less jails; more books and less arsenals; more learning and less vice; more leisure and less greed; more justice and less revenge; in fact, more of the opportunities to cultivate our better natures”
That’s not quite so outrageous now is it?
Gompers also favored immigration restriction and a shorter work week to compensate for the ever increasing introduction of new labor saving technologies. What a Neanderthal!
I’ve been reading an exceptionally useful book _Bourgeois Dignity_ by Professor Deidre N. McCloskey of the University of Illinois, and strongly recommend it for her very insightful comments about measuring errors concerning modern-era American personal income and productivity. A few related threads back you said:
“I pointed out in that book and in other pieces I wrote at the time that real wages for non-supervisory private sector workers had begun to stagnate in 1973; that was in 1985 and still today the hourly and weekly wages for American workers in inflation-adjusted dollars are less than they were almost 40 years ago.”
Professor McCloskey spends much of the first seven chapters of her _Bourgeois Dignity_ explaining the flaws in opinions similar to those quoted by you. On page 116 she vehemently concurs with Paul Krugman’s dissection of economic errors by David Landes in the latter’s _Wealth of Nations_. Given that _Bourgeois Dignity_ is the second of a promised six-volume set, she might get around to you in another 10-20 years.
Most of Professor McCloskey’s book is a refutation of widely held current and past opinions concerning the nature and origins of the past two centuries of explosive economic growth. Agreement with her own explanation of such explosive growth is not necessary to acceptance of the substantial validity of her thorough explanation of errors in the past accepted wisdom on such matters. I suggest you consider, though, some interesting parallels between her explanation of the causes of explosive economic growth and the American groupings you described in ¬_Special Providence_.
The other aspect to this debate that I think is not talked about very much is how the demise of the Blue State Model is likely to affect the ability of the United States to project military power in the world. As public and private unions decline in power, as wages continue to stagnate, as income inequality continues to get worse and as the standard of living in states like New York, Massachusetts, Connecticut and California begins to approach the standard of living in states like South Carolina, Alabama, Tennessee and yes, Texas, can we expect that there will be no impact on America’s military might?
Even a cursory glance at per capita federal tax receipts by state, indicates that of the top ten states contributing income tax receipts to the federal government, nine are blue states. For those that are interested, on per capita basis, citizens of these states contribute the greatest amount in federal taxes: District of Colombia, Delaware, Connecticut, Minnesota, New Jersey, New York, Massachusetts, Rhode Island, Nebraska and Illinois. Obviously, on this list, only Nebraska is a red state.
How will the Federal Government be able to support a vigorous Department of Defense, when citizens of those blue states can only afford to pay their federal taxes in the manner of the laggards on the list?
The ten states that contribute the least to federal coffers on a per capita basis are: West Virginia, Mississippi, New Mexico, South Carolina, Montana, Maine, Alabama, Kentucky, Arizona and Utah. Surprise, surprise, nine of the ten states unable to pull their own weight are red states.
Will we really be in a better position to project American military power when the collapse of the Blue State model makes New York look more like Kentucky or Massachusetts look more like Alabama?
Will America really be stronger when the wealthiest American states start to resemble the poorest American states? Would Europe be stronger if Germany and France came to resemble Latvia and Bulgaria?
And there’s a psychological element that I think is worth talking about. The more economically insecure people become and the more difficult their financial straits, the more they tend to limit their political interests to domestic as opposed to foreign affairs. We already see this happening.
In a recent post at Via Meadea and in his brilliant piece in the current issue of Foreign Affairs, WRM alludes to the internecine battle between Palinite Tea Partiers and Pauline Tea Partiers. Mead is convinced that the Sarah Palin wing is likely to prevail; I tend to think he’s right. But I also think it’s fair to say that as Americans become increasingly economically marginalized, the more likely it is that the Ron/Rand Paul approach to foreign policy and military affairs will look attractive. It’s hard to know for sure, but my guess is that as the American standard of living declines along with the Blue State model, that isolationism will become a more prominent feature of the American political landscape.
We already know that the Red State model is a recipe for economic failure. If it wasn’t, there would be far more examples of wealthy Red States. States with energy resources are an exception and a few Red States in the Plains also appear to be exceptions, but for the most part, Red States are poorer than their Blue State cousins.
As Blue States become Red States and as the race to the bottom accelerates, what will happen to the Superpower status of the United States? Will we really be able to keep up with China’s growing naval strength in the Indian Ocean? Will we have no choice but to reduce our willingness to confront militant Islamism?
In my opinion, it’s a strange delusion that motivates people to think that America will be richer and more powerful when a significant majority of Americans are poorer and more financially insecure.
There was nothing “inexorable” about the rise of neoliberal “globalization” and the political attacks on social democracy–which W.R.M. inaccurately labels as the “blue state social model.” In the late 1960s and early 1970s business interests decided that they needed to crush the power of organized labor in the private sector and to change political arrangements that would allow capital to flow more easily across the globe. They were more or less successful after Thatcher and Reagan crushed organized labor in the private sector through the 1980s (in part due to labor’s ineptitude at reading the political writing on the wall). Now they are going after the public sector, which has managed to hold for longer because they realized early on that they had to organize politically in order to be successful.
In a sense, WRM is correct. Democratic politicians are as beholden to the current system of financial capital and geopolitical overreach as the Republicans. Obama received more campaign contributions from investment banks in ’08 than any other politician in history. Look at how he caved on the Bush tax cut issue.
This is a moral issue about who we are as a nation. We can the go the short term easy route and accept the dictates of financial capital and continue to spend insane amounts of wealth on an ultimately futile attempt at maintaining our global military footprint while blaming teachers and firefighters for wanting a middle class life. Or, we can put our house in order and reinvent social democracy for the 21st century (admittedly, not too popular).
I find it astonishing that after the ’08 financial crash (in which the financial sector got off scott free for making the rest of us suffer) W.R.M. can lecture public employees who have the audacity to think that $50k a year and an okay pension are too much to ask. Because, if that is too much to ask from the US than we are in deep, deep trouble.
Hers are few to fix things we could do:
– Return top marginal tax rates on the wealthy to what they were in 1960s
– Tax financial transactions (Tobin Tax)
– Cut wasteful military spending
But all this is off the table. Why?
Old Karl Marx was wrong about a lot of things. But he was right about what happens when the power of the ruling class is unchecked.
If we don’t, the political field will be left to resentments of the kind that the Tea Party and Glen Beck express. That would be disastrous.
Jacob, Are you old enough to remember 1979-80? Liberal tax and expenditure policy and Keynsian economics, what you call “social democracy,” had resulted in a vicious cycle of inflation and recession. I seem to remember 14% inflation, a prime interest rate of 20%, and an unemployment rate of 10% (in the recession necessary to wring inflation out of the economy). Carter’s “cutting wasteful military spending” resulted in the Soviet invasion of Afghanistan and the national humiliation of American diplomats held hostage by a group of unruly savages in Iran. Soviet communism is the only modern political program I can think of that failed more spectacularly than “social democracy” had by the end of the 1970s.
Also, if I remember correctly, the subsequent (sort of, but incomplete) dismantling of “social democracy” resulted in 25 years of low inflation economic growth with two brief and mild downturns, and Reagan’s defense buildup and support of anti-communist insurgencies hastened, if not brought about, the collapse of the Soviet Union. As for restoring “social democracy,” isn’t the definition of insanity doing the same thing over and over and expecting different results?
geokstr makes a great point. Part of the original NATO agreement depended on European countries to take on their fair and sacrificial share of responsibility for military preparedness to fend off the Soviet menace. We have now, all these years later, nursed the Euros through, arguably, four world wars: WWI and II, the Cold War, and The War on Terror, in which they’ve been a little help. A very very little.
This at huge expense to us financially, but worse, reputationally, as the very same Euros, having relied on our protection, went on to demonize us as a militant culture. Because they didn’t have to pay their own freight militarily, they were able to invest in extreme social programming and soon found that that pleased their peoples, especially voters, very much. I agree also that we should take all troops out of Europe and perhaps everywhere else.
MaxMBJ also has a great point. I’ve come to the conclusion that most people are of approximately the same raw intelligence. We go to school to learn we’re either smart or stupid. That’s the main function of our public school system. To bifurcate us classwise based on arbitrary standards. School asks us, “can you find where the baloney is hidden?” If we can, we’re smart. If not, not. We leave school either thinking that we’re smarter than we really are, or dumber than we really are. What a great service. Once declared dumb by arbitrary standards, many secumb to the diagnosis and come accept it, giving up in part on their lives.
Great piece by Mead as always. I would go a small step further. Whether or not Walker wins out in my state is almost irrelevant. What will win out eventually is American common sense pushed to the brink by exploding municipal debt. School taxes, etc. Wisconsin, under the hapless Doyle, tried to soak the rich and succeeded only in driving business out of the state and driving up our state debt. So much for the lost leftists’ best friend, the tired old class warfare angle.
As an aside, as a resident of rural Madison, the protests have gotten increasingly testy, and now border on violence. Fox reporter Mike Tobin was hit twice Sunday while on air, and was threatened by a large blubbering fellow who was standing ominously right behind him, body-rocking and spitting out vendom and eventually told Tobin he was going to break his neck. And every time Fox tried to broadcast live, protesters came over and harrassed them unmercifully, screaming Fox lies and jabbing posters, often with extremely demeaning slogans, in front of the cameras. On several occasions they covered the cameras during live broadcasts. Whereas CNN, though little different in their coverage, was left alone. None of the other media stood up for Fox and it has been almost completely ignored by them. What ever happened to professional standards and pride?
There is more going on here than the issue itself. It’s become a crude and rude and ever-shifting litmus test for our future.
The unions lost the election in Wisconsin. All they have is shouting and hopes that a friendly media will turn public opinion their way and make Governor Walker back down.
As for the oft-heard cries for civility, those do not seem to operate where left-wing incivility is involved, neither in the operation nor in the media coverage thereof.
“What ever happened to professional standards and pride?”
That’s a rhetorical question, right?
I apologize for the late response.
I was born in the late 1970s. That means that for my entire life wealth in the US has been concentrated in fewer and fewer hands at the top of the income bracket. In the 1980s conservatives claimed that Keynesian Social Democracy could not delivery “the goods” in the same way that neoliberalism could. Since the 1980s real wages for American workers have remained stagnant. Sure, flat-screen TVs are cheap at Walmart. But by any objective measurement the majority of American workers have lost ground (David Frum is the only conservative pundit I have seen mention this).
Keynesian social democracy was no utopia, but I would argue that the Western societies that embraced these policies after WWII were as egalitarian and free as any in modern history. I would also argue that Social democracy did not “fail”, it was the victim of its own success. The new middle classes that benefited most from these policies began voting against social democratic parties in 1970s because they had forgotten the poverty of the Great Depression in Europe and the rise of the coded racism in Republican appeals to the south in the US.
The point of restoring social democracy would be to get similar economic results. If you can convince me that Sweden in the 1960s was a terrible gulag than I might change my mind. What do you have to say to the millions of angry Americans out of work? The middle classes that have lost ground in the last 30 years? Americans will tolerate high levels inequality as long as they see opportunities. Both parties have failed to address these anxieties.
I’m not a professional economist, but I do know that inflation within reasonable limits is not as bad as some make out (it means that workers are getting more wealth).
A strong argument can be made that the Soviet Union destroyed itself due to its internal weaknesses.
Reagan’s support of “anti-Communist insurgencies” supported murderous human rights abusers like the Contras, Taliban and Al Qaeda. When a country supports human rights abusers in the name of freedom, it is really bad for their credibility. Do we really need to maintain a costly system of over 1000 military bases in over 120 countries around the world from a few guys in the mountains of Afghanistan and few other spots?
@Wigwag: I think you have something backwards: could it be that states are “Blue Model” because they are wealthy, rather than the other way around?
Another bit of info you may have missed: Germany has acknowledged (ten years ago) that its old people are going to bankrupt its young people if the pension system isn’t changed, and the Germans are “renegotiating the social contract” as we speak. It is painful to watch, and all the “Blue Countries” are headed the same way.
If you want to know why we are where we are, look no further than the amazing growth in productivity in the “Third World”.
Growth in productivity in the Third World based upon low wages is limited by comparison with the labor movement in America from slavery to reconstruction to industrialization and rise of the labor unions. It will be easier to organize third world countries against foreign companies than it was in America simply because of the visible isolation, and unless forcing slavery upon employees of the Third World is the plan, what will occur is a foreign-based ground hog day of American labor reproduced in third world labor.
Despite its desire for slavery or its complement, low wage labor, companies will discover that automation is as close as they will ever get to free labor. That reality could not come too soon for history buffs who will gleefully recite the “I told you so’s.”
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