Saturday, February 18, 2012

When It Comes to Aligning with Unions, Federal and State Governments are Often Going Their Separate Ways

An interesting development is taking place throughout much of America today.

While the Obama administration remains joined at the hip with unions under the guise of achieving "fairness and social justice," more and more state governments are going in the exact opposite direction.

Several states will now try harder to follow the recent Indiana example of enacting right-to-work legislation. To the extent that these states are successful, they will do a very positive thing for their citizens. For the non-adopters, however, those states will likely fall even further behind the growing pack of job creating and financially stable state governments.

Indiana's straightforward message in The States Are Leading a Pro-Growth Rebellion is that aligning too closely with unions is, in the end, a losing governance strategy. The article, written by supply side guru Art Laffer, summarizes the benefits that accrue to states and their citizens when right-to-work legislation is enacted:

"The benefits to states having right-to-work legislation are overwhelming. As demonstrated by a number of economists, most notably Ohio State's Richard Vedder and Harvard's Robert Barro, the economies in states with right-to-work laws grow significantly faster than those in forced-union states. They also have higher employment growth, attract more residents, and have more rapid growth in state and local tax revenues than forced-union states."

Laffer also describes the bigger U.S. picture that's been unfolding the past few years:

After the 2008 election, Democrats controlled both houses of Congress and, of course, the presidency. They used that victory to push through an agenda as radical as any seen in this country since FDR—unprecedented deficit-financed stimulus spending, more regulations, a new health-care entitlement, etc.

In 2010, the Democrats lost control of the House of Representatives and seven Senate seats in a startling reversal of fortune. But instead of rethinking their agenda, Democrats in Washington have doubled down, marching in lock-step toward ever bigger government.

Well, the states are now starting to change the playing field. The latest shock to the Democratic agenda is Indiana's adoption of a right-to-work law that bans contracts that require private-sector employees to pay union dues. And there are many more such changes on the state level to follow.

Most high-school civics students would agree that no American worker should either be prohibited from joining a union or required to join one as a condition of employment. And no union member—or anyone else for that matter—should be required to contribute to political causes they oppose. Yet in 27 states, if more than 50% of workers agree to create a union shop, workers are still required to join the union and pay dues even if those dues are used for political causes they disapprove of.

As of Feb. 1, the day Gov. Mitch Daniels signed the right-to-work bill into law, that's no longer the case in the Hoosier State. That's progress, and part of a growing trend at the state level. Indiana is now the 23rd state to adopt a right-to-work law. . . .

But just because it was the right thing to do, don't think it was easy for Gov. Daniels to do it. Not only did every Democrat in Indiana's House and Senate vote against the bill, but five Republicans in the House and nine in the Senate also voted against it, testament to the influence of union power in Washington and state capitals across America.

Passing the right-to-work legislation isn't Gov. Daniels's first success in Indiana. On his first day in office in 2005 he removed former Democratic Gov. Evan Bayh's executive order allowing collective bargaining for state employees. As a result, over the next six years the number of Indiana state employees paying union dues fell to fewer than 1,500 from more than 16,000. He also signed school voucher legislation increasing parents' choice for their children's education. And to top it all off, his approval ratings remain high."

But there may be more state right-to-work laws to come, especially if voters get a chance to have their say. Minnesota Mulls Right-to-Work Bill presents the conflicting views of union aligned Democratic politicians and the people:

"That's good news for (Minnesota's Democratic Governor) Mr. Dayton. The Star Tribune reported that he announced his opposition to the bill at a fundraiser last week. "And these people, they're just hell-bent on their own agenda," the governor explained. "They don't even take the bills up with anybody else, not the DFLers" -- the state affiliate of the Democratic Party -- "not me. They just ram them through so they can go home and they think somehow that's going to appeal to the people of Minnesota. Well, I know the people of Minnesota better than that."

Except he doesn't. A Public Opinion Strategies poll taken in December found that 73% of Minnesota voters would favor a right-to-work constitutional amendment. The same poll even found 69% of union households in support of one. And so long as Republicans don't cave to union political pressure, the amendment will almost certainly be ratified by the people of Minnesota."

Now we'll move away from the right-to-work issue, and consider what is happening in several states on the issues of taxes, public sector bargaining, employment and such. Laffer says this:

"But right-to-work laws are only one example of states taking on the Democratic agenda and public-sector unions. Oklahoma, Kansas and Missouri are all preparing legislation to eliminate their state's progressive personal income-tax codes. Last year Ohio repealed its state estate tax, and the issues in Wisconsin surrounding Gov. Scott Walker's battle with state workers over budget constraints and collective bargaining are legend.

Gov. Walker is not alone. Tennessee Gov. Bill Haslam has signed legislation ending public-school teachers' collective-bargaining rights, and New Jersey Gov. Chris Christie has removed collective-bargaining rights on issues such as state-employee contributions to pension and health-care plans.

Meanwhile, Democrats, for better or worse, have staked their future on tight partnership with the unions. Unfortunately for them, not only is union membership a fraction of what it once was, but half of all union members today are public-sector employees—teachers, nurses, police officers, firemen, prison guards. In 1983, when President Reagan fired the air-traffic controllers for walking out on their jobs, two-thirds of all union members were in the private sector.

Not only is union membership declining, but in some of the most ardent pro-union states, such as California, the unfunded liabilities of public-employee retirement plans are pushing those states toward financial collapse and intolerably high tax rates.

The message from the states—and especially from Indiana—is that allying oneself too closely with unions is a losing strategy. President Obama and his Democratic allies should take note: They've hitched their fortunes to a falling star."

Although the demise of the Democrats is not close at hand, it is a given that aligning with unions will hurt the Democratic party down the road. That's because unions are in large part an anachronism today. Besides doing great harm to taxpayers in the public sector, unions represent old style monopolistic power in a society where monopoly no longer has a place.

In short, global competition isn't sidetracked by U.S. based union monopolies. Free world markets deliver business to the most competitive enterprises, pure and simple. And adversarial union leadership doesn't aim to help employers compete for business. In fact, a union's presence invariably makes an employer a weaker competitor.

For evidence, look at the automobile industry. The U.S. based auto manufacturing facilities of Toyota, Honda, Nissan, BMW, Mercedes and several others aren't unionized. GM, Ford and Chrysler are.

In fact, these foreign transplants have generally located in right-to-work states. And what happened as a result? Well, the powerful UAW union helped the U.S. manufacturers go broke.

As for the monopolistic public sector unions, their leadership has bargained hard and won many unaffordable and very expensive benefits for their members over the years. Now states and cities, aka taxpayers, aren't able to make the necessary payments unless they implement economically debilitating tax hikes on their already stretched private citizens. The taxpaying citizens rightfully are resisting.

But when states and their union allies decide to take the heavy taxation route (think Illinois), many companies and individuals will simply opt to relocate to another state or country.

The unions' power, if left unchecked, will in time threaten the solvency of America and many of our states and cities. And perhaps even more important, our U.S. based companies' ability to compete globally.

All in all, unions clearly represent an existential threat to the Democratic party. But the Democrats are joined at the hip with the unions. So what will happen?

The position of the Democrats relative to the unions reminds me of the Chinese saying that "He who rides a tiger may not dismount." And that's why Obama et al will continue to ride with the unions for as long as they can.

But there's an even better saying which goes as follows, "If something can't go on forever, it won't." And that's the winning horse that more and more individual states are choosing to ride.

And for the sake of our entire nation, it's a good thing that the states are doing just that.

Thanks. Bob.

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