The Pelican Post

In a previous blog post we noted that public-sector unions impose higher labor costs, increase public debt, and lower the state’s management quality.  The end result of the growth of public sector unions can be seen in California.

A member of California’s Service Employees International Union (SEIU) was recorded saying “We helped to get you into office, and we got a good memory.” Too often, this is the attitude of public sector unions. The state of California is in critical financial condition. While the Great Recession has worsened the state’s situation, the power of these unions has done more long-term damage than this temporary economic downturn.

What has happened in California is the subject of an outstanding City Journal article by Steven Malanga. In California government workers enjoy better conditions than private sector workers. This privilege is not the result of free market interactions where above-average skills and productivity would be rewarded; contrarily, this benefit is due to unions pulling political strings:

“The state’s public school teachers are the highest-paid in the nation. Its prison guards can easily earn six-figure salaries. State workers routinely retire at 55 with pensions higher than their base pay for most of their working life. […] This toxic combination—high public-sector employee costs and sagging economic fortunes—has produced recurring budget crises in Sacramento and in virtually every municipality in the state.”

California is currently suffering from an unemployment rate well above the national average, and a 2008 survey by Development Counsellors International concluded that “business executives rated California the state where they were least likely to locate new operations.” More and more companies are expanding outside the state because of higher taxes and extensive regulations following union pressures on local governments.

City Journal reports the California Organization of Police and Sheriffs, using “controversial soliciting campaigns,” was able to achieve for California cops a retirement age of 50 and a pension equal to 90 percent of the working salary, while cops in the rest of the country retire at the same age but get only half of their original pay. COPS is only one of  many large lobbying groups that successfully exert pressure on politicians.

The gains of modern unions are too often achieved at the expense of other workers. On a broader scale, the US witnessed unions’ political pressure in 2008 when the United Auto Workers exercised its pressure in order to have the federal government bail out the US auto industry.

The unions’ political pressure ultimately pushes unemployment rates upward, increases costs for taxpayers, and distorts market forces. Until states like California get serious about reform, the crisis will only get worse.

A report by the Louisiana Budget Project on the state’s budget deficit, and a subsequent rebuttal by Professor Jeffrey Sadow, illuminates the fundamental differences between progressive and conservative economic philosophies.

Edward Ashworth of the LBP blames middle-upper class tax breaks for a giant drop in state revenues, which in turn has forced a drop in spending on the poor, elderly, students, etc. Of course, Ashworth makes no mention of the fact that the state currently overspends on unnecessary state jobs and bureaucratic offices. Essentially, he doesn’t realize that the state government is already too big, spread too widely, and too fiscally irresponsible. If he’s really concerned about money going to the disenfranchised, he may want to look into streamlining the government so thay money goes directly to them and is not wasted on superfluous state employees and programs.

Addressing the foundation of Ashworth’s misguided argument, implementing heavier and harsher taxes is never the answer to alleviating a budget deficit. As noted by Sadow, 60% of Louisiana households already pay 96% of individual income taxes. Adding more to that burden will stifle economic growth and suffocate the producing workforce.

On the contrary, our state does not lack money from want of taxing, it just overspends in the wrong areas. For example, Louisiana has the 12th highest per capita rate of state employees and in 2008 was 4th highest per capita in state operating expenses. For a relatively small state in terms of population,this is unacceptable. A reduction in the size of the state apparatus means a more efficient government and more money to spend on the disenfranchised. More and more rounds of taxes are not the answer and will solve nothing.

The main fallacy in Mr. Ashworth’s argument is that, especially during a recession, taking money from the economically most productive segment of the population and giving it to a state government which has demonstrated gross negligence in spending it wisely (particularly in regard to those Mr. Ashworth sympathizes with) is fiscal suicide. Not coincidentally, his viewpoint translates readily to that of the contemporary liberal view of fixing our national economic downturn.

Reason Foundation’s director of transportation policy Robert Poole offers a compelling argument for reforming airline security. His argument focuses on the conflicts of interest faced by the Transportation Security Administration. Established after 9/11, the TSA is a federal agency having both the job of screening passengers and baggage at airports and the job of regulating airport and aviation security. In other words, the TSA regulates itself. Talk about a conflict of interest!

The Bush administration established the TSA following the terrorist attacks with the purpose of improving airport security. As Poole points out, the real problem with security at airports at the time was a matter of policy. Certain regulations allowed passengers to carry hazardous materials on board of the aircraft (box cutters, liquids, etc.). Further, passenger history and law enforcement information was overlooked. Regulation was the real flaw of the system, rather than the quality of airport security.

There wasn’t, and isn’t, a need for one cohesive federal agency that both regulates and controls airport security. Poole recommends that the TSA continue establishing guidelines for airport security. However, each airport should be in charge of carrying out its security measures. This would allow airports to privatize airline security, which would lead to significant cost savings without compromising quality.

The State Legislature has essentially killed a bill that would have done away with the much-maligned red light/traffic cameras. House Bill 160 byRep. Jeff Arnold (D-Algiers) was the first of five which sought to either eliminate or place restrictions on the implementation of these cameras.

While proponents of the cameras have repeated the chorus that they make our streets safer, it doesn’t take a cynic to determine the underlying motivation behind their installation. That being said, Professor Jeffrey Sadow, who operates the blog Between the Lines, posits a very compelling compromise between the two factions.

If these cameras are going to stick around, and it looks as though they are, then the municipal governments which use them should do so properly and effectively. If they are truly concerned about driver safety, then Sadow argues (and I concur), that the fines accumulated should, for example, be directed towards funding driver’s education programs or subsidizing schools which use driver’s ed. Collected money should not be going into a general fund, used to “offset … additional administrative and legal costs…, or worse, line the pockets of various officials and bureaucrats.

Of course, this is Louisiana, so to put it euphemistically, it is often uncertain how taxpayers’ money is being spent. This entails internal auditing and transparency of record so that the public can see how their collected money is being used and whether traffic cameras are actually benefiting us.

Would you like to read an excessively optimistic view on health care reform? Sen. Mary Landrieu’s op-ed highlights what she believes to be the greatest ObamaCare achievements, praising the full coverage of Louisiana’s children, young adults, and seniors.

Claiming that “congress has finally delivered meaningful health care coverage to all Americans,” Sen. Landrieu argues that the new reform will “save businesses thousands of dollars each year which will allow businesses to potentially increase wages or hire more employees.”

But Sen. Landrieu is overly confident – and even deceptive – because she is neglecting important facts behind the new health care reform: its costs. As Michael Cannon from the Cato Institute points out:

“Obama’s plan [aka: ObamaCare] would vastly increase the size and scope of the federal government, and increase our already record federal deficit”

The Congressional Budget Office estimated costs to be around $940 billion, but this projection takes into account only the costs to expand current health insurance coverage. Considering other unavoidable spending provisions, the costs would amount to around $1.2 trillion.  And that is a conservative estimate. Further, the new health care reform will force nearly all Americans to purchase health insurance, set price controls on the private health insurance industry, and increase the federal deficit by providing more than $1 trillion in subsidies.

Sure, Landrieu is right to claim that these reforms will extend coverage to more children, seniors, and sick individuals. Unfortunately she fails to acknowledge that this will not be sustainable in the long run.