Every now and then, we just need a rest from life. A day off.
Since I could not say this any better myself, I will just re-publish this here. Mort Zuckerman’s “The Crippling Price of Public Employee Unions”, posted May 14, 2010 in US News & World Report.
The American public feels it is drowning in red ink. It is dismayed and even outraged at the burgeoning national deficits, unbalanced state and local budgets, and accounting that often masks the extent of indebtedness. There is a mounting sense that taxpayers are being taken for an expensive ride by public sector unions. The extraordinary benefits the unions have secured for their members are going to be harder and harder to pay.
The political backlash has energized the Tea Party activists, put incumbents at risk in both parties, and already elected fiscal conservatives such as Republican Gov. Chris Christie of New Jersey. Over the next fiscal year, the states are looking at deficits approaching hundreds of billions of dollars. The Center on Budget and Policy Priorities, a liberal think tank, estimates that this coming year alone states will face an aggregate shortfall of $180 billion. In some states the budget gap is more than 30 percent. The result is a crowding out of the state role as the supporter of adequate infrastructure, education, and healthcare.
How did we get into such a mess? States have always had to cope with volatility in the size and composition of their populations. Now we have shrinking tax bases caused by recession and extra costs imposed on states to pay for Medicaid in the federal healthcare program. The straw (well, more like an iron beam) that breaks the camel’s back is the unfunded portions of state pension plans, healthcare, and other retirement benefits promised to public sector employees at a time when federal government assistance to states is falling—down by roughly half in the next fiscal year beginning Oct. 1.
It is galling for private sector workers to see so many public sector workers thriving because of the power their unions exercise. Take California. Investigative journalist Steve Malanga point out in the City Journal that California’s schoolteachers are the nation’s highest paid; its prison guards can make six-figure salaries; many state workers retire at 55 with pensions that are higher than the base pay they got most of their working lives. All this when California endures an unemployment rate steeper than the nation’s. It will get worse. There’s an exodus of firms that want to escape California’s high taxes, stifling regulations, and recurring budget crises. When Cisco’s CEO, John Chambers, says he will not build any more facilities in California, you know the state is in trouble.
The business community and a growing portion of the public now understand the dynamics that discriminate against the private sector. The public sector unions organize voting campaigns for politicians who, on election, repay their benefactors by approving salaries and benefits for the public sector, irrespective of whether they are sustainable. And what is happening with California is happening in slower motion in the rest of the country. It must be one of the reasons the Pew Research Center this year reported that support for labor unions generally has plummeted “amid growing public skepticism about unions’ power and purpose.”
There has been a transformation in the nature of our employment. Labor is no longer dominated by private sector industrial workers who were in large part culturally conservative and economically pro-growth. Over recent decades public sector employment has exploded and public workers have come to dominate the labor movement. These public sector employees have a unique and powerful advantage in contract negotiations. Quite simply it is their capacity to deliver political endorsements and votes for the very people who are theoretically on the other side of the negotiating table. Candidates who want to appear tough on crime will look to cops, sheriffs’ deputies, prison guards, and highway patrol officers for their endorsement.
These unions will naturally back a candidate willing to support better pay and benefits for their members, and this means as much as, or more than, the candidate’s views on law enforcement. The result has been soaring pay and the ability of state police and other safety officers to retire with pensions that place an increasingly unbearable financial burden on the states. In California, such retirees at age 50 often receive pensions at 90 percent of their pay; comparable retirees in most other states get about half their final working salary.
In New York, public service employees have received gold-plated perks for much of the 20th century, especially generous health insurance benefits. Indeed, where once salaries were lower in the public sector, the salary gaps in the public and private sectors have disappeared in the last two decades, or even reversed for most job categories. A Citizens Budget Commission report in 2005 showed that for most job categories in the greater New York City region, public sector workers received higher hourly wages than private sector workers. And according to a 2009 survey by the same group, this doesn’t even count the money that New York City pays in full premiums for comprehensive health insurance policies for workers and their families. Only 8 percent of workers in private firms enjoy that subsidy. Moreover, in virtually all cases, the city also pays the full healthcare premium costs for retirees and their spouses. And the city pensions are “defined benefit” plans, which are more expensive since they guarantee specific benefits on retirement.
On the other hand, private sector workers in the survey were mostly in “defined contribution” plans, which means that, unlike their cushioned brethren in the public sector, they do not have a pre-determined benefit at retirement. If New York City were to require its current workers to pay contributions toward health insuranceequal to the amounts paid by the employees of local private sector firms, the taxpayer savings would approximate $628 million a year. In New Jersey, Christie says government employee health benefits are 41 percent more expensive than those of the average Fortune 500 company.
What we suffer is a ruinously expensive collaboration between elected officials and unionized state and local workers, purchased with taxpayer money. “Scratch my back and I’ll scratch yours.” No wonder the Service Employees International Union has become the nation’s fastest-growing union: It represents government and healthcare workers. Half of its 700,000 California members are government employees. More and more, it wins not on the picket line but at the negotiating table, where it backs up traditional strong-arming with political power. It spends vast amounts of money on initiatives that keep the government growing—and the gravy flowing. Similarly, for the teachers unions—with the result that California and its various municipalities, especially Los Angeles, face budget shortfalls in the hundred of millions of dollars. California can no longer rely on a strong economy to support this munificence. Its unemployment rate runs about several points higher than the national rate and its high-tech companies are choosing to expand elsewhere. Why stay in a state with such higher taxes and a cumbersome regulatory environment?
California is a horrible warning for the nation of how dreams can turn to dust. In most states, politicians face a contracting local economy and shortfalls in tax receipts. Naturally, they look to cut expenses but run into obstruction from politically powerful unions that represent state and local government employees, teachers, and healthcare workers who have themselves caused pension and healthcare insurance costs to soar. It is not an accident that in framing the national stimulus program, Congress directed a stunning percentage of the $787 billion to support public service employees.
The lopsided subsidies for pension and health costs are a large part of the fiscal crises at the state and local levels. The subsequent squeeze on education and infrastructure investment is undermining the very programs that have made it possible for our economy to grow—thousands upon thousands of teachers let go, schools closed, mass transit slashed.
Between New York and California, the projected deficits run about $40 billion—and that doesn’t account for projected billions of dollars in the operating deficits in the states’ mass transit systems or the multibillion-dollar unfunded liability in many of the state pension plans. New York is badly hit because it is being deprived of tax revenues by the government’s indiscriminate attack on the securities industry, which has been so critical to the economy of New York State and to the United States.
We have to escape this cycle or it will crush us. One way is to take labor negotiations out of the hands of vulnerable legislators and assign them to independent commissions. They would have a better shot at achieving a fair balance between appropriate salary increases and the revenues and services of local municipalities. The electorate won’t swallow any more red ink
The contents from the above link is pasted below. It’s a piece by Richard Russell, and is good advice.
I wish I wrote it, but I did not. I did pass it along to my son
So much for my father’s wisdom (which was obviously tainted by the Great Depression). But Dad was a very wise man. For my own part, I’ve been in a number of businesses — from textile designing to advertising to book publishing to owning a night club to the investment advisory business.
It’s said that every business needs (1) a dreamer, (2) a businessman, and (3) a S.O.B. Well, I don’t know about number 3, but most successful businesses do have a number 3 or all too often they seem to have a combined number 2 and number 3.
Bill Gates is known as “America’s richest man.” Bully for Billy. But do you know what Gates’ biggest coup was? When Gates was dealing with IBM, Big Blue needed an operating system for their computer. Gates didn’t have one, but he knew where to find one. A little outfit in Seattle had one. Gates bought the system for a mere $50,000 and presented it to IBM. That was the beginning of Microsoft’s rise to power. Lesson: It’s not enough to have the product, you have to know and understand your market. Gates didn’t have the product, but he knew the market — and he knew where to acquire the product.
Apple had by far the best product in the Mac. But Apple made a monumental mistake. They refused to license ALL PC manufacturers to use the Mac operating system. If they had, Apple today could be Microsoft, and Gates would still be trying to come out with something useful (the fact is Microsoft has been a follower and a great marketer, not an innovator). “Find a need and fill it,” runs the old adage. Maybe today they should change that to, “Dream up a need and fill it.” That’s what has happened in the world of computers. And it will happen again and again.
All right, let’s return to that wonderful world of perfection. I spent a lot of time and thought in working up the criteria for what I’ve termed the IDEAL BUSINESS. Now obviously, the ideal business doesn’t exist and probably never will. But if you’re about to start a business or join someone else’s business or if you want to buy a business, the following list may help you. The more of these criteria that you can apply to your new business or new job, the better off you’ll be.
(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state. In other words, it has an unlimited global market (and today this is more important than ever, since world markets have now opened up to an extent unparalleled in my lifetime). By the way, how many times have you seen a retail store that has been doing well for years — then another bigger and better retail store moves nearby, and it’s kaput for the first store.
(2) The ideal business offers a product which enjoys an “inelastic” demand. Inelastic refers to a product that people need or desire — almost regardless of price.
(3) The ideal business sells a product which cannot be easily substituted or copied.This means that the product is an original or at least it’s something that can be copyrighted or patented.
(4) The ideal business has minimal labor requirements (the fewer personnel, the better). Today’s example of this is the much-talked about “virtual corporation.” The virtual corporation may consist of an office with three executives, where literally all manufacturing and services are farmed out to other companies.
(5) The ideal business enjoys low overhead. It does not need an expensive location; it does not need large amounts of electricity, advertising, legal advice, high-priced employees, large inventory, etc.
(6) The ideal business does not require big cash outlays or major investments in equipment. In other words, it does not tie up your capital (incidentally, one of the major reasons for new-business failure is under-capitalization).
(7) The ideal business enjoys cash billings. In other words, it does not tie up your capital with lengthy or complex credit terms.
(8) The ideal business is relatively free of all kinds of government and industry regulations and strictures (and if you’re now in your own business, you most definitely know what I mean with this one).
(9) The ideal business is portable or easily moveable. This means that you can take your business (and yourself) anywhere you want — Nevada, Florida, Texas, Washington, S. Dakota (none have state income taxes) or hey, maybe even Monte Carlo or Switzerland or the south of France.
(10) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs. There’s nothing like being fascinated with what you’re doing. When that happens, you’re not working, you’re having fun.
(11) The ideal business leaves you with free time. In other words, it doesn’t require your labor and attention 12, 16 or 18 hours a day (my lawyer wife, who leaves the house at 6:30 AM and comes home at 6:30 PM and often later, has been well aware of this one).
(12) Super-important: the ideal business is one in which your income is not limited by your personal output (lawyers and doctors have this problem). No, in the ideal business you can sell 10,000 customers as easily as you sell one (publishing is an example).
That’s it. If you use this list it may help you cut through a lot of nonsense and hypocrisy and wishes and dreams regarding what you are looking for in life and in your work. None of us own or work at the ideal business. But it’s helpful knowing what we’re looking for and dealing with. As a buddy of mine once put it, “I can’t lay an egg and I can’t cook, but I know what a great omelet looks like and tastes like.”
“Courage is being scared to death, but saddling up anyway.” Marion Mitchell Morrison, 1907- 1979 ) (aka John Wayne)
The funeral has come and gone. He passed February 8th. In the hospital, in room 8. I begin to realize after the fact that there are a lot of 8s – his birthday adds up to 8, he was born in the 8th month – did you know “8” in numerology symbolizes the businessman.? It reads“You are inspiring, result-oriented, powerful, ambitious, visionary, generous, perseverant, forgiving, broad-minded, money-conscious and self-disciplined. You have the potential for enormous success. You are also a good judge of character a natural leader and a survivor.”
“You feel strongly that the financial system has gotten out of whack. Do you think the American political process is capable of fixing it?
The American political process is about as broken as the financial system. Therefore, one has to be a bit skeptical. Just to give you one little example, one unrelated to the financial crisis. Here we are on Dec. 29, almost a year after the Inauguration, and there is no Under Secretary of the Treasury. That should be an important position. How can we run a government in the middle of a financial crisis without doing the ordinary, garden-variety administrative work of filling the relevant agencies? The Treasury is an outstanding example of a broken system, but it’s not the only one.
Is part of the problem that Congress is slow in the process of approving?
Slow is too fast a word to describe what’s going on. The Administration is one quarter over, and it hasn’t manned the ramparts of government yet.
So it’s the Administration’s problem? They haven’t gotten their Executive Branch in place?
It’s partly a reflection of the discord in government and extreme views on either side and fighting each other for every scrap of advantage.
In interviews in the past you said that’s why we needed to change the political process; that’s why you thought that candidate Obama was the best choice for President.
True. But has he been able to do that at this point? It doesn’t look that way. I think that’s unfortunate. I wish the Administration would pay more attention to what’s needed to improve the ordinary functioning of government. We can’t even fight a war with our own people any more. We’ve got to hire Blackwater. I think people have lost confidence in government, they’ve lost trust in government, and it shows. This isn’t a question just of this Administration. It’s been kind of a steady, downhill path.”
Saturday morning, around 4 am, I awake, and hear him downstairs coughing. I go down, and crawl into the bed next to him while the care-giver helps make him comfortable. I do not know it at the time, but I now believe the transition from the hospital to our house exhausted him.
28 years ago today, I became a mother.
Happy Birthday, to my wonderful son.
What’s become known as “Climategate” may be about to explode on this side of the pond as well. Chris Horner, a senior fellow at the Competitive Enterprise Institute, has threatened a lawsuit against NASA if by year-end the agency doesn’t honor his Freedom of Information (FOI) requests for information on how and why its climate numbers have been consistently adjusted for errors.
“I assume that what is there is highly damaging,” says Horner, who suspects, based on the public record, the same type of data fudging, manipulation and suppression that has occurred at Britain’s East Anglia Climate Research Unit (CRU). “These guys (NASA) are quite clearly determined not to reveal their internal discussions about this.”
They may have good reason, says Investor’s Business Daily (IBD):
- NASA was caught with its thermometers down when James Hansen, head of NASA’s Goddard Institute for Space Studies, announced that 1998 was the country’s hottest year on record, with 2006 the third hottest.
- NASA and Goddard were forced to correct the record in 2007 to show that 1934, decades before the advent of the SUV, was in fact the warmest; in fact, the new numbers showed that four of the country’s 10 warmest years were in the 1930s.
- Hansen, who began the climate scare some two decades ago, was caught fudging the numbers again in declaring October 2008 the warmest on record.
- This despite the fact that the National Oceanic and Atmospheric Administration had registered 63 local snowfall records and 115 lowest-ever temperatures for the month, and ranked it as only the 70th-warmest October in 114 years.
- Scores of temperature records from Russia and elsewhere were not based on that October’s readings at all; figures from the previous month had simply been carried over and repeated two months running.
Was Hansen, like his CRU counterpart Michael Mann, trying to “hide the decline” in temperatures, asks IBD?
Hansen has said in the past that “heads of major fossil-fuel companies who spread disinformation about global warming should be tried for high crimes against humanity and nature.” What penalties would he recommend for himself and his CRU colleagues, asks IBD?
Source: Editorial, “NASA-Gate,” Investor’s Business Daily, December 7, 2009.
For more on Global Warming:
With never enough time in a day for exercise and work related happenings, I look forward to Fall and Winter, and the holidays that come with that timing. The kids will be home for Thanksgiving, and even though it is a brief visit, spanning just two days, it will feel great to hear their voices and feel their hugs.
I am traveling this week – Green Intelligent Buildings. I think I have picked up a new person for the office – one who may prove to be a keeper if we can hold his interest. I’ll know more next Spring, but for now, I feel very good about things to come.
Of course, except, on the global political front. Makes me wonder where my head was at back in the 70s and 80s that I missed so much of what was happening. I love the internet for its ability to bring the world to our door. While it is not the end-all, it is a great placfe to start.
Iran will show us what kind of a spine we have, over the course of the next couple of days, and maybe weeks. The whole world is watching. Meanwhile, Congress keeps trying to move healthcare reform along. Too bad they are aiming in the wrong direction. But it comes from the top, doesn’t it?
Interesting linksHere are some interesting links for you! Enjoy your stay :)
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