Friday, April 27, 2012

Conservative Principles Or Unprincipled Conservatives


Wisconsin's Governor Scott Walker has accepted a lot of credit and taken a lot of abuse for his approach to Wisconsin's fiscal problems.  He instituted significant changes in employee benefits, particularly teachers' benefits, so that what had been paid for by the state is now partially paid for by the employees.  This is consistent with most private benefit programs.  While this was a painful adjustment, there was a strong element of reason and reasonableness in his position.  The way it was implemented, however, was effectively a large pay cut with no phase-in period.  That left many teachers in very vulnerable economic positions.

But then, in my opinion, Governor Walker's administration went way too far.  He became a communist.  He wanted something for nothing.  He wanted to change the rules so that the rewards of others' labor and effort went to his administration.  He was no longer operating under conservative principles; he was operating as an unprincipled conservative.

This will explain it:
The Wisconsin Employment Relations Commission (WERC) General Counsel Peter Davis has confirmed that a new rule recently approved by Governor Walker, together with Act 10, will prohibit school districts and other governmental bodies from including most so-called "add-ons" in the pay scales of new contracts. While years-of-experience add-ons largely will be preserved, additional education, advanced degrees and most other add-ons will be prohibited from being put in the contract. 
This will hit all public sector workers hard, but will teachers the hardest. 
Davis agreed and said that a commonly used "guesstimate" for the effect of the changes was that about 30% of the wages actually paid to teachers would not be counted as part of the total wages. [source]
No, it doesn't quite explain it.  You have to understand that teachers, as most professionals, are normally paid based on experience and qualifications.  Some jobs require just the basic qualifications, so pay is set based on those basic qualifications.  Pay increases come over a period of time as experience and working knowledge increase.

But some jobs require special skills and knowledge.  You don't go to a general practitioner for delicate brain surgery; you don't ask a teacher with basic skills to teach deaf children with learning or physical disabilities.  Yet under the new "Act 10" legislation, that is exactly what Gov. Walker's administration is demanding.  Teaching positions that required advanced degrees were paid a premium for that knowledge and skill.  Now, although the knowledge and skills may be necessary, those teachers will no longer receive the "add on" pay that should be attached to the skills.  Try doing that with your brain surgeon.
As an example of how this will play out, below is the pay scale for the Monticello School District's teachers. Previously, the maximum a teacher could earn in the district was $52,927-- which is what someone who has a Masters degree, 24 hours of college credit and 12 years of experience is paid. Under the new rule, the maximum a teacher will be able to earn in future contracts is $38,167, which is the maximum for a teacher that has the minimum educational requirements, but many years of experience.

Sorry Governor Walker, but as a die-hard conservative, even I find that unprincipled.  I'd say Wisconsin has swung the pendulum just a bit too far with regard to teachers' pay and benefits... especially using a technicality like "add-ons" to take away legitimately earned pay.  That is classic redistribution of wealth.

So, Governor Walker, don't call yourself a conservative anymore.  You're giving us a bad name.

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SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)