Fires Are Down Fifty Percent in the Last Thirty Years But Paid Firefighters Are Up Fifty Percent? No Way. Way!

“If you want to chat with a firefighter or see a fire truck up close, you can go down to the local firehouse at any time of day. The crew will probably be there, lifting weights or washing down the already gleaming red engines. Career firefighters usually live at the firehouse for a day or two, then take as many as three days off. Between eating and sleeping at the station, they mop floors, clean toilets and landscape the yard - with a few hours set aside daily for training and drills. Mid-morning, you'll find several of them at the local supermarket doing the day's grocery shopping.

In other words, being a firefighter these days doesn't involve a lot of fighting fire.

Rapid improvements in fire safety have caused a dramatic drop in the number of blazes, according to the National Fire Protection Association. Buildings are constructed with fire-resistant materials; clothing and curtains are made of flame-retardant fabrics; and municipal laws mandate sprinkler systems and smoke detectors. The striking results: On highways, vehicle fires declined 64 percent from 1980 to 2013. Building fires fell 54 percent during that time.

But oddly, as the number of fires has dropped, the ranks of firefighters have continued to grow - significantly. There are half as many fires as there were 30 years ago, but about 50 percent more people are paid to fight them.” - Fewer fires, so why are there far more firefighters? Washington Post, 09/04/2015

Link to the entire article appears below:

https://www.washingtonpost.com/opinions/2015/09/04/05316abe-517c-11e5-933e-7d06c647a395_story.html

When getting your kicks on route sixty-six….don't forget San Bernardino

"What happens when public employee unions begin calling too many of the shots in government?”

“Yet on close examination, the city’s decades-long journey from prosperous, middle-class community to bankrupt, crime-ridden, foreclosure-blighted basket case is straightforward — and alarmingly similar to the path traveled by many municipalities around America’s largest state. San Bernardino succumbed to a vicious circle of self-interests among city workers, local politicians and state pension overseers.

Little by little, over many years, the salaries and retirement benefits of San Bernardino’s city workers — and especially its police and firemen — grew richer and richer, even as the city lost its major employers and gradually got poorer and poorer.”

“In bankrupt San Bernardino, a third of the city’s 210,000 people live below the poverty line, making it the poorest city of its size in California. But a police lieutenant can retire in his 50s and take home $230,000 in one-time payouts on his last day, before settling in with a guaranteed $128,000-a-year pension. Forty-six retired city employees receive over $100,000 a year in pensions.

Almost 75 percent of the city’s general fund is now spent solely on the police and fire departments, according to a Reuters analysis of city bankruptcy documents – most of that on wages and pension costs.”

Link to the entire article appears below:

The Debt Death Spiral: U.S. City Edition - The Independent Institute

http://www.mygovcost.org/2012/11/15/the-debt-death-spiral-u-s-city-edition/

　

Twin Political Dupery: When the Both Sides of the Table Phenomena Dupe the Taxpayer AND the Union Member

What is the "both sides of the table" phenomena regarding collective bargaining in conjunction with a government monopoly? The public choice theory proposition of the both sides of the table phenomena is basically:

　

(1) if bureaucrat X is negotiating with collective bargaining public sector union Y, exactly what motivation does bureaucrat X have regarding negotiations? The problem goes back to Milton Friedman's fourth category of spending: other people (bureaucrat X), spending other people's money (taxpayer money), on other people (recipient class which in this case is a public sector union). Therefore the bureaucrat has little motivation because he/she is spending other people's money not his/her own money,

(2) public sector unions have found that they can collect dues through members and funnel dues into political action funds. They then fund the campaigns of politicos that promise them [public sector unions] more compensation/benefits. They not only fund certain politicos but actively encourage their union members to campaign for the politico. Once they get their particular candidate elected they have now secured a politico who over sees bureaucrat X.


Political dupery in action


The public choice theory proposition of both sides of the table phenomena many times is discussed in terms of collective bargaining by unions and resulting rich benefits bestowed upon the union and its members. However, rather than pointing to the richness of the benefits and the inability of the taxpayer to pay such benefits, what if one focuses on the political dupery of the benefits.


The both sides of the table phenomena, long the norm for public sector unions, is no longer in play in many locals as tax revenue streams have been reduced, the taxpayer can‘t afford more taxes to pay the benefits, and taxpayers have elected politicos that have changed those sitting on one side of the table. Hence the politicos bestowing benefits via taxpayer dollars and/or deficit spending to build dependent political constituency has, for the time being, ended. The accumulation of benefits via the both-sides-of-the-table phenomena is then defended by the now unrepresented yet purposely built dependent political constituency. Hence they can’t rely on the other side of the table and begin a second line of political maneuver which is strike, slow down, picket, etc.


A much overlooked item is the accumulation of benefits bestowed were in fact bestowed based on the short term political time horizons (next election) by a series of politicos (many of which are now long gone). The actual ability to pay the basket of benefits/wages, unfortunately, was never the aim of the politico. That is, its not the accumulation of “unrealistic promises” its really the purposeful accumulation of unrealistic promises [its not an error or oversight, its purposeful].


The result is the union and/or union employee think/perceive they “negotiated” items, when in fact, there never was any true arms-length negotiation. There was never any intent to negotiate long term funded realistic benefits and wages. Rather, the union or union representative, the supposed accumulated “negotiated” benefits/wages thereof, are in reality an accumulation of purposeful politico promises matching politicos short term political time horizon devoid of long term funded realistic benefits and wages.


One might consider this proposition: the both sides of the table phenomena, where the union or union member thought they where negotiating benefits, was a benefit mirage. Stated alternatively, the purposeful political dupery of the politico toward the taxpayer in the both sides of the table phenomena was simultaneously the purposeful political dupery of the union side of the table as the politico actually, in the long run, duped both the taxpayer and the union.

　

To make this concept even clearer, the both sides of the table phenomena is portrayed as duping the taxpayer. True. But the both sides of the table phenomena is duping the union and union worker as well. The politico is duping everyone in the room as well as outside the room.


The end result is a union that thinks they have played a role along with politicos to dupe the highly defused taxpayer when in fact they themselves were duped. The basket of benefits is a basket of promises not a basket of negotiated benefits that are funded and realistic. Therefore, the union strikes, performs walkouts, performs work slow downs and pickets based on dupery. That is, they have yet to figure out that benefits promised are much different than benefits negotiated and funded under a limited tax revenue stream. Stated alternatively, their very strike is occurring as they have yet to figure out they have indeed been duped too.

　

Indiana: the newest right-to-work state

Regardless of your politics of right-to-work or required unionization, one has to consider “voting” preference in regards to revealed preference.

Ponder this: if one can vote in an election, if one can vote with one's dollars, if one can vote with one's feet…..then certainly one can vote with his/her human capital. Since 90% of the private sector is non-union, then 90% of human capital has voted right-to-work.

Greece: what happens when one attempts to privatize state owned enterprise

Its been long argued that when politicos through the mechanism of government legislate state ownership or state run enterprises, the removal of such a program is nearly impossible.

Why is state owned enterprise near impossible to remove? What if state ownership has to be removed?

The state ownership many times was a political constituency building exercise at its inception. That is, politicos bestowing benefits on a particular recipient group creates a voting block of dependent recipients. The recipients of the benefits in many cases become long term dependent on such bestowed benefits. In order to continue to receive such benefits the recipients vote for the politicos that support the particular state owned enterprise. Hence we have the complete political circle of the politico bestowing benefits on a particular class of recipients, the recipients grow dependent on the bestowed benefits, the recipients then vote for the politico bestowing benefits.

Meanwhile the bestowed benefits (in this case the state enterprise) must be administered by some government agency. The agency exists to bestow the benefits directed by the politico. The end of such benefits would theoretically mean the end of the agency. Hence agency employees also become a dependent class that support the politico that continues the programs the agency administers.

Further, vendors exist that supply the government agency with items to administer the state owned enterprise. These vendors have suppliers and so on. Further, the state owned enterprise have vendors and suppliers as well.

Hence we have an army of recipients, bureaucrats, and vendor/suppliers that are dependent on the state owned enterprise to continue. These dependent parties support the politicos that perpetuate the state owned enterprise.

What happens when you threaten to end such a program? Obviously great resistance is put forth by the dependent parties as well as the politicos that gain political support from the dependent parties. The politico stands to lose the political constituency base of the dependent parties and the dependent parties stand to lose benefits of one type or another.

What happens if the program must end? That is, there is absolutely no money remaining to fund the program? Greece is an excellent example of what happens when state owned enterprise must end. The resistance that occurs when you threaten to end such programs morphs into delay when you must end the program.

In an article appearing in Financial Times 05/13/2011 entitled Greece can privatize more, says IMF one sees a tail of delay. The article in this particular case focuses on state owned assets and state owned enterprises that need privatized. The article points out that privatization would gain confidence from exogenous parties that hold Greek debt as well as cut the debt. With only one-fifth of assets up for sale the delay to privatization is self evident.

'Antonis Samaras, leader of Greece's conservative opposition New Democracy party backed the privatization programme and on Thursday said the governing socialists were taking "too timid" an approach.

 "We need to act boldly to seek strategic partners who will invest in growth rather than simply selling equity stakes" said Mr. Samaras in a speech outlining his party's economic policy.

He urged immediate liberalisation of the energy sector, saying socialist-backed public sector unions were blocking the opening of the electricity market. "This is what international investors want to see," he said.' (1)

Notes

(1) Financial Times, 05/13/2011, Greece can privatize more, says IMF

A Bridge to Nowhere, A Bridge Too Far, or The Bridge of Sighs?

The Spruce Goose of All Stimulus Plans Ever Concocted


If you recall the $787 billion(try $862 billion at last count) Obama deficit spending plan aka stimulus plan, you likely remember the claim that unemployment would not rise above 8% which in fact rose to 10%. Maybe you merely recall the enormity of the plan at $787 billion ($862 billion) plus future interest putting the grand total well beyond a trillion dollars. Maybe you remember the term “shovel ready”.

Remember the term “social engineering”? (1)


Bridge of Economic Security

One of the social engineering aspects of the stimulus plan was the awarding of large chunks of money to state governments to keep public sector employees on the payroll. The money was doled out over two years. In other words, an artificial bridge was produced with deficit spending (tax payer liability) to delay public sector layoffs.(2)

One thing to consider, historically speaking, when the US economy goes into recession the private sector begins layoffs immediately. However, the public sector begins its layoffs approximately twelve months after the beginning of the recession. Why? Governments plan their budget and fund those budgets one year in advance. Hence when the recession begins the public sector has budgeted and funded their budget with tax dollars well in advance of the recession. Moreover, once the recession is twelve months old and tax receipts have plunged, the public sector budget is adjusted downward to equal the new lower tax revenue volume at which point public sector layoffs begin.


Therefore the bridge of economic security for public sector workers was merely delaying or putting off into the future what would historically speaking occur in twelve months from the beginning of the recession. Why put off the inevitable? What if you think you can spend your way out of the inevitable? What if you think you can centrally plan a desired outcome at someone else’s expense?


A Bridge to Nowhere?

Politicos, through the mechanism of government, built a Keynesian deficit spending social engineering bridge and picked winners and losers regarding the bridge. One of the social engineering winners was public sector employees. Why? Public sector unions and associations lobbied their associated politicos for additional economic security. That is, organized public sector labor merely organized for their particular economic security against the disorganized mass of tax payers and to the detriment of the tax payer’s economic security. Hence the public sector and their associated politicos built a bridge of economic security for the public sector at tax payer expense.

Moreover, the bridge of economic security was produced to remove the threat of layoffs over two years for the public sector. The implicit and explicit assumption of the Obama deficit spending plan and consequential bridge of economic security for the public sector being that the economy would have recovered after twenty four months and tax revenues once again would be robust. That is, the economic assumption was that the $862 billion deficit spending plan would jump start the economy and after two years there would be no public sector layoffs as the economy would once again be robust.

However, the bridge of economic security became the bridge to nowhere as the economy did not recover in a robust manner as assumed by the stimulus plan’s Keynesian social engineering designers. Hence the bridge never reached the shores of robust economic recovery and robust tax revenue.

Its important to note that little attention would have been directed to the cumulative effects of public sector collective bargaining, its unsustainable path, had the Obama deficit spending social engineering plan succeeded. That is, some commentators in the past have pointed out the unsustainable path of cumulative total compensation produced by public section unions through collective bargaining. However, the issue would have remained in the background and continued to fester as politicos elected by and in association with public sector unions would have derailed any debate. Meaning that the hidden strategy of the social engineering deficit spending, spending specifically for an economic bridge of security for public sector unions, was in essence a strategy of pay me now and pay me later.


A Bridge Too Far?


The economic stimulus plan aka deficit spending plan was the grand design of central planning techniques. One likely remembers the grand charts and graphs of how the deficit spending would stimulate this sector and that sector. That future unemployment trends were shown graphically and how they would peak at 8% then begin a downward trend. Like any central planning scheme the central planners were so sure of themselves that they made bold prediction with their charts and graphs. And like all the central planners from the past, present, and future they were/are/will be frightfully wrong.

However, the assumptions used in the Spruce Goose of all stimulus plans ever concocted regarding the bridge of economic security for public sector employees were woefully short sighted. The single minded idea that in two years all would be well and public sectors workers could go on their merry way was ludicrous. What about state spending expanding at an extraordinary rate from the mid 1990’s until the demise of Lehman? What about two thirds of the states with continuing and constant financial problems? What about ballooning state debt? What about Medicaid eating up larger and large chunks of state tax revenue? What about woefully funded state unemployment insurance programs that immediately had to apply for loans from the federal government at the onset of recession? What about exploding public employee total compensation costs?

“The curious task of economics is to illustrate to men how little they really know about what they imagine they can design.” - F.A. Hayek


The Bridge of Sighs

The current problem for state legislators is that a bridge to nowhere or a bridge too far is of no interest to public sector unions. Regardless of the implosion of the bridge of economic security for public sector employees, regardless of the failure of the stimulus plan, regardless of the failure of the social engineering aspects, regardless of the failed predictions by the central planners - bridge or no bridge- there shall remain economic security for public sector employees or else.


Forget the billions of dollars thrown at the bridge of economic security for public employees, tax revenues be damned, budgets and accumulated debt be damned, the status quo for public sector employees will remain or else a tantrum to end all tantrums erupts. We won’t teach your children and we will not pick up your garbage. That is, the wonderful world of government monopolized services will come to a grinding halt. And to boot we will jam your capital buildings and sleep over if necessary.

You see, regardless of the billions upon billions upon billions of dollars already spent to ease the pain of public sector employees, well, that’s still not good enough. All past benefits will be retained. Period! Collective bargaining will be retained as public sector unions and associations know exactly how they obtained current benefits and how they will expand benefits in the future. Politicos will continue to be funded by these unions so the both-sides-of-the-table phenomena will continue and tax payer’s money will continue to be funnelled into greater and greater compensation levels for unionized/collective bargaining public employees.(3)

And who pays? You pay!

Government is the great fiction, through which everybody endeavours to live at the expense of everybody else. -- Frederic Bastiat


Summary


Current public sector union demands are made atop of the past bridge of economic security specially built for the exact same group. Public sector employees are earning approximately 25% more compensation than comparable private sector workers made possible through cumulative effects of collective bargaining against they tax payer's dollar. Gratefulness is not an option. More of the same is the only option. More and more, all at the tax payer’s expense. (4)


Notes

(1) http://www.cnsnews.com/news/article/57617

(2)http://www.jsonline.com/news/statepolitics/64116527.html

(3)http://thelastembassy.blogspot.com/2011/02/wisconsin-is-coming-to-state-capital.html

(4)http://mjperry.blogspot.com/2010/02/two-americas-public-sector-vs-private.html

Public Sector Unions Have the Power to Tax?

Public sector collective bargaining and tax dollar claims

Its long been argued that the present value of future public sector benefits, or what some characterize as unfunded liabilities (future cost of health-care benefits/future cost of defined benefit pension) are in essence an ever increasing claim against the stream of future tax dollars.

The implication is that as unfunded future benefits become more and more expensive to fund, more and more tax dollars are diverted from the stream of tax dollars to fund the benefits and less and less tax dollars are available for the actual business of government. Its further been argued that public sector debt held by bondholders is threatened as the stream of tax dollars must first be used for funding future benefits, then the remaining stream of tax dollars are used to provide the now reduced business of government, leaving an insufficient remainder to service past debt.

Should Unions Have the Power to Tax? - William Dunkelberg

William Dunkelberg, professor of economics at Temple University makes the case that private sector and public sector unions do in fact have the power to tax. How so?

“We have laws that prevent firms from exercising monopoly power and charging prices that are well above the real costs or value of production. But what if a group of workers conspires (usually with the help of government) to overcharge for their services at the expense of the larger public?


The UAW successfully used market power to raise their compensation above levels that the “market” was paying. In simple terms, they “taxed” individual purchasers of cars, extracting as much as $1,500 per car just for healthcare in addition to their higher wages, making it possible for union members to live better, but, dollar for dollar, buyers of cars to have less.”

“Only about 7% of the private workforce is unionized today, but their ability to “tax” union members through union dues and make political contributions gives them top priority in the White House today. Public sector unions represent about a third of public sector workers.

Here, we are held hostage by threats to not pick up our garbage or teach our children. Politicians, not facing a bottom line performance measure like GM or the steel companies but worried about re-election, give in to demands to keep voters from being unhappy. But, over time, this has produced a generally over-paid and over-benefited public sector workforce (compared to market wages).


Their generous compensation can only be supported by reducing the welfare of citizens through higher and higher levels of taxation. The “employers” (taxpayers through their elected officials) have slowly lost their ability to determine the terms of employment offers. The unions now determine working hours, hiring criteria, the quantity of “output” to be produced per day, the number of sick and vacation and holiday days, how their performance will be evaluated etc. No longer can the employer make an “offer” for a job with requirements that fit the needs of the public institution.

The workers themselves now determine these things through the exercise of union power.

Bottom line, union members get higher compensation than the market would pay, but dollar for dollar, that higher compensation comes out of the pockets of taxpayers and customers, leaving them worse off. These are not “high paying jobs” that reflect the value produced by the workers but instead reflect the power of the organized group to impose “pain and suffering” on unorganized individuals in society.

The prices companies can charge are disciplined by competition as is the wage I can earn offering my services in the marketplace. Unions seem to be exempt from this, granted the power to tax individuals to support the lifestyle to which they feel they are entitled. (1)

Unorganized Individuals in Society

One should take note and further reflect on the this statement by Dunkelberg:

“These are not “high paying jobs” that reflect the value produced by the workers but instead reflect the power of the organized group to impose “pain and suffering” on unorganized individuals in society".

Maybe there is something to this unorganized individual within society. Walter E. Williams, professor of economics at George Mason University, sheds some additional light on the “unorganized”:

With all of the union strife in Wisconsin, Indiana and New Jersey, and indications of more to come, it might be time to shed a bit of light on unions as an economic unit.

First, let's get one important matter out of the way. I value freedom of association, and non-association, even in ways that are not always popular and often deemed despicable. I support a person's right to be a member or not be a member of a labor union. From my view, the only controversy regarding unions is what should they be permitted and not permitted to do.

According to the Department of Labor, most union members today work for state, local and federal government. Close to 40 percent of public employees are unionized. As such, they represent a powerful political force in elections. If you're a candidate for governor, mayor or city councilman, you surely want the votes and campaign contributions from public employee unions. In my view, that's no problem. The problem arises after you win office and sit down to bargain over the pay and working conditions with unions who voted for you.

Given the relationship between politicians and public employee unions, we should not be surprised that public employee wages and benefits often average 45 percent higher than their counterparts in the private sector. Often they receive pension and health care benefits making little or no contribution.

How is it that public employee unions have such a leg up on their private-sector brethren? The answer is not rocket science. Employers in the private sector have a bottom line. If they overcompensate their employees, company profits will sink. The company might even face bankruptcy.

Of course, if private companies can count on federal government bailouts, as did General Motors and Chrysler, they can maintain a comfy relationship with their unions. No such bottom line exists in the government sector. Politicians have every reason to grant benefits to their political allies, in this case public employee unions. They don't pick up the tab; it's unorganized taxpayers who face higher taxes. (2)

The Aristocracy of Labor and the De-facto Aristocracy

Milton Friedman in his famous PBS documentary Free to Choose referred to unionized labor as “the aristocracy of labor”. That is, Friedman was pointing out a class of labor holding exceptional rank and privilege. (3)

The exceptional rank and privilege was gained through “rent seeking” and sponsored by politicos (the true aristocracy) through the concept of “political constituency building” in order for the politico (aristocracy) to perpetuate their class position as part of the lofty de-facto aristocracy. (4)

One then has to wonder who in the devil funds this hierarchy of aristocracy? Hmmm. Yes you guess it! You….. the unorganized tax payer! (5) The organized take advantage of the unorganized and create a hierarchy of aristocracy and all the while the unorganized are duped into funding the entire process!

The Political-Economy of the Organized Aristocracy Hierarchy and the Unorganized

Once in a great while a sea-change occurs in which the unorganized metaphorically
storm the castle walls and want accountability, the end of the hierarchy of aristocracy, and no longer are they willing pay the tax collector the tribute needed to perpetuate the aristocracy class.

Oh but no! You see, being in the aristocracy is comfortable. Holding exceptional rank and privilege at the expense of the unorganized is the high life. (6)

Hence the hierarchy of the aristocracy must reshape the argument. The unorganized, now enlighten enough to be metaphorically standing outside the castle walls with torch and pitchfork in hand, are portrayed as the evil doers. It becomes time for the “organized” to show their organizational prowess!

The hierarchy of the aristocracy slips out the back gate of the castle and begins to protest the end of the hierarchy of aristocracy. You see, the debate must be reshaped. That is, the unorganized are really the evil doers. That the unorganized are mistaken and that you must pay tribute to the life style of the entitled as its your lot in life. That its blasphemy to believe other than what is written from on high. And what is written is that you pay and we receive.

That is, the hierarchy of the aristocracy is merely a fuzzy little white rabbit.

Notes:
(1) http://www.cnbc.com/id/41717876/Dunkelberg_Should_Unions_Have_the_Power_to_Tax

(2)http://townhall.com/columnists/walterewilliams/2011/03/03/public_employee_unions

(3) http://miltonfriedman.blogspot.com/

(4)(5) http://thelastembassy.blogspot.com/2011/03/state-tax-revenues-consequential.html

(6)http://washingtonexaminer.com/politics/it039s-wonderful-life-working-government

And about that joyous public sector .........