Gyroscopic Investing

Good or bad?

[quote=http://www.nytimes.com/2015/03/10/us/go ... -bill.html]Even before the Legislature passed the measure on Friday in a fast-track process, Mr. Walker’s political backers were raising money on the issue, saying of the bill in an email pitch to donors, “You know how it is: It threatens the power the Big Government Labor Bosses crave and they are going to come after him with everything they’ve got.”?

Democrats assert that Mr. Walker’s real motivation is more about politics than job creation: breaking a dwindling union movement in Wisconsin and boosting his standing as the conservative choice for the Republican presidential nomination next year. And beyond Mr. Walker’s prospects, they say, the new laws throughout the region are intended to help Republicans build a favorable electoral map for 2016, by weakening the labor groups that have traditionally provided muscle and money to Democratic candidates in crucial swing states.

“It’s designed to depress wages and to help them win elections in the future,”? Michael Sargeant, executive director of the Democratic Legislative Campaign Committee, said of passage of the measure, almost entirely on party lines, in Wisconsin. “That’s what this is about.”?

...

Federal law already permits workers not to join unions. But these laws go further, permitting workers to not pay fees to them. Unions argue that the fees are fair for nonunion members who still benefit from the contracts they negotiate, and that without a requirement, their membership, financial support and very existence are threatened.[/quote]

No one should be forced to "contribute" to anything they don't want to. (I used quotes because "forced contribution" is a contradiction.)

Libertarian666 wrote: No one should be forced to "contribute" to anything they don't want to. (I used quotes because "forced contribution" is a contradiction.)

+1

The unions, if they want to stay relevant, must now actually keep the best interests of their members as their top priority.  Ones that do will gather new contributing members. Ones that do not will die off. I think it's a positive development for both sides.

Tyler wrote:

Libertarian666 wrote: No one should be forced to "contribute" to anything they don't want to. (I used quotes because "forced contribution" is a contradiction.)

+1

The unions, if they want to stay relevant, must now actually keep the best interests of their members as their top priority.  Ones that do will gather new contributing members. Ones that do not will die off. I think it's a positive development for both sides.

Exactly. The idea of being forced to contribute to a union you don't actually belong to is ridiculous.

This is one area where I really don't agree with union activity.  I think it's a net loss for the country that they're dwindling (in spite of their bureaucratic f*ckery), and I think public sector unions are ok, but forcing people to pay dues to them seems to be a stretch...

But overall, I don't really understand unions and their interactions with the private/public sectors (and laws regarding their activities) as I wish I did. Most conversations around unions are either:

1) listening to someone who thinks it's a huge tragedy that they're dwindling, and ignores what appear to be overreaches to try to defend what they're doing.

2) Listening to someone that hates them to their core for the fact that they encourage laziness of employees, are self-serving, and do all sorts of shady things.

3) People who are exposed to them enough and have a mix of opinions on them, but no real perspective on the fundamental basis upon which they're even allowed to function legally.


It's hard to get a balanced opinion or even observe a useful debate on this topic.

Great point, Moda.  I haven't seen anything that really states how all the pieces fit together.

However, I do think that public sector unions are probably a bad thing to allow.  The history of unions suggests that they will inevitably eat their own industry, and the only check on that is that the business might go under.  Unions have to scale back their demands in order to prevent that (or they don't, and the business goes under).  Public sector unions have no such check.  They will run wild on the taxpayer dime.

Xan wrote: Great point, Moda.  I haven't seen anything that really states how all the pieces fit together.

However, I do think that public sector unions are probably a bad thing to allow.  The history of unions suggests that they will inevitably eat their own industry, and the only check on that is that the business might go under.  Unions have to scale back their demands in order to prevent that (or they don't, and the business goes under).  Public sector unions have no such check.  They will run wild on the taxpayer dime.

Xan,

I can definitely see that possibility, but when I look at a teacher, I really don't see someone who I think is grossly overpaid for what they do (dealing with 30 rambunctious kids of varying degrees of behavior and intelligence).  If that is "public sector unions running wild," I guess I think there is still a cap on it.

Further, the public sector is ALWAYS negotiating with the private sector.  And if we include all levels of government in one big pot (probably unfair for this example, but here goes), you're talking about a massive amount of negotiation going on against an entity.  Not just at the labor level.  This is going to give us two items to point out...

1) Our government is already negotiating with MASSIVE contractors and corporations.  These companies often are massive in the first place because of the increased bargaining power they gain by being that way.  These are no different from unions in principle.  Large bargaining entities.  Does this mean we can't have our government negotiating contracts with massive corporations... because they will bankrupt taxpayers?

I definitely agree with too much complacency in government with embedded interests, whether it be employees or members of the military industrial complex... but I think taking a broadsword to the idea that our government negotiates with large entities (whether unions or corporations) is probably a bad idea (unless we're going all anarchist and want to disassemble the entire government haha).

2) To the degree that an entity as large as government is negotiating with individual human beings, it has far higher economic bargaining power.  Employing a union against a bigger bargainer was never a source of un-relenting negotiation that only the solvency of the employer constrained.  It just allowed for more bargaining power of the employees.  It's quite common that small interests band together to negotiate against a large one. And obviously our government has more financial staying-power than a large corporation... but it's still just market economics.  It's just one large bargaining power vs another.  If I remember right in econ 101, bargaining power plays some role in economics, but it's usually diminishing as your size approaches the size of the party you are bargaining with.



EDIT: Another thing to point out is that the VAST majority of labor bargaining is done at the state/local level, where going into debt is far, far more difficult to do than at the federal level.

This means the constraint the government has to deal with is taxation.  Taxation is woefully unpopular with the public as a whole.  Even when I hear GOOD ideas proposed to fund things that libs and conservatives ALL tend to agree on (roads & such), you still get a ton of grumbling by people for having to pay them (because EVERYONE thinks they're overtaxed for what they get respective to (insert "other" here).  I think this is a more hard constraint than we may be giving it credit for.  Especially since the main forms of state/local funding are extremely regressive (property, sales, and state income taxes, as well as gas & sin taxes and other fees).... this means that it's a lot harder to "tax your neighbor" without taxing yourself as well.  There's not a handy-dandy uber-progressive income tax code to rest another credit on.

Good. Next question.

Xan wrote: Great point, Moda.  I haven't seen anything that really states how all the pieces fit together.

However, I do think that public sector unions are probably a bad thing to allow.  The history of unions suggests that they will inevitably eat their own industry, and the only check on that is that the business might go under.  Unions have to scale back their demands in order to prevent that (or they don't, and the business goes under).  Public sector unions have no such check.  They will run wild on the taxpayer dime.

Correct. When public sector unions strike, it is against the taxpayer, who has no power to tell them off.

Libertarian666 wrote:

Xan wrote: Great point, Moda.  I haven't seen anything that really states how all the pieces fit together.

However, I do think that public sector unions are probably a bad thing to allow.  The history of unions suggests that they will inevitably eat their own industry, and the only check on that is that the business might go under.  Unions have to scale back their demands in order to prevent that (or they don't, and the business goes under).  Public sector unions have no such check.  They will run wild on the taxpayer dime.

Correct. When public sector unions strike, it is against the taxpayer, who has no power to tell them off.

Yes they do.  Not individually of course, but they don't get taxed individually either.  Politicians need votes.  Raising taxes loses them that.

moda0306 wrote:

Libertarian666 wrote:

Xan wrote: Great point, Moda.  I haven't seen anything that really states how all the pieces fit together.

However, I do think that public sector unions are probably a bad thing to allow.  The history of unions suggests that they will inevitably eat their own industry, and the only check on that is that the business might go under.  Unions have to scale back their demands in order to prevent that (or they don't, and the business goes under).  Public sector unions have no such check.  They will run wild on the taxpayer dime.

Correct. When public sector unions strike, it is against the taxpayer, who has no power to tell them off.

Yes they do.  Not individually of course, but they don't get taxed individually either.  Politicians need votes.  Raising taxes loses them that.

You don't get taxed individually? That's odd; I do.
As for votes, public sector employees vote too, unfortunately. Obviously they shouldn't be able to, as it is a direct conflict of interest. And their unions are VERY "generous" with politicians, who can use the funds to buy advertising to get more votes.

Libertarian666 wrote:

moda0306 wrote:

Libertarian666 wrote: Correct. When public sector unions strike, it is against the taxpayer, who has no power to tell them off.

Yes they do.  Not individually of course, but they don't get taxed individually either.  Politicians need votes.  Raising taxes loses them that.

You don't get taxed individually? That's odd; I do.
As for votes, public sector employees vote too, unfortunately. Obviously they shouldn't be able to, as it is a direct conflict of interest. And their unions are VERY "generous" with politicians, who can use the funds to buy advertising to get more votes.

We get taxed as groups, from a public policy standpoint.  There is a check, in that politicians are reluctant to raise taxes because people won't vote them into power. 

Corporations also give money to politicians... does that mean that corporations shouldn't be able to contract with government?

Individuals of all stripes contract and interact with governments on various levels.  So isn't it a conflict-of-interest that any of us are able to vote? 


Employment is simply a contract between two parties.  One gives up services.  The other one money.  There are plenty of other areas where government interacts with folks and corporations.  I don't see conservatives/libertarians asking them to quit contributing to campaigns and to not be able to vote.

I'm just pointing out the inconsistency of the nature of this discussion is all.  Not saying I have a perfect solution but I at least want any solution I support to be somewhat consistent.


Pug,

I'm not surprised to hear people being upset if incomes (including the FMV of benefits as income) being reduced.  Most people at all income levels HATE the idea of making less than they did last year.  That doesn't really tell me a whole lot in terms of the nuance of the public sector union debate, or unions in general.  The question is, are they really compensated in gross excess for what they do?  I generally don't think so, with some exceptions.


Also, I meant regressive with respect to tax/income.  Everyone has to pay it.  Rich people do own bigger homes and spend more, but not in direct ratios to their income.  I can't find the source, but there was a very interesting source that showed some of these numbers.  I'll try to do some work on that.

Pointedstick wrote: Exactly. The idea of being forced to contribute to a union you don't actually belong to is ridiculous.

Even if they negotiate on your behalf so you get union wages, benefits, etc.?

MachineGhost wrote:

Pointedstick wrote: Exactly. The idea of being forced to contribute to a union you don't actually belong to is ridiculous.

Even if they negotiate on your behalf so you get union wages, benefits, etc.?

The whole point of being free to turn down union membership is that one believes he can negotiate a better deal than what the union offers.  The choice should be with the individual. 

moda0306 wrote: but when I look at a teacher, I really don't see someone who I think is grossly overpaid for what they do

But actually, they are.  There's only one way to determine this: are there huge waiting lists of people waiting to become X?  Answer, in this case: yes.

Question answered.

When the market clears, then you can know that Xs are not being "overpaid".  Nor "underpaid".  Markets clear.

LC475 wrote:

moda0306 wrote: but when I look at a teacher, I really don't see someone who I think is grossly overpaid for what they do

But actually, they are.  There's only one way to determine this: are there huge waiting lists of people waiting to become X?  Answer, in this case: yes.

Question answered.

When the market clears, then you can know that Xs are not being "overpaid".  Nor "underpaid".  Markets clear.

I can appreciate that logic. I'm gonna chew on that a bit.

LC475 wrote:

moda0306 wrote: but when I look at a teacher, I really don't see someone who I think is grossly overpaid for what they do

But actually, they are.  There's only one way to determine this: are there huge waiting lists of people waiting to become X?  Answer, in this case: yes.

Question answered.

When the market clears, then you can know that Xs are not being "overpaid".  Nor "underpaid".  Markets clear.

+$1 billion

Tyler wrote: The whole point of being free to turn down union membership is that one believes he can negotiate a better deal than what the union offers.  The choice should be with the individual.

I don't think that would be the cause for consternation because there's plenty of workers that opt not to join a union, but still have to pay dues to it.  My question is: is it fair for an employee that opts out and now no longer has to pay the dues due to "right to work", but still benefits from the collective bargaining because it is collective negotiating by nature?

moda0306 wrote: I can appreciate that logic. I'm gonna chew on that a bit.

Just remember, it only clears if there is an equilibrium.  Perfect equilibrium is a fantasy like Marxism.  But, there wasn't a market failure that caused the government to originally intervene in the market for teachers.  No, it was more Polituburo than that.

Bottom line though is unions help preserve wages and living standards.  That's a fact.  It's a rational response to that "giant sucking sound" of competition, offshoring, job obsolesence due to technology and powerful capitalists in the C-suite.  Now, whether this is all in the public interest is the $64K question.  And it's even more egregarious when it is a public union feeding at the unlimited taxpayer trough.

MachineGhost wrote: My question is: is it fair for an employee that opts out and now no longer has to pay the dues due to "right to work", but still benefits from the collective bargaining because it is collective negotiating by nature?

I would have no problem with negotiated union benefits being withheld from non-members.  That is the far fairer remedy than forcibly collecting money from people for something they do not want. 

The larger question is: If the unions closed tomorrow would those benefits really go away?  In some industries, they would.  These are areas where unions truly benefit workers, and the unions will continue to thrive.  In some they would not.  Absent forced contributions, these unions will die because they are no longer necessary.  IMHO, distorting the market for unions by subsidizing the whole lot with forced contributions ruins them.  Force betrays weakness.  The ones that survive by providing tangible and cost-effective benefits to their voluntary members will be much stronger than they are today. 

MachineGhost wrote:

moda0306 wrote: I can appreciate that logic. I'm gonna chew on that a bit.

Just remember, it only clears if there is an equilibrium.  Perfect equilibrium is a fantasy like Marxism.  But, there wasn't a market failure that caused the government to originally intervene in the market for teachers.  No, it was more Polituburo than that.

Bottom line though is unions help preserve wages and living standards for their members, at the expense of everyone else.  That's a fact.  It's a rational response to that "giant sucking sound" of competition, offshoring, job obsolesence due to technology and powerful capitalists in the C-suite.  Now, whether this is all in the public interest is the $64K question.  And it's even more egregarious when it is a public union feeding at the unlimited taxpayer trough.

Fixed that for you.

Libertarian666 wrote:

MachineGhost wrote: Bottom line though is unions help preserve wages and living standards for their members, at the expense of everyone else.  That's a fact.  It's a rational response to that "giant sucking sound" of competition, offshoring, job obsolesence due to technology and powerful capitalists in the C-suite.  Now, whether this is all in the public interest is the $64K question.  And it's even more egregarious when it is a public union feeding at the unlimited taxpayer trough.

Fixed that for you.

+1 and beautifully put.

I detest hearing about how "low" salaries are for teachers, subway workers etc.  First off, have you ever added up how much vacation time teachers get?  Let's say it's only 8 weeks more than typical workers - one has to factor in this extra paid vacation.  Then there's the fact that they get to retire at age 45-50 on a very generous pension plus full medical benefits for life.  The cost of these pensions & medical insurance between retirement and age 65 should also be factored in.

When you do that, the pay is far greater than one would expect in the private sector.  Which is precisely why people are lining up around the block for these jobs.

Personally, I do understand the conditions that led to unions being organized in the first place, but they've gone far too wild and seriously need to be restrained.  Pensions are wrecking NYC's budget and making infrastructure improvements difficult.  And the hospital union at my institution took the rather astounding view that labs hiring students for summer or part time jobs constituted competition for union positions, so the union forced a rule outlawing that practice.  It means that students can still work in a lab but can no longer be paid - they have to get fellowship funding or course credit.  And no I can't hire them as consultants, because there's a rule against doing that for anyone affiliated with the institution.

This varies like crazy state to state but...a couple of thoughts from some one who was in a union, was in management and has worked for a long time in government.

- It was pretty clear to me that the union (Teamsters) was really all about the union and not about the worker. Wage negotiations generally were pretty straight forward...the real fight was over benefits and why was the big fight over benefits because the union ran the benefits (read got big money as admin fees). Ultimately I became a non-union fan because I thought they were stupid with regard to business economics and drove the company I worked for out of the state. Was that in my best economic interest? (Anecdote of one I know, but the same movie was replayed in the GM and Chrysler bailouts.) I'm by no means a labor/union expert, but I think they could serve a useful purpose. I could be wrong, but I think in Germany the unions are part of the company, not a separate entity and there is required union representation on the corporate board as elected by the workers. If I don't have this totally wrong, that seems to make a lot of sense. Ultimately the company has to be competitive, but workers make the company successful ultimately and should get a piece of the pie. One boat, two oars seems a good model. The US model is two battleships lining up for mutual broadsides.

- Moda makes a good point about the inconsistency of the public sector union debate...but ultimately:

The desire of Government employees for fair and adequate pay, reasonable hours of work, safe and suitable working conditions, development of opportunities for advancement, facilities for fair and impartial consideration and review of grievances, and other objectives of a proper employee relations policy, is basically no different from that of employees in private industry. Organization on their part to present their views on such matters is both natural and logical, but meticulous attention should be paid to the special relationships and obligations of public servants to the public itself and to the Government.

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable."

Ronald Reagan or Franklin Roosevelt?

Having noted all the above...large corporations and ultra rich individuals have way more sway than they probably should over the political class.

I am in complete agreement that unions have gotten too powerful today and I don't like the idea of public sector unions at all but in defense of unions.....

My Dad was a lifelong conservative Republican voter and a staunch supporter of unions as a member of the AFL-CIO.

He used to tell me what a wonderful thing it was when the union bargained for and won Sundays off. Except for my stint in the U.S. Navy I never had a job where I was required to work 7 days a week so I can imagine how heavenly it must have been.

And then they went for Saturday's and I'll bet there was an awful outcry at the time that they were asking for too much.

Would most of us be enjoying the working conditions we do today if it wasn't for unions? I don't actually know the answer to that question. Maybe, maybe not.

WiseOne wrote: I detest hearing about how "low" salaries are for teachers, subway workers etc.  First off, have you ever added up how much vacation time teachers get?  Let's say it's only 8 weeks more than typical workers - one has to factor in this extra paid vacation.  Then there's the fact that they get to retire at age 45-50 on a very generous pension plus full medical benefits for life.  The cost of these pensions & medical insurance between retirement and age 65 should also be factored in.

When you do that, the pay is far greater than one would expect in the private sector.  Which is precisely why people are lining up around the block for these jobs.

Careful, this same line of reasoning supports non-equal pay for women!