Unions and the problem of public sector salaries

All Democracies are probably moving slowly down the road to the fiscal irresponsibility that now plagues Europe.  In the private sector not controlling costs will ultimately put the people who own the business out of business, to great loss to the owners of the business.  They are motivated to keep costs under control.  That motivation is lacking in the public sector.  The politicians and technocrats that scramble to the top of the public enterprises get paid and get good benefits, what happens down the road is pretty low on their priorities.

For democracies to be fiscally responsible in the modern interconnected world the law needs to build in some structures to control public sector salaries.  Here are some mechanisms that could help:

1.  Every taxpayer supported entity should have a provision in their charter or constitution that links public sector compensation to private sector compensation.  People that understand math far better than I could set up the formula, using mean, median and mode tests.  The goal would be to make public sector salaries match the private sector salary of three years prior.  In any given year that will mean the private sector employees may make a little bit more than the public sector employees, but when the private sector hits a bumpy patch and the local economy takes a dive, Government would not add to the economic slowdown by not reducing salaries until three years later.

To put a top end limit on public salaries the charter/Constitutional provision can either set a maximum salary as some multiple of the average private sector salary, or use the salary of the highest paid elected official as a cap.  For example, why should any State employee make more than the Governor?

In terms of how to get to a system like this, the Charter/Constitutional amendment should acknowledge that it would not be fair to go back in time and change assumptions that people have built their life plan around.  The change to a linked salary structure should be prospective only - from the date of the approval of the amendment.

2.  Another government practice that inadvertently fuels the increase in public sector salaries is the practice of sending money from one taxing authority to another.  For example, when the Federal Government hands out a block grant for local governments to use for some purpose, that pool of money becomes a target for local government officials and employees.  Local taxpayers don't pay much attention since it is not money out of the taxes they pay locally, so the easy road for politicians is usually to give the local public employee's what they want (and thereby get their support at the next election).

We need a Federal, State and local Constitutional/Charter amendments that preclude government from giving taxpayer money to another government entity or accepting money without a vote of people of the accepting jurisdiction.  That doesn't mean the Feds or the State can't come into town and set up a program on their own, it means the Fed's can't just shower money on States and Local governments that undermine the local taxpayers ability to control their governments long term obligations.

Regulations as a political scapegoat

Because Federal and State Regulations are pretty arcane and remote from most peoples day to day experience they are a regular boogie man for politicians seeking to get elected.  Currently regulations are frequently described as "job destroyers" or some similar term.

As someone whose business in significant part depends on understanding the nature and history of Federal and State regulations the political rhetoric sometimes seems divorced from reality.  Regulations aren't some cruel torment dreamed up by politicians to torment business people, they are generally a crucial part of making markets function.  They are simply laws to insure people clean up the messes they make trying to make as they go about their business.

Suppose I own a paper manufacturing business.  I act responsibly by disposing of all my toxic chemicals in a responsible manner.  The guy across town builds a paper manufacturing business, but he just dumps his toxic chemicals in the river.  He now has lower costs than me, so can undercharge me.  If I don't stop acting responsibly he puts me out of business.   So instead of the rest of us paying slightly higher costs for paper now society has a poisonous river they will have to clean up, and lots of people are probably going to get sick and have lots of medical bills.

Or suppose I manufacture widgets.  I pay my employees a decent wage, spend the money I need to spend to make the workplace safe, and make a little profit.  Then the guy across town starts building widgets.  He doesn't spend a dime to keep employees safe, pays the employees as little as possible and undercuts my prices.  I am out of business unless I adopt his business practices, and the the long run, maybe so is he as the workers in the town eventually can no longer afford the widgets he is manufacturing.

Regulations are always long and complex, even convoluted.  They have to be to prevent people from using slick lawyers to get around them.  But they are absolutely necessary to the long term health of society.  Are there obsolete or poorly thought out regulations?  Unquestionably - but it is hard work to figure out which ones are obsolete or not accomplishing their goals, hard work that the politicians who rail against regulations are seldom willing to do. History has demonstrated that often the regulations that politicians loudly complain about are the ones that make wealthy people behave responsibly to protect our economy and our health.  Meanwhile obsolete or useless regulations get ignored because their is no political hay to be made in eliminating them.

What qualifications prepare one to be a political leader?

Few of us, no matter how qualified we are in our particular field of expertise, would think we could step in an operating  room and perform surgery, or design a bridge to support the weight of traffic, or step right into almost any other field of expertise and be competent without a long training period.

But when it comes to politics the world is full of people who think they can step right in and be competent.

This creates a real problem, because getting elected is pretty easy if you have money, some degree of public speaking ability, and attractiveness.   But being competent at steering the country is a job that requires a broad base of knowledge and understanding in widely diverse subjects like economics, psychology, history and law.

The last few years the political world has been full of people that made a lot of money in business who think that means they can successfully run a government.  The problem is, business is easy.  Oh you have to work hard and make tough decisions, but figuring out what decisions to make is relatively easy because you have one goal to focus on - what will make money?  What really sets people apart in the business context is ruthlessness.  If laying off 2000 people is what will make the most money, you have to be able to do it without letting the impact on those people affect you.

Politics can be that easy if your a dictator.  Your goal is your own self interest, with little concern for the powerless.

But in a democracy there is no such simple goal to govern your decisions.  Idealists would say you should do what is best for everybody, but often every choice is a choice between helping one group at the expense of another group. So democracy ends up being a more benign version of a dictatorship - whoever has power gets their way at the expense of others.

Since 1908 there have been 18 Presidents.  8 were lawyers - Taft, Woodrow Wilson, Calvin Coolidge, FDR, Nixon, Ford, Clinton and Obama.  7 came out of a business background, ranging from Warren Harding, who owned a newspaper, to Herbert Hoover the mining engineer, to Harry Truman, with his brief fling as a haberdasher, to Jimmy Carter the Peanut farmer, Ronald Reagan the actor and Union President, and the two Bushes with their oil industry interests.

Here is a list of Presidents and their vocations:

William Howard Taft - Rep - 1909-1912 - Lawyer
Woodrow Wilson - Dem- 1913 to 1920 - Lawyer
Warren Harding - Rep - 1921 to 1923 (died in office) - Newspaper owner
Calvin Coolidge -Rep - 1923 to 1929 - Lawyer
Herbert Hoover -  Rep - 1929 to 1933 - Mining Engineer
FDR - Dem - 1933 to 1945 (died in office) - Lawyer
Truman - Dem - 1945 to 1953 - briefly business (retail) but lifelong politician
Dwight D. Eisenhower - Rep - 1953 to 1961 - Career Military Officer
JFK - Dem - 1961 to 1963 (died in office) -  In the military in WW II but aiming at politics his whole life.
LBJ - Dem - 1963 to 1969 - briefly teacher - lifelong politican
Nixon - Rep - 1969 to 1976 - Lawyer / politician - made his name as a prosecutor
Gerry Ford - Rep - 1976 to 1977 - Lawyer/politician
Jimmy Carter - Dem - 1977 to 1981 - Navy, Peanut Farmer
Ron Reagan - Rep - 1981 to 1989 - Radio Sports announcer, actor, union rep
Bush Sr.- Rep -  (1989 to 1993) - Economics/Investment.banking/oil/politics
Clinton - Dem - 1993 to 2001 - Lawyer
Bush Jr. - Rep - 2001 to 2009 MBA - Biz and politics
Obama - Dem - 2009 to      -Lawyer

Statistics and light posts

There is an old joke about people using facts like a drunk uses a light post - for support, not illumination.  In the February 23, 2012 Republican debate Rick Santorum made a statement that is a perfect example of how statistics can be used the same way.

The former Senator stated that the defense spending was not the problem with the Federal deficit, that entitlements were the problem, because only 16% of Federal spending was on defense.  That is so twisted it made my jaw drop.  This is a former Senator - is he cynically manufacturing misleading statistics to support his political position, or does he really not get it?

Here is what he is either hiding or ignoring - Congress has borrowed money from working people for decades to fund tax cuts for wealthy people.

Here are the facts:  There are two main sources of tax revenue for the United States.  Payroll taxes and Income taxes.   Payroll taxes are what is taken out of all of our paychecks every month for social security, medicare, unemployment insurance and other similar programs.  In other words, all those programs that actually impact ordinary working citizens are funded by payroll taxes.  The bulk of the payroll tax is to cover Social Security and Medicare.  To my knowledge in my lifetime payroll tax income has always exceeded the expenditures on these programs and in fact generally run big surpluses. (I am not sure about how unemployment insurance taxes and expenditures stack up over time)

These payroll tax funds were supposed to have been trust funds - the money could not be used for other purposes, but Congress started raiding the trusts funds years ago, in large part to close the big holes in the Federal budget blown by tax cuts on income taxes.  Defense spending has for decades equaled about 50% of income tax revenue.  The remaining 50% pays for all the other things the Federal Government does.  Basically for decades the Congress has not imposed enough income tax to cover the costs of government and they have covered it up by using payroll tax money, or running a deficit.  So Senator Santorum's 16% figure was arrived at by looking at the total Federal budget, and then laying the blame for the deficit on the part of the budget that has actually paid for itself over the years.

I don't know which scenario is more worrisome.  That former Senator Santorum doesn't understand these distinctions, or that he is quite comfortable manufacturing misleading statistics to make a misleading debating point.

Conservatives, Religion and the First Amendment -

Rick Santorum recently said he felt "like throwing up" when he heard a speech where John Kennedy stated his commitment to the principle of maintaining a rigid wall between religious belief's and politics. He went on to say he doesn't believe the separation of church and state is absolute, and apparently that is not an uncommon view among religious conservatives.

Santorum is one of the candidates prone to talk about the Constitution being right up there with the Bible as holy text.   It makes me wonder if he ever really uses either document for anything other than to provide support for his personal ambitions.

When the 13 colonies got together to draft a constitution first they drafted the body of the Constitution which addresses the organization of the Federal Government and divided up the powers between the State governments and the Federal Government.  Then, specifically to protect individual liberty from the powers of the State, they drafted the 10 amendments.  The very first amendment addressed religion, saying the Government shall neither establish, or interfere with a religion.  The 13 colonies were largely populated by people and their descendants who had fled Europe to a remote, wild and dangerous continent to escape governments that used Religion to coerce behavior.  The basic goal of the first amendment's religion clauses was to insure freedom from religion enforced by the state.

When you look at political issues with religious overtones that are prominent today, religion isn't the victim.  What you find are religious conservatives trying to use the power of the state to coerce women into not having abortions.  Or trying to use the power of the Government to deny gay citizens rights that are available to all other citizens, like the right to serve in the military, or legally form a couple for a partnership in life.

It seems like some religious conservatives are so committed to their beliefs they can't tolerate the notion the constitution forbids using government to impose their beliefs on others.  Which is really odd when they profess to be Christians, since the Constitution is entirely consistent with what Jesus taught.

Jesus recognized there were laws of man, that we enact to run our own affairs among one another, and laws of god.  What made him a revolutionary in his day was that he preached a strict segregation between the two.  In Jewish law God's law was to be enforced by men, Jesus's message was that sin was an issue between the individual and God.   Unfortunately this was so revolutionary he had to choose his words carefully to avoid arrest, so you actually have to read his words and think about their implications.  Think about John 1:3 where the officials of the Temple brought a women caught in adultery to Jesus.  They sought to get Jesus to say something that would be heretic so they could arrest him.  They confronted him and said the law of Moses says the women should be stoned to death, so what did he say.  He avoided arrest but made clear his point, not by saying Moses was wrong, but by saying why Moses was wrong.  He told them that whoever had never sinned should cast the first stone.

2000 years later we still have candidates for President (and Religious leaders) loudly proclaiming to be Christians who have not grasped the distinction between mans law and gods law that is enshrined in the 1st Amendment to the US Constitution.  They are, like the Temple officials who confronted Jesus, still trying to usurp Gods power to judge that people are committing sin and use the power of the state to coerce what they deem to be right behavior.

Faith

We are hearing a lot of talk about Faith this election season.

Faith is necessary to allow us to make decisions about our life in matters where there is a lack of definitive factual data.   We often have to rely on faith to make decisions because some things are unknown or unknowable.  The exact nature of God is a big unknowable.  But whatever Gods exact nature, we are endowed with a brain and I think it is because we are supposed to use it.

Unfortunately, for many people these days it seems like "Faith" has become an excuse to ignore data, or as a shortcut to avoid thinking about complex issues, or disturbing their preconceived notions.

Some facts pertinent to Drug Policy

Facts selected from an article in the Economist, June 4, 2011. pp  70-71, which was reviewing the findings of the Global Commission on Drug Policy, a group that includes the ex-presidents of Mexico, Brazil, Columbia and Switzerland as well as officials from the UN and some former US officials.  The findings called for deregulation of all drugs and experiments with legalization of drugs, begining with cannibis.

Findings - for the period from 1998 to 2008 drug consumption continues to rise throughout the world.  The US Federal Government spent $15 billion in 2010 on drug control, another $25 billion on other public spending related to drug control.  Campaigns to drive Narcos out of one country just drive them into another.

Giving out clean needles reduces greatly reduces the incidence of HIV (comparing countries with clean needle programs with those without such programs).  Switzerland and the Netherlands have demonstrated that prescribing heroin to to addicts reduces the total number of addicts as it cuts the tie between pushers trying to get people hooked on drugs and casual customers.   Decriminlaizing cannibis in in Western Australia and Portugul  had no effect on consumption but saved lots of money, and when England tried it for a few years, consumption dropped.  A study looking at different states in the US found no link between the level of enforcement and number of drug users.