Private vs. Public. Not non-union vs. union.

Wisconsin
[Update: I altered a paragraph at the bottom that flummoxed some people so grievously that they couldn't find their way to addressing the actual point of the post.]

My union friends.

My friends-of-union friends.

Those of you who do not wish to be my friend but who are upset about the what’s happening in New Jersey, Wisconsin, and now Ohio, regarding unions and collective bargaining…

Chill.

Think about something for a moment. Please consider this:

A private company, let’s call it Bob’s Widgets, takes in $5,000,000 in total revenue in a given year. That means the company has a total pool of money of $5,000,000 to pay for supplies, rent, machinery, insurance, taxes, fees, salaries, wages, benefits, and bonuses. After paying for supplies, rent, machinery, insurance, taxes, and fees Bob’s Widgets is down to, let’s say, $1,000,000 for salaries, wages, and benefits. That means before anyone has been paid a red penny, there is a total pool of $1,000,000 to “divvy up” among the president, managers, and unionized employees. When the union bargains with Bob, if the union rep ups the wage and benefits demand above a certain point Bob can tell the union rep, “if you demand that much in wages and benefits, we will be unable to stay in business, and everyone will lose their job.” The union can then either demand that much anyhow, go on strike, and eventually cause Bob to shutter the business (if only long enough to de-certify the union), thus losing everyone their job; or the union can back off its demands, accept that Bob really can’t afford to pay what they are demanding, and be happy with the pay Bob is able and willing to pay. If Bob is a good and decent man, he will be honest in that negotiation. If the union rep is a good and decent man, he will be honest in that negotiation.

But the bottom line is that there is a bottom line: a finite pool of money from which Bob can pay the workers. No more is available, period.

Now let’s step into the realm of the public sector, where union employees work for the government (i.e., for you and me. Ostensibly, anyhow). George is an elected politician for whom all the unionized workers work. George is the employer who sits across the table from the union representative and listens to the rep’s demands. The union rep demands more money in salaries, nicer health insurance with a very small employee contribution, accumulated sick leave with full pay-out upon retirement, and a structured raise system based on seniority and years served rather than merit. George, since he is a government official, doesn’t have to rely upon selling a good or service to raise revenue; he gets revenue from taxes and fees. George really wants to keep the union rep and all of the unionized government employees happy. George really can’t tell the union rep that it is impossible for the government to increase its revenue pool (because all George has to do is raise taxes and increase fees—he is in government, anyhow). Then he’ll have more money to pay for the increased salaries, benefits, and accumulated sick leave pay-outs. Also, since George is an *elected* official, that means he’ll be up for re-election. Now that George really did his part to make life nice for the unionized government workers, the government, public sector unionized workers will be very inclined to do everything they can to get George re-elected so he can and will continue making their life nice and easy.

So lots of money will be raised from the pockets of all people including Bob, the union representative, and all the unionized employees at Bob’s Widgets through higher taxes and new fees. That money will be used to pay the government employees, who in turn will pass a decent portion of it along to George in campaign contributions, thus helping him get re-elected. That way he can can continue scratching the back that scratched his because he scratched theirs.

Do Bob’s employees get a chance to “re-elect” Bob or support his opponent for the presidency of Bob’s Widgets? Um, no.

Can Bob go out and simply order people to buy his widgets under penalty of garnished wages or jail time? Huh-uh.

But Bob and each of his employees, all of them good union men and women, will have to pay higher taxes and fees out of their pocket, along with higher prices on food, clothing, gasoline, movie tickets, cigarettes, whatever it is that George targeted with higher fees and taxes, in order to pay for the posh deal George signed off on for the public sector union workers.

Eventually the government no longer is of, for, and by the people, but the people must, under penalty of jail time, support that government and all its works and deeds…

See: what is happening in state houses in Wisconsin, Ohio, and New Jersey is not an anti-union action. It is uprooting a corrupt, self-perpetuating system that treats all private sector citizens as piggy banks: to be cracked open as the need arises. It never should have been allowed to happen in the first place. FDR was opposed to the idea of public sector unions collectively bargaining. FDR! Governors Daniels, Christie, Walker, and Kasich are making this first step in fixing the mess that is the public deficit.

It is not pretty, and some promises made by politicians long since out of office will be broken—but they were promises made in bad faith: the politicians who made them had no idea what the future economic realities would hold and thus had no standing to promise future generations’ revenues. But even at that, they also knew they would not be around when the bills came due, so it would be someone else’s problem if it all blew up. Well, with the economy in the tank, the baby boomer generation about to retire en masse, and the simple reality of economics, these promises simply cannot be honored.

The chickens from decades of cozy dealings between politicians and public sector unions are coming home to roost. An economy can only handle so much taxation and fees before imploding.

Public sector unions and private sector unions are the same in name only. Public sector unions have an advantage in collective bargaining that is simply impossible for private sector unions, and then the public sector workers get to pocket the money taxed away from the private sector union guys and gals.

I hope that is sufficiently clear.

Now, if you’ve lost your chill it’s for one of two reasons: you didn’t think of it this way before and you’re ticked off that this has been happening for so long, that it imperils the economy, and that people are defending this dastardly arrangement; or you have been a beneficiary of this arrangement, don’t like that it has been exposed, and resent that the people think it is corrupt and should go away.

If it’s the former, good for you. Do what you can to help bring fiscal sanity to your state and local government by supporting those making tough calls on budget cuts including, but not limited to, efforts like I discuss above. Attend rallies (peacefully, of course), call your elected officials and voice your concern, write letters to the editor and talk with your friends who may also have incorrect notions about what is really happening. Hopefully our politicians will stand their ground and government will be reined in.

If it’s the latter, well, it’s time for a new way of thinking. Support fiscal sanity and the common good rather than your own pocket book for a while. Stay in your present public-sector job, but agitate for deals that are in the best interests of the common good, respecting that the tax payers pay your salary. Or, perhaps to broaden your perspective, get a job in the private sector. Even better, take a risk and start a business (perhaps an educational institution) so you can directly, actively create real wealth-generating jobs for multiple people. You’d be amazed how much good that can do.

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39 thoughts on “Private vs. Public. Not non-union vs. union.

  1. Mike says:

    I normally vote conservative (which in turn is usually Republican). However, I cannot for the life of me figure out why this article is on a Catholic website. I may or may not agree with the conclusions here, but what does it have to do with being Catholic, or Church teaching? If you guys continue to address issues that are strictly political, you are going to lose pro-life folks that might disagree with you on issues where the Church allows a diversity of opinion, such as this union issue. It makes you look like a conservative hacks, rather than thoughtful Catholics. Maybe the mission of this website changed, I’m not sure, but most people I know originally came here for information on Catholic issues, such as abortion, euthanasia, etc. People can go elsewhere for opinions on fiscal responsibility.

    1. Tom Crowe says:

      Mike, was the post unthoughtful? I hope you find it thoughtful, because I put thought into it. Did it claim that it is proclaiming defined Catholic teaching? Certainly not, because there is no doctrinal statement regarding this issue, nor could there possibly be. I did not argue that anyone is barred from unionizing, rather I exposed a corrupt system that benefits a few at the expense of the many. That, my friend, is a moral issue, as are most governmental issues. Therefore, since truthfulness, a full consideration of the issues at stake, and a moral structure of governance are at stake, there is no reason why a site that deals with politics from a Catholic perspective should avoid such a post. I did not proclaim that anyone who disagrees with me is a bad Catholic (or, “Catholyc,” as we sometimes use around here), but I present a description of what is at stake, and that the present system, which (it bears repeating) uses government authority to unfairly benefit a few at the expense of the many and corrupt a fair elections system, is immoral. Immorality in governance is a Catholic issue.

    2. Joe says:

      Mike. The Church is always concerned about the well-being of people and the common good. It sounds like you might be surprised at how much has been expressed by Church leadership about these types of issues (politics, economics, unions, etc.).

      I have the opposite feeling as you. I don’t think that the Catholic perspective should be limited to a few issues. It’s important for Catholics to engage their principles in the day-to-day business of life and interactions with others (maybe even more important when there is room for debate). I think that this web site serves that purpose well and much more of this type of presence is needed. After all, we’re supposed to be Catholics all of the time. Not just when certain subjects are brought up.

  2. Cindy says:

    Tom,
    Gov. Scott Walker says he wants state workers covered by collective bargaining agreements to “contribute more” to their pension and health insurance plans. Accepting Gov. Walker’ s assertions as fact, and failing to check, creates the impression that somehow the workers are getting something extra, a gift from taxpayers. They are not. Out of every dollar that funds Wisconsin’ s pension and health insurance plans for state workers, 100 cents comes from the state workers.

    How can this be possible?

    Simple. The pension plan is the direct result of deferred compensation- money that employees would have been paid as cash salary but choose, instead, to have placed in the state operated pension fund where the money can be professionally invested (at a lower cost of management) for the future.

    Many of us are familiar with the concept of deferred compensation from reading about the latest multi-million dollar deal with some professional athlete. As a means of allowing their ball club to have enough money to operate, lowering their own tax obligations and for other benefits, ball players often defer payment of money they are to be paid to a later date. In the meantime, that money is invested for the ball player’s benefit and then paid over at the time and in the manner agreed to in the contract between the parties.
    Does anyone believe that, in the case of the ball player, the deferred money belongs to the club owner rather than the ball player? Is the owner simply providing this money to the athlete as some sort of gift? Of course not. The money is salary to be paid to the ball player, deferred for receipt at a later date.

    A review of the state’s collective bargaining agreements – many of which are available for review at the Wisconsin Office of State Employees web site – bears out that it is no different for state employees. The numbers are just lower

    1. Joe says:

      Cindy. If what you describe is true, the unions shouldn’t have a problem with Walker’s proposal on that basis as it allows them to continue negotiating their wage. They can continue to take money out of their negotiated pay checks and send that to a pension fund.

  3. David says:

    Wow, another nut job. Proof that just typing a lot of words doesn’t mean you actually understand what you are talking about. He’s actually suggesting that public workers, including teachers quit, and start a small business to fuel the economy. Hmmm, when everyone quits and no one is left to teach our children and because the few public workers left have no money to spend, I really don’t think my business is going to succeed. But hey, at least I helped defeat the last barrier against the corporate takeover of our government.
    There’s no point in proving point by point where you are wrong, since this is obviously a biased site anyway and 99% of readers will agree, like the other sheep, with the author anyway. Let the attack begin.

    1. Tom Crowe says:

      David– Well, if the teachers quit their public teaching jobs and start a private school that focuses especially on outcomes rather than teachers’ contracts, then they haven’t quit teaching at all, now have they? And what’s with the opening ad hominem attack? That doesn’t win you any points at all, but makes you look bad. You must have slept through logic… ——- and don’t look now, but when big corporations (or big unions) and big government get in cahoots to rule everything it’s called fascism. Another left-wing ideology. My preferred way of approaching things is to encourage entrepreneurship and small business (the real backbone that made/makes this nation great) by reducing government barriers to startups. The employees of small business can unionize if they so desire. But then they’re in the scenario headed by Bob, not George, and thus actually contribute to the economy rather than just sucking off it. ——– But I suppose all that is just because I’m biased and typing random words that happen to form complete sentences and make cogent arguments. Which is different than what you did: swoop in, discount an argument and a writer out of hand without providing a single point of rebuttal, and leave with your jaw pointed self-satisfiedly up but having accomplished nothing of substance. Bravo.

    2. Joe says:

      David. I’m pretty sure that typing a lot of words that form several arguments trumps writing a few words that form nothing but insults. I welcome you to “prove point by point” where Tom is wrong rather than appearing that you can’t in a post like this.

      1. Cindy says:

        The Republican strategy is to split the vast middle and working class – pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don’t believe these programs will be there for them, and the poor against the working …middle class.

        If what you are stating is true, then why do Republicans have no record on doing anything to curb the deficits? Especially in times where a democrat has come along and prudently stored up the wealth.
        What we have had is large tax cuts that disproportionately benefit the wealthy all the while we have the ramping up of military spending.

        What we have going on right now is a targeted attack on the working class. What we as a society are not addressing is the leverage of corruption. What we have the Republicans going after are the public service unions. Meanwhile, they completly ignore the activities of private corporations. These same private sector corporations have the ability to take their jobs overseas to make a profit. The ‘public sector’ –state jobs, do not. Meanwhile private sector corporations can literally use all of their tactics. Funding political candidates, they can lobby, they can pretty much straight up blackmail. Give us these low tax cuts, or else we will simply take our company overseas and hurt more American workers.

        Yet no one wants to look at it all fairly. What you want is to jam things through that hurt the American worker, while you feel good about it, because it all fits into your ideology. Great. What a country!

        1. Tom Crowe says:

          Cindy– Bullhooey. Set aside your Democrat talking points and respond to my actual arguments. ———- As I explain in the post, unionized workers are split by the unfair advantage enjoyed by public sector unions when it comes to collective bargaining. The private sector union workers are hurt by the ability of public sector unions to bargain with politicians rather than business owners and managers. ———— Nothing I say in my post says Republicans are saints or Democrats are villains. I mention some governors, who, yes, happen to be Republican, but it is because of their policies, not their party, that I mention them. They have proven themselves serious about tackling the deficits that you so flippantly assert they don’t care about. ———– Also, contra your assertion, I’m quite clear that “this isn’t not pretty,” which puts the lie to your “while you feel good about it.” I don’t feel good about any of this. You are unfair for saying so. The difference between you and me is I’m willing to be honest about an awful situation while you prefer to blow partisan smoke up everyone’s skirts so you and those whom you support can continue to get a sweetheart deal that screws every single person who pays income tax, sales tax, gasoline tax, property tax, and the myriad fees the government concocts to pay for the lavish benefits that public sector employees have scored. ———— I didn’t cause this division: I’m doing my part to expose it and bring it back to fiscal sanity. You can either help out or be a partisan hack.

        2. Joe says:

          Cindy.

          The Bush tax cuts increased tax revenues. Bill Clinton, assuming that he is your “prudent Democrat” cut welfare and taxes significantly.

          Comparing private business with public employee unions: if a private company were to pay someone working on behalf of the other side of a negotiation and it became public, people would go to jail. And that is exactly what occurs when public employee unions get a politician elected. There’s a reason why it’s illegal in every other case.

          Unions are the reason why jobs are being sent over seas. Take General Motors for example. The cost of labor per vehicle is so much higher than at Toyota, GM can’t compete by increasing the value of or lowering the cost of the product. That cost of labor was driven up over the years by union demands for increasingly rich pay and benefits.

          1. Robert says:

            Hardly. Corporate money gets politicians elected all the time. Check the interest groups and PACs that contributed all kinds of money to the last round of elections, on both sides. No one goes to jail over political donations. And it makes no difference if it is a pharmaceutical company lobbying my contribution to their PAC to get the republican candidate elected so that the FDA will stay off their backs or if it is a Teamster contributing to the election of a pro-union democrat. That is nonsense, pure and simple. If you don’t like the union rules, change them. Use Tom’s argument of increased costs will close the company. Happened to American Motors when Chrysler bought them, happened to the Kroger employees in Indiana where I went to school (the stores closed, only to be replaced by another Kroger branded store a few years later – they didn’t have to hire anyone back that way). None of this is a rational argument for why the union shouldn’t exist. Merely an argument for new rules of engagement. We don’t throw out our cars because they are malfunctioning, we fix them. Or maybe you have enough money that you can… I know I don’t.

    3. Cindy says:

      Thank you David! There is hope out there. Divided we stand!

      1. Tom Crowe says:

        Um, huh? Divided we stand?

        1. Xenophon says:

          Tom, you seem to have attracted a pair of trolls. David even admits this in his closing line, “Let the attack begin.” Neither he nor Cindy are interested in a rational debate, since the logic here has veered away from the simplistic (but chantable) bullet points their union bosses handed them at this morning’s demonstration in Madison. Best not to dignify any further ad hominems from them with a response.

          1. Tom Crowe says:

            Xenophon– You are most likely correct, but I like to point out their faulty logic. I find it fun, to a point. Then I just stop responding.

  4. Adam says:

    I am so glad that my public school teachers didn’t decide to come to “sanity” and find a job in the public sector – without them I would never have been able to even read your blog.

    1. Cory says:

      Well, Adam, some teachers DID decide to come to “sanity” and they took a job teaching at a private school, like our local Catholic school system. They get paid less than their public counterparts but at least they have the satisfaction of knowing that the students they teach are given the best opportunities to be the best that they can be. It has always been amazing to me how simple it is, and yet some people can’t see it. It doesn’t matter where it has been studied, the results are the same. Private schools, where the PARENTS have a vested interest in their childrens education, perform hands and feet above public schools with a fraction of the funds. And these results are duplicated in every country on earth! Call me a simpleton or a hick or just naive, but I believe that the unions don’t care about our children, they care about making there coffers fat and self preservation…. Well then, they are taking from our kids, and we will not allow that any more! Time is well past for the buck-passing to stop, and it will stop with me.
      God Bless

      1. Bruce says:

        Public education, particularly its own “gospel” of progressive education founded by the likes of John Dewey, is a tremendous failure and needs to be demolished and rebuilt on concepts and philosophies that actually work. In all of my years of public education, the sad story was always the same: Dollars always take precedence over children. Always have and always will. In time, the public school system will collapse anyway, so the situation will probably remedy itself whether people yell and scream or not.

      2. Adam says:

        Cory -
        My father busted his knees and back just to be able to keep a roof over our head and food on our table. Unfortunately this meant that we couldn’t afford $4.000-$5,000 a year in tuition, as such I had to be a “lowly” public school student. But because my parents were always interested in my education – because they loved me, not because they had a bigger financial stake – I still turned out fairly well. It’s not that people don’t realize that private schools may be better for the kids, it’s just that they simply cannot afford it. And now they’re being vilified on blogs like this and by commenters like you as lacking your enlightenment, when they really just lack funds. On a Catholic blog by an assumed Catholic commenter, I’d think that an acknowledgment of those who are without shouldn’t be seen as less sane, just in unfortunate circumstances. So yeah, I want those public school teachers to stay because I happen to dislike the gap between the haves and the have nots. The rich and the poor. Strangely, I really thought that was part of having a Catholic heart. Perhaps I should rethink this.

        1. Tom Crowe says:

          Adam– You are mis-reading the intention of the post entirely. First, I can compare notes with you on growing up in a house where my parents barely had two nickels to rub together. My parents did, however, manage to scrimp and save (and get discounts from the pastor) to send me and my siblings to Catholic grade school rather than inner-city Youngstown, Ohio public schools. I do, however, recognize that not everyone has that option. But You fail to address the substance of my post, which is the corrupt circular quid pro quo among politicians and public employees. Instead you set up a bogeyman that I’m out to shut down all public schools and services. Bullhooey. I’d just like them to be first about teaching, like the private schools which are driven by market motives and reputation rather than simple inertia and public funds being thrown at them for no apparently good reason. To repeat and clarify: I wish the public schools were worth a darn, but by and large they are not. If market forces were introduced then perhaps they would be. But teachers unions have used the scheme I outline to prevent school vouchers, charter schools, and any other semblance of competition. That’s a crock. And it horribly disserves people like yourself who did not have the opportunity to go to a private school. ——- See? My heart is with you and others who are less fortunate, and my eyes are set firmly on the corrupt system that consigns you and others to poorly performing schools and teachers who get paid regardless of ability. Can you see your way to where I’m standing?

          1. Adam says:

            Tom,
            No I understood your post, but your latest comment makes me wonder if you understand it. In this post, and all of your other posts on the subject, this has all been about fiscal responsibility and making collective bargaining fair between the public and private sector. Now, all of the sudden, it’s about reforming education? When did that happen?

          2. Tom Crowe says:

            Adam, it happened when that became the thrust of comments. Which prompted my alteration of the offending paragraph. I didn’t change my meaning, but altered the ancillary part at the end that caused people, like yourself, to miss the forest for a tree.

        2. Joe says:

          Adam. If I may, I’d like to add that your parents paid for your public education as well via taxes. Point being, if they didn’t have to do that, it would have freed up money that they could have brought home and used toward your education at a private institution. Essentially, someone else took the decision about where you would go to school away from your parents.

        3. Cory says:

          Adam,

          I didn’t get to attend a private school, althought I did attend school in a small rural South Dakota town of 500 that was run in the same way. I am not willing to let my children make that sacrafice when we have a Wonderful Catholic School right here. And for your information, I do not make a huge amount of money. I and my wife are your typical middle class family, four children from age 4 to 20, oldest in college, morgage (20 yrs left) on a 1998 square ft home built in 1962. Oh, and I almost forgot, along with the tuition that I pay to CSS, I pay $2,300.00 a yr in property taxes. So I guess that I am paying for someone else’s child to go to public school on top of it. All that I am asking for is the ability to be responsible for my children’s education and every other parent to be able to make the same decision, if they so choose.

          God Bless

          1. Cory says:

            ps…I forgot to include the taxes that the business where I work (small, only 3 employees including me) pays- $12,000.00 a year in property taxes. Add in the property taxes from the other two employees personal homes and you get $18,000.00/yr and here in SD that goes almost entirely to public edu. Just thought you might want to know….

            God Bless

  5. Kat says:

    Very good summary, Tom. Thank you.

  6. Joe says:

    Thank you Mr. Crowe. Well said.

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