The sad truth is that there is no justification for public employee unions in the first place. The system that tolerates them is dark and unjust existing only for (i) the benefit of the politicians dependent on union contributions and support to get themselves elected, (ii) the union bosses that get power and wealth from their members, and (iii) the few deadwood employees who would fail in any competitive environment and are dependent on union seniority to remain on the public payroll. Excellence is not even mentioned, mediocrity is the norm.

Also true, the good, dedicated, high-preforming public workers are held back by the same unions that claim to represent them. Performance bonuses that could otherwise be available to reward excellence in performance are nonexistent. Seniority governs, holding back the top performers. This disincentive enforces mediocrity, the stuff of a declining society. Likewise the union members really have no voice. The cliques supporting the union bosses pressure conformity. If work slowdowns are called for, work slowdowns are socially enforced. Then, there is the lack of political choice in where political contributions generated from the pockets of public employees from their union dues go. In essence, they are paying for incompetent political leadership but have no choice in the matter. Finally, there is the false promise of retirement benefits which, because of the incompetent political leadership, will not be available to them on retirement. In short, the public employee union members are used for short term gain by others.

There is a critical difference between private sector unions and public sector unions, PRIVATE SECTOR UNIONS ARE SUBJECT TO THE LAWS OF THE MARKETPLACE. PUBLIC UNIONS ARE A MONOPOLY WITHOUT MARKET COMPETITION.

This fact is lost on the voting public. Private unions work for companies that compete in the marketplace. If their demands are too exorbitant in terms of wages, benefits or work rules, their employer will lose business to it competition. If the employer loses enough business, the employees lose their jobs. So a competitive market forces parties to be reasonable and respond to market conditions; in short, to excel in their jobs.

In the public union case, the government by definition is a monopoly free from competition. There is no market in which it must compete. Governments are by definition inefficient necessities in society. If their workers are allowed to unionize and collectively bargain for wages and benefits, there is no check or balance on their ability to extort increases, security, tenure, etc. A strike, walkout or slowdown creates a situation where there are no substitute government services. No competition.

A public union labor negotiation, is really no negotiation at all. The ritual of collective bargaining in the public union case is just a union boss talking to the incompetent politician who was elected with the help of the union dues. This incestuous relationship is driving our states, counties and cities to the brink of bankruptcy. It is dis-economic at its core.

Public employee unions perpetrate a fraud not only on the unsuspecting public but on the public employees themselves. We all lose with this unjust, uneconomic system.

Time for a change!

Nevada’s employment bubble exploded in the recent recession with a loss of 417,000 jobs, 27% below the historic trend line. The states largest employers gaming and construction both suffered with construction declining 68% below trend. Booming Nevada was and is an employment bust.

One of the points little understood in the main stream media reporting is that the Legislature and Governor are only dealing with the General Fund which is only 35.7% of state revenue. This is what all the budget fights are about. The balance of the funds are beyond state control and in some cases, as with Federal Funds, really exacerbate the states budgetary problems. Medicaid, one time stimulus unsaved both hurt more when reduced or eliminated.

Education both higher and K-12 account for fully 53.5% of the appropriations. The other big chunk is Human Services at 30.6% of General Fund appropriations; this is greatly influenced by Federal mandates particularly Medicaid.

Bottom line, the Governor’s budget at $6.13 Billion is only $212,339,021 less than the prior biennium budget. That 3.35% reduction is what all the complaining is about. Anyone for camping out in front of the Legislature in protest?

Andrew was good enough to take questions and hear comments on his state presentation and to a limited extent on his new job as Reno City Manager. We thank him for the excellent evening and wish him all the best in his new and challenging position in Reno.

Nevada’s near monopoly on legalized casino gambling fueled an economic boom that made it the fastest growing state for five straight decades. The associated business development and population in-migration supported a construction boom, making Nevada’s construction sector larger than that of any other state.

However, Nevada no longer has the “only game in town.” Proliferated Indian gaming and legalization in other states have especially hurt Northern Nevada gaming, and world-class gambling in Asia means Las Vegas is also no longer immune to competition.
Moreover, the recession has decimated Nevada’s construction industry. An economic storm has blown Nevada from the top of the economic heap to the bottom. The state is in need of an economic makeover, a hard reality Nevada must face.
Economic diversification has been the clarion call of Nevada policymakers for decades — easier said than done. Most diversification efforts amount to “two birds in the bush,” laudable but iffy. We suggest it is time to consider a “bird in the hand,” a more certain route to diversification and to shoring up Nevada’s fiscal house.

A fundamental entrepreneurship dictum is “problems create opportunities.” Disposing of nuclear waste has long been a significant national problem. As a result, there is a tremendous entrepreneurial opportunity for Nevada.
President Obama has indicated nuclear power will remain an important part of U.S. energy policy despite Fukushima. Nevada should not ignore the Yucca opportunity because of unfounded fears, special interests nor political pandering.

The choice of Yucca Mountain in 1987 as the preferred long-term storage site for nuclear waste put a bird in Nevada’s hand. To date, most Nevada policymakers have preferred not to have this bird in Nevada’s backyard. The “not-in-my-backyard” argument played well when the gaming and construction bushes were supplying so many birds, but times have changed. Pursuing Yucca has advantages, economically and politically.

Economically, Yucca Mountain, merely as a storage facility, would provide substantial long-term employment, state tax revenues and some of the illusive diversification Nevada has been seeking. Wise negotiation could increase these benefits by moving the facility toward becoming a reprocessing center and a focal point for nuclear research dollars.

Politically, developing Yucca Mountain offers an alternative to two that are unattractive. Should Nevada be cutting government services that support economic development and diversification at this time? Proponents say no, but the tax increases necessary to fund the services would work against any diversification effort. Developing Yucca provides a path for maintaining some valuable government services without tax increases.

As economists, we are trained to count costs and benefits. Developing Yucca Mountain would not provide Nevada with a free lunch. There are risks and challenges with any entrepreneurial venture. There will be costs and risks. But, it is unprofessional to ignore the benefits and potential, which is the tendency of NIMBY adherents.
It is time to reconsider the development of Yucca Mountain.

Thomas F. Cargill and Mark A. Pingle are professors of economics at the University of Nevada, Reno.

This fact is lost on the ignorant public because the issue is framed in terms of “union rights.” Whatever that means it has no applicability to  public unions. Private unions work for companies that compete in the marketplace. If their demands are too exorbitant in terms of wages and benefits, their employer will lose business to it competition. If the employer loses enough business, the employees lose their jobs. So a competitive market forces parties to be reasonable and respond to market conditions.

In the public union case, the government by definition is a monopoly free from competition. There is no market in which it must compete. Governments are by definition inefficient necessities in society. If their workers are allowed to unionize and collectively bargain for wages and benefits, there is no check or balance on their ability to extort increases, security, tenure, etc. A strike or walkout or slowdown creates a situation where there are no substitute government services. No competition.

Furthermore, the public unions are structured so that mandatory dues are taken from the pay of each government worker. A portion of those dues pay the union bosses and another portion go to political slush funds to be used to elect political candidates favorable to union causes. In essence the union bosses direct money to the elections of…..who? The very people who employ them and “negotiate” their wages and benefits.

So, a public union negotiation, is really no negotiation at all. The ritual of collective bargaining in the public union case is just a union boss talking to the employer boss who was elected with the help of the union boss!

This incestuous relationship is driving our states, counties and cities to the brink of bankruptcy. It is dis-economic to its core. It perpetrates a fraud upon the unsuspecting public. Finally, it increases the theft against our children and grandchildren and is wrong.

The only unrepresented parties are the taxpayers!

The fact that screams for attention is that the November election put the Republicans in control of both houses of the legislature and the governor’s mansion. The Republicans ran on platforms that the Democrats and public unions were bankrupting the state. The voters understood the danger of the unholy alliance between Democratic politicians and public union leaders: taxpayer money from the public trough went thru the union employee paychecks to the union bosses then back to elect the Democrat politicians. Incest at its best. No checks, no balances, no taxpayer input, unfettered theft! Well, the taxpayers did get their input at the ballot box in November and input they did.

In an historically Democratic state, a birthplace of so called “progressivism,” the voters kicked out the majority Democrats and installed a Republican government. But all the elected, Democrat and Republican, took an oath of office to uphold the constitution under which they were elected and sworn into office. At times it may be ugly but in the state democracies joined together in this republic under our constitution, the majority, fairly elected, is the government. Period!

It is obvious that those sacred oaths were only so many words to the defaulting Democrats. They were meaningless when put to the test. The elected minority, rather than honor their duties, deserted their offices, left the state, took a powder, went on the lamb. Dereliction of duty? Yes. Obstruction of government? Surely!

So after several attempts to cajole the recalcitrant Democrats to return, the legislature passed the ordinance freeing the state taxpayers, the voters from the most heinous aspects of the public employee union lock on the state treasury. The national brouhaha sponsored by President Obama and the national unions were only so much puff. The voters in Wisconsin and elsewhere realize that public unions have no place in a democracy, no competitive checks and balances to keep them and their political bosses honest. They have stolen way too much so far and amassed way too many unfunded liabilities yet to come.

The taxpayers are hurting and its time to stop this incestuous alliance. On Wisconsin!

TIME TO REDUCE BENEFITS FOR ALL OF US

The United States and the State of Nevada together are facing budget deficits that threaten the financial viability of the country and the state. The national debt is reaching unprecedented levels– this year alone it will reach a record $1.6 trillion, due to the weak economy, higher spending, and renewed tax cuts.

At the national level, combined expenditures on Social Security, Medicare, and Medicaid are projected to account for 45% of federal spending, up from 27% in 1975. That entitlement spending could triple by 2035. When defense spending, interest on the debt, and federal pensions are added in, this accounts for 86% of federal spending. Interest on the debt currently costs $200 billion annually, but if nothing is done, in just five years the interest on this debt will triple to around $640 billion.

Nevada does not have the luxury of printing money to cover budget deficits, and must have a budget that is balanced. The Governor is set to accomplish that by severe spending cuts and not raising taxes. His opponents in the Legislature have squawked loudly, but have yet to offer an alternative plan. The target of the Governor’s cuts are personnel, since that is where the lion’s share of expenditures go, with a focus on reigning in overly-generous pensions, benefits and salaries, a problem that is even greater at the local government level.

Government employees must be prepared to accept reductions in retirement pensions and pay much more for health benefits. That goes not only for local and state employees, but those who work for or are retired from the federal government, including military retirees. The Defense budget is not sustainable and will have to be reduced in the future, especially to offset soaring retirement and health benefit costs.

Those of us who have reached 65 and are now receiving Social Security and Medicare must also be prepared to accept changes—means testing of Social Security perhaps, more paid in doctor visits and prescriptions. Yes, I know, we who have paid money into the system for decades in good faith have reason to protest while those who have been less thrifty in planning their retirements will not be penalized. It is what it is—not fair, not fair at all, but it must be done.

And those of us who served in the military can make the point that our service was much more demanding and difficult. I, for one, had two tours in Viet-Nam in my 26 years—living in the swamps, fighting off the VC and cobras alike, separated from our families for a year at a time (I only saw my first-born one week the first year of her life!). We moved 17 times our first 13 years of marriage, I worked 24 hours a day, 7 days a week in my 6 years in the White House. No overtime, no sick leave, no padding my retirement with phony “call backs” or special health programs (oh, I do go to the VA, but to participate in an Agent Orange tracking program for those of us exposed to the dangerous defoliant).

Still, the nation cannot afford the entitlement programs that I and many others are eligible for. The state, and especially local governments, is on the verge of a financial crisis and personnel costs, particularly benefits and retirement, must be roped in. It is happening in Wisconsin, New Jersey, Indiana and other states where budgets can only be balanced by reigning in benefits for government employees. GOV Sandoval says it must also happen here, and he is right, but at all levels of government.

It ain’t nice, it isn’t pretty, but it must be done.

-Tyrus W. Cobb

Former Special Assistant to the President, Republished from Nevada Appeal

By Frank Partlow

I can barely spell it, but I am a Septuagenarian.  At 72, I receive a federal pension for 34 years of Army service, Social Security, Medicare, Tricare and VA benefits.   I believe I am “entitled” to all of that.  Septuagenarians disagree on many issues, but not on their “entitlements.”

These entitlements are unsustainable.  My federal paymaster is $14.5 trillion in debt and borrowing $1.5 trillion more each year.  72 million entitled “Boomers” are right behind.  Social Security is a “Ponzi Scheme” which makes Bernie Madoff blush.  I receive as benefits what three current workers pay in.  What happens when there are two workers paying in?  More federal debt.

The only way to fix the deficit and balance the federal budget is to reduce current and future entitlements, which account for 62% of budget outlays and grow each year.  Septuagenarians and Boomers not only cringe at this idea, they vow to unseat any politician foolish enough to suggest it.  The problem with that approach is that while they may live long enough to collect, their children and grandchildren will not, even while facing crushing new taxes.

A better way is for each generation to take a hit—mine by some sort of means test for Social Security payments. The Boomers could delay their retirement to say, age 70.  Those still paying Social Security taxes could pay in a higher percentage of their salary. We are the only country in the world without age limits on medical procedures, an enormous drain on our Medicare and Medicaid, as health care costs grow by nine percent per year.  The potential list of reductions is virtually as endless as the nature of “entitlements” themselves.

When Social Security began, the oldest US generation was the poorest.  In part by taking mortgage interest rate deductions on their income taxes for thirty or more years, Septuagenarians are now the richest.  Can that continue?

Our parents were called the “Greatest Generation” for getting the US through the Great Depression and World War ll.   One can argue about that title, but they did get themselves out of their own jams.  My generation won’t even come close to doing that. Septuagenarians must understand that our world, its mores, beliefs, facts and fictions are irrelevant.

We septuagenarians are very opinionated.  We caused the problems we now face.  Yet, we expect the 50 year olds now in public office to jump at to our solutions. Perspective is the only thing we have to contribute.  Experience yields perspective and is what you get while you are looking for something else. Our perspectives will help those younger generations understand that if they do what we did, they will get what we got.  They can ignore our advice. However, they will live with their decisions and we will not.

With the wisdom of experience and perspective, my generation should lead the way.  If, however, we are unwilling to sacrifice some of what was heretofore promised, we will deserve to be called what we will have become: the “Selfish Generation.”

Special Report for the Northern Nevada Network.

Frank Partlow is a Nevada veteran since 1964 who now lives in downtown Reno

Mark McKinnon in his Daily Beast post, End of the Privileged Class, argues that we do not need public employee unions. In that he agrees with FDR who said that unions have no place in the public sector. McKinnon makes four good points to support his case:

1. Public Unions Are Big Money. 10 of the top 20 political contributors in the last 20 years are unions and only four are corporations. The three biggest unions gave over $170 million in the 2010 election cycle.

2. Public Unions Redistribute Wealth:

“Unlike private-sector jobs, which are more than fully funded through revenues created in a voluntary exchange of money for goods or serv-ices, public-sector jobs are funded by taxpayer dollars, forcibly collected by the government (union dues are often deducted from public employees’ paychecks). In 28 states, state and local employees must pay full union dues or be fired. A sizable portion of those dues is then donated by the public unions almost exclusively to Democratic candidates. Michael Barone sums it up: “public-employee unions are a mechanism by which every taxpayer is forced to fund the Democratic Party.”

3. Public Unions Silence the Voters Voice:

“Big money from public unions, collected through mandatory dues, and funded entirely by the taxpayer, is then redistributed as campaign cash to help elect the politicians who are then supposed to represent taxpayers in negotiations with those same unions. In effect, the unions sit on both sides of the table and collectively bargain to raise taxes while the voters’ voice is silenced.”

4. Public Unions Are Unnecessary:

“The primary purpose of public unions today, as ugly as it sounds, is to work against the financial interests of taxpayers: the more public employees are paid in wages and uncapped benefits, the less taxpayers keep of the money they earn. It’s time to call an end to the privileged class.”

I would argue that the big union bosses have misled the public employee rank and file. The teachers, engineers, social workers in government are basically dedicated people who have been misled into thinking they will get pensions that are not funded, medical care that is excessive and salary and fringes that will continue to outstrip the compensation of the people who pay the taxes that fund their salary and benefits. So I condemn the fat-cat union bosses long before the good public servants.

In any case, the handwriting is on the wall and this basic element of run away government will stop. Voters can’t stand the smell!

Alaska is able to export almost
80 percent of its tax collections to
residents of other states… While
taxpayers in 43 states are busy
filing income tax returns in April,
Alaskans are instead receiving checks
from a multi-billion-dollar reserve
fund built up from years of large
severance taxes on oil extraction.

Nuclear power is to Nevada what oil  is to Alaska. The Alaska Permanent Fund provides an ongoing annual dividend to Alaskans. A Nevada Permanent Fund could likewise provide and annual check to Nevada families approximating $2,500.

Nevada has a resource that no other state has, a federally designated nuclear storage facility which can be expanded to fuel rod reprocessing, energy research and development and nuclear power generation. The Nevada Energy Park would generate new diverse  industry, a new academic center of excellence in energy research and development, significant revenue for the state treasury, and an annual dividend check for each family in the state.

The best part is that utility rate payers in 43 other states are already paying for the development of the Nevada Energy Park. That’s correct over $30 Billion is available and growing each year in the Nuclear Waste Trust Fund. Pretty good potential source to start the NEP development, the Nevada Permanent Fund, and solve the state’s budget problems.

This idea is just getting started. Check out NV4CFE.org. Let me know what you think.

]]> http://renohayek.com/2011/02/how-about-a-nevada-permanent-fund/feed/ 0 http://renohayek.com/2011/02/public-employee-unions-exist-for-their-leaders-not-their-members/ http://renohayek.com/2011/02/public-employee-unions-exist-for-their-leaders-not-their-members/#comments Wed, 23 Feb 2011 04:55:17 +0000 Tom http://renohayek.com/?p=2489 Let’s start with a simple question: who are the most powerful people in our nation? Congressmen? Senators? Governors? How about the President? No, not even close. All of these people come and go. Well then, what about the entrenched bureaucrats? They come but don’t go. Close, but no cigar. All of these folks are dependent, they are beholden.

Beholden to whom? Who controls them? Well the voters are too disorganized, with independents swinging elections; and the voters are fickle from election to election. What about the people who can deliver votes, and I mean “deliver” in the Chicago sense of the word. These are the special interest people who can ENFORCE discipline. Who can command delivery of votes. These are the union leaders.

These people are as powerful as any dictator in a banana republic, or more timely, as any dictator in the middle east! They tell President Obama which side the bread is buttered on. So he jumps in to the Wisconsin fracas against the citizens calling pension reform “an attack on the unions.” Or, he tubes the widow and orphan bondholders in favor of the UAW and takes over GM.

Think about the position of a union leader. Fat compensation, fawning liberal press reporting what you want, unlimited expense accounts, no oversight on union control or finances, and you OWN the politicians. Think of that they own the President, supposedly the most powerful position in the world!

What does one do to stay in that position? He or she keeps members in line. What’s his major priority? To stay on top, to stay in power. And the only thing he must do is keep members in line.

That is done by promising, by confronting, and by creating dissension (in other words “community organizing”). Is any of this necessary for the welfare of the members? Hardly! But it is necessary for the leaders to retain their positions.

The thing about this “community organizing” is that it need not be true, it need not be real, it need not be economic. Yes, that’s right, it can all be a big lie. But the big lie works. It really works well where union membership is mandatory either legally or practically. De jure or de facto.

So where there is no economic hope of pension payouts every being realized, union leaders promise more and negotiate for greater pension benefits. Is so doing, they lie to their members and the lie is necessary to keep them in power.

The sad, immoral fact is that the union members rely on these powerful leaders who are only acting in their own behalf. Members rely to their detriment on this “super class” of rulers. When will they wake up?