Friday, November 02, 2012

Unions Flexing Their Muscles While Others Get Hurt



Here in Michigan, the Service Employees International Union has siphoned off well in excess of $32 million through a sweetheart deal with the former Governor (D) Jennifer Granholm  from individuals who are home health care providers.  That siphoning continues despite the fact that it was specifically outlawed by the current legislature and governor... although how they manage to do it seems a bit of a mystery.

This abuse has been written about extensively in the Mackinac Center for Public Policy and now the issue of government employee unions is raised in the Hoover Institution.
The hottest topic in Michigan today is not the looming presidential election. Rather, it is Proposal 2—“Protect Our Jobs,” which will constitutionalize collective bargaining in the state for public sector unions. As drafted, the proposal gives to “the people . . . the rights to organize together to form, join, or assist labor organizations, and to bargain collectively with a public or private employer through an exclusive representative of the employees’ choosing”—provided that this proposal is not preempted, or overridden, by federal labor law. 
It is not clear from its general language whether Proposal 2 will roll back any of the modest reforms that Michigan now has put in place as a counterweight to union power, but the initiative is certainly intended to bolster union power in the state.
Michigan, long an economic basket-case, has started to turn the corner under Republican Governor Rick Snyder, who knows that the state’s fortunes won’t improve if it doubles down on a system of labor law that has proven itself to be a major failure. As the governor has argued, Proposal 2 is a step in the wrong direction.
We should be profoundly skeptical of any proposal that aims to improve the lot of the “people” by giving some people rights that necessarily bind others—in this instance, the public at large or the owners and employers of private firms. The folks on the receiving end of these collective bargaining laws are people too. No system has a prayer of long-term success if the gains that some people get by state coercion are smaller than the losses those laws inflict on others.  
In this instance, the virulent economic protectionism of the “Protect Our Jobs” provision means that the losses will far outweigh the gains. Proposal 2 does not remove transactional frictions or regulatory barriers from the economy. Rather, it is a partisan call to benefit unions and union members at a time when most states around the country are rightly questioning whether the special protections for government employees have gone too far, especially on such key matters as pensions, health care, and work rules. [more]

2012 IS HERE


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“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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Tracking Interest Rates

Tracking Interest Rates


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)