Monday, February 21, 2011

Politics Found Me

It all started with a blog post from the Economist. I try to avoid long political debates on Facebook. It's not why I use the site since the 'Book is so diligent about telling everyone I know exactly what I'm doing. Eventually, the constant posts on politics will drown out the rest of the personal stuff that people come for. I don't want to do that to all the apolitical folk who friended me because we did Summer Theatre together.

I do love politics, though. This is a blog; it was inevitable that politics would find it's way here. Posting a news item about a topic like the Wisconsin union situation was bound to draw a response and draw one it did. An old friend took issue with it almost immediately. I'll just reproduce his post (adding some of his own edits) and my response here to save some time:

  • Peter: What this article pretty much ignores is the fact that government jobs = fat pensions that you don't get in the private sector. That's one of the primary perks of getting a government job.

    The author dismisses said pensions by arguing that they'll be underfunded, but in doing so destroys the rest of his argument. Clearly then, the government is out of money and cuts have to come somewhere, but he provides no solutions.
  • Erin: Hey, Peter! It's been quite a long time, hasn't it? Funny, I remember arguing quite a lot about politics as a rabblerouser in high school. It's almost like fifteen years hasn't gone by.

    Anyway, the author's argument here doesn't really deal with strategies for fixing the deficit (though the Economist in general is consistently on the side of pension reform, though not union busting). It's about the new idea that public sector workers are a lot better off than private sector workers. I would argue that even with the pension benefits, it's impossible to believe that public workers (meaning teachers, lawyers, administrators, accountants, firemen, policemen, etc) are paid wildly out of line with the work that they do. I also think he is right to point out that given the current economic climate, it is quite likely that even that one supposedly gold-plated benefit will vanish before most of the workers get their shot at it. Ultimately, I don't think there is any reason for the blogger to try to provide a particular solution to the deficit problem, since that isn't his purpose (though the Economist's editors consistently stand behind the need for meaningful deficit reduction through pension and health care reform, as well as other sensible tax reform to increase tax revenue and diversify the tax base away from an over-reliance on the income tax).

    The only point that I wish the author had made was that public sector benefits haven't fallen to the same levels as private sector benefits because governments are just plain slower at reacting to economic changes and because it responds to political as well as economic pressure (unlike, say GE or IBM). Even the Wisconsin union acknowledges the need for pension and health funding reform, though, a point that doesn't get enough emphasis, I think.
  • Peter: It has been a while since we set up the ol' chess board and discussed life, politics and whatever else we deemed important. That said, I don't disagree with you, I guess I just don't get the point of the article. While it may be true that the pensions end up not fully-funded, isn't the fact that public employees have such fat pensions and sweet health-care plans that make it difficult to hire/retain/give raises to current employees? Moreover, though a direct comparison is difficult, I think that many public sector employees do make more than their private sector counterparts.

    At the end of the day, I'm all for paying a good wage to teachers, but I'd kill the unions too as they've long been against any kind of merit-based pay and make it darn near impossible to fire teachers.
I hope Peter has dropped by so that we can continue this discussion (sorry about the roundabout way to do that, Peter!), though I will gladly debate these points if anyone is interested.

I disagree that public sector pensions are outrageously high or that their health care plans are significantly better than many private plans (my parents will certainly debate that point and my father has worked for the federal government for his entire career). I would love to take issue with the comparison and there is a wealth of empirical data out there, but I'm just not going to out and find it (though if someone wants to hire me to spend the time to do that, they are welcome to send that interest along). It's just overall strange to me that in the past couple of years it has become an article of faith that the private sector workers are getting screwed and people look longingly at public sector compensation and benefits, something that would have been laughable even five years ago.

I definitely agree that teacher's unions have not been amenable to some obvious solutions to the clear problem of teacher quality (though it could be because of the confrontational way that these ideas have been presented by people who would happily do away with the union - not a recipe for dialogue).

As I said, I'm all about the discussion. Chime in if the spirit moves you!

2 comments:

  1. One point I should make before starting my next comment is that there are vast differences between state and federal employees (and differences between the different kinds of employees at each level). That said, let's just focus on the teachers, which are at the state level.

    1. I'll concede the argument about health care. As one who has military Tricare, I know that my friends with private medical insurance have more choices available to them. However, from a bottom-line, $$$s only perspective, no one can touch my federally-funded health care. I pay ZERO for health care for me and my family, no co-pays, no nothing. Plus, my dental care for the entire family is $20-something a month if I remember correctly. Now, my Dad's plan (he's been with the USDA since 1990) is not as good, but it still isn't bad either when it comes to the $$ he puts into it. I really can't speak to the health care plans that teachers have, but I do think it interesting that the unions fought hard to have their plans exempted from ObamaCare.

    2. I think that teacher's unions are some of the worst unions out there. In fact, I've often thought of teaching in the public schools once I'm no longer in the Navy (however long that will be), but I will never teach if I am forced to join a union. I'd be OK with letting unions survive if they made it so that joining one wasn't mandatory. Let me negotiate my own salary please! Also, as I noted on facebook, some of the big-ticket items that unions have fought for in the past (the gold-plated pension plans for example) are a significant factor in the massive deficits states are running these days. States can either (A) chose not to fully fund those pensions (a political non-starter), or (B) cut pay/benefits for current employees, fire some, institute hiring freezes, and reduce state services across the board. Incidentally, it was those same pension plans that helped bankrupt the car companies. The feds seem less willing to bail out states than car companies though, so the cuts have to come somewhere.

    3. As for the argument about whether the private sector or public sector pays better, I really think that it depends on the job. On the whole, though, the public sector has historically offered better job security and now certainly has better retirement/pensions plans than the private sector which has all but abandoned company pension plans. Whether the states will be able to fund those plans (anymore than the feds will be able to fund social security) is anybody's guess, but at least on paper I'd take the government job and the security it provides in our uncertain times. In fact, I see sailors making this choice all the time, which is why retention is so high. Why give up a sure-thing (a military paycheck) for an uncertain job market. As a result, the Navy is having to implement new ways to kick people out and it has become increasingly difficult to stay in for a full 20 years.

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  2. 1. Health care is pretty tricky. There is no question that health care for veterans is completely different from civilians. Veterans have (and deserve) incredible coverage, but they are not public sector workers anyway. My health care options with the Alley Theatre, a successful not-for-profit theatre company was outstanding, especially relative to the money I put in and I have no doubt that anyone at a larger corporation (the Alley only employed about 150 people) receives equally outstanding health benefits. There is no doubt in my mind that the private sector health care plans are superior to the vast majority of plans on offer to state and federal employees for equivalent positions. I just wish I had some numbers to back that up.

    2. I certainly agree that teacher's unions have been among the number one source of problems with solving budget and education problems. The union seems to have completely forgotten that teacher's serve the community and have done far too much to shield mediocre teachers from the rigors of a proper marketplace that tests for and adequately rewards skill in teachers. I agree without question that teacher's unions are among the least democratic and most obstructionist political forces at work in education today.

    That having been said, I do think the unions have the right to exist and the Wisconsin union has been very accommodating on the fiscal issues. Breaking the union is not the way to fix the problems we have with education or the budget.

    I will also point out that the Feds have been bailing out the states for two solid years but with the fight over the debt ceiling and the deficit there is no way that the federal government can afford to continue to do so.

    3. There is no question in my mind that skill for skill all of the real money is in the private sector, in both benefits and pensions. Uncertainty is priced into the positions and the private sector rewards risk taking enormously.

    I would also note that pensions in the private sector have not disappeared, they have morphed into IRA and 401(k) plans with matching contributions from businesses. Pensions have become the preserve of the individual with the company providing some assistance in finding plans and matching a small portion of the funds. The defined contribution requires more work and saving on the part of the worker as opposed to a defined benefit plan, true, but public sector workers don't make as much in salary so their final benefit is often lower than a well funded defined contribution plan for someone with the same job (who will usually have a significantly higher income level).

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