Thursday, March 10, 2011

What’s Next in Wisconsin

Is President Obama worse than Wisconsin's Gov. Walker?
Far from seeking to strengthen the hand of federal-employee unions, Barack Obama has sought to impose a two-year wage freeze on federal workers through the budget process. If the federal government had a bargaining law like the one Wisconsin has today, he would be unable to do that.
Also consider this fact:
[D]espite the howls coming from the left, Wisconsin’s new policies on public-employee relations will not be especially unusual. Only 26 states have laws that grant collective-bargaining privileges to substantially all public employees.

Economic reality doesn't seem to apply to government or public sector employees right now. Government (and government jobs) only exists with businesses, especially their owners and their employees. Without tax revenues from businesses, there are no government jobs. None. It's time for governments at all levels to start behaving at least a little bit more like the businesses upon which they rely for their existence.

If a business cannot pay its creditors, especially vendors, it doesn't take long for the creditors to push the business into receivership. Cities, counties, and states are near a real risk of defaulting on bonds — meaning they are insolvent. Being unable to pay the people financing your daily operations is bankruptcy, plain and simple.

When a private business becomes insolvent, the court-appointed receiver usually nullifies all contracts, from leases on properties to union agreements. That's the reality of a business failure. Chapter 11 reorganization fails? Then the business lands in Chapter 7 and is entirely liquidated.

Guess what? Your government "business" has failed in state after state. These local and state government failures will have consequences, including changes to union contracts and even the nullifying of contracts in extreme cases. This same process has happened in the airline, automotive, and even publishing industries. Unions have had to accept changes to contracts once believed inviolable.

Public employees (and their "business" of government) are not immune from financial reality. Sorry, but if businesses are struggling, so will the governments they feed. That's a reality public employees don't seem to accept. They can't comprehend that as businesses close or leave an area, the taxes dwindle until there isn't enough left for all that a government wants to do.

Cuts, painful cuts, are inevitable. Elected officials have concluded unions, unwilling to negotiate on some matters, have to dealt with as they are in private industry. I expect a lot of turmoil as public employee unions are forced through what their private sector colleagues have already experienced over the last three decades.

So far, the unions aren't dealing with this reality well. Neither are their supporters.

The Wisconsin GOP state senators are receiving death threats. That's absurd. Radicalism doesn't help the union cause, and I'm sure the GOP-supporting groups will use any misbehavior to make their cases against public employee unions. See: Wisc. GOP state senators threatened

Companies and governments go down (and up) in parallel. However, governments, unlike businesses, don't tend to "hoard cash" during the good times. In fact, government officials and unions often complain about businesses creating "rainy day" funds. That's simply stupid. If governments had created and maintained sufficient funds during the most prosperous times it would now be much easier to slowly downsize with (somewhat) less pain.

Wisconsin is going to happen in state after state, city after city.

Voters can protest, just like public employee unions. Voters could turn against public employees, a risk unions should consider as they protest day after day. I'm sure unions imagine they've "won" the debate. I'm guessing this is a temporary public relations for unions. If forced to raise taxes, cities will find the people who pay for monstrously oversized government can and will take action, too. Remember, California's Proposition 13 was a voter rebellion against taxes.

Right now, many Wisconsin voters believe the unions were "wronged" by the state. Taxpayers, though, can turn fickle in an instant — especially if they are asked to pay for a government that doesn't behave like a decently managed business.

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