Sunday, February 20, 2011

another perfect opportunity

A commenter passes along an article that demonstrates the conflict as starkly as any I can imagine:
Business and real estate executives intend to raise $10 million in the coming weeks in support of Governor-elect Andrew M. Cuomo’s looming showdown with government employees’ unions over wages and pensions. ...
“Let’s put the stock transfer tax on the table,” [Ed Ott] added, referring to proposals to revive a state tax on stock sales, which Wall Street vehemently opposes.
Here we have it: the people and entities responsible for the financial crisis that has driven so many state governments and our federal government into fiscal insolvency, and caused massive hardship throughout this country, are found within the New York financial sector. As an edifice, the financial sector of New York is the single most culpable agent in the entire world for our recent downturn. No other agent in the crisis comes close to that level of blame. The stock transfer tax proposal-- which asks for a tax that is half what it once was-- could net the state and city $3.5 billion dollars. So who is asked to pay? Of course: union members.

We know where Andrew Cuomo stands, and shame on him. Will the deficit hawks in the blogosphere and media act seriously and support the stock transfer tax? Let's see.

8 comments:

Anonymous said...

Freddie,

I find it strange that you would focus on the part of the article that highlights the financiers vs unions aspect of the situation in New York yet you ignored the public sector union vs private sector aspect union. Because this tension calls into question your framing of the issues I thought you'd be interested in addressing it.

Handle said...

Ask yourself: are you proposing the social model of the future, or are you desperately trying to reincarnate and salvage the obsolete and collapsing social model of the past?

Is the Battle in Madison the beginning of a new age and a new dawn of American Labor-Oriented Progressivism, or is the merely the latest, highest-decibel instance of a continuously crescendoing extended death-rattle?

The Progressive Century is now ending. Something new will take it's place, one way or the other, but what that wont be is some return backward to the ideas and systems of institutions developed before WWI. Yglesias and Klein and The Atlantic et all won't fight with you because that battle is lost. It doesn't matter that the war was a noble one.

The last Japanese soldier on some isolated island surviving on his own and shooting as some American research vessel because he's still fighting a lost war some decade after the surrender because no one came to collect him and tell him it was over ... he is simultaneously both admirable and pathetic, for his life is tragic. His honor command him and he cannot stop fighting against the enemy. But he cannot win.

Freddie said...

Handle I'm glad that you've discovered my blog; you are a thoughtful and articulate commenter. As for your position here, I don't know what to tell you other than that I don't believe that really any turn in human events is inevitable, and this one in particular is fully within the control of our democracy.

I don't think that a "lottery ticket" economy, where some great mass of the people make a tiny fraction of the huge amounts that some small, rarefied portion of the populace makes, is moral. But more to the point, I don't even think it is sustainable. What we are staring down today is a system where every mechanism to move large groups of our populace into better material conditions has been systematically dismantled by the neoliberal policy platform. What is left to defend the interests of the lower classes, of the working class? They (we) are my interest, and there are not and cannot be met by the present economic order.

Handle said...

I know sometimes I must seem disrespectful, and I apologize for that, I'm just having fun with my provocations, as I'm sure you know. The funny thing is that I agree with you almost completely, just from the polar opposite perspective.

Actually, I'm not just having fun with my provocations, I'm actually trying to provoke you into creating a genuinely original New Left Answer to this problem, instead of grasping at the Old Left Answer, which no longer works. That's why I hang around here, to see what new conclusions you would come to. I have a hunch, but I'll keep mum in the meantime.

Here is where I agree with you (besides the whole Klein and Yglesias as my enemies thing) - the current system is disastrously unsustainable and fragile, lacks a legitimate moral foundation, and as contradictions multiply and remain unresolved - as especially as people's expectations, upon which they relied to their detriment, are dashed on the rocks - will result in some kind of social collapse or upheaval in the absence of some major intervening institutional reform.

The last several years have been, largely, the time of the revelation for us - where it becomes clear to us how fundamentally broken and corrupt many of our cherished institution were. It's a lot like when a business goes bankrupt, or a Ponzi-scheme like Madoff's collapses, everything seems fine until the very day it's suddenly over, and then when you investigate you discover the ancient fraud behind the facade, and the desperate papering-over of the problems that have been going on for years. But when times are good, nobody feels like asking questions or rocking the boat or worrying about the future.

Here's is where I disagree with you - that preserving the political pathologies of the embrace of the Democratic Party and the Public Sector Labor Unions (to which my parents belonged) in their modern form have anything to do the shape of that intervening reform, should we even be so lucky as to get it. We will need to evolve something altogether different and brand new to create the kind of society that both of us want to live in. It's not the social vision, it's the mechanism of achieving it.

For years, many progressives and leftists have been almost nostalgic for the revival of the newly dominant institutions of the New Deal era, but those institutions came from a profoundly different time and place and they will no longer work for us now. To me this is so obvious that it's hard to take talk of revival seriously. Clinging to the past's solutions cannot be our answer.

Here's the question: Why and When do Unions fail? They fail when they bite the hands that feed them. Why did GM go bankrupt? Because GM can't compete paying higher wages than its competitors do. How did GM avoid bankruptcy for so long (and if you look at it's old stock chart, declining for a decade, you'll see that the financial crisis, again, did not create but merely revealed the deeply rusted engine inside the shiny beast). GM avoided bankruptcy by figuring out that it could contain wages to the levels of its competitors by making empty promises that were somebody else's problem tomorrow instead of writing fatter paychecks today. In other words - through irresponsibility - by choosing appeasement and huge future pain instead of present confrontation with the UAW.

They chose the time bomb. It went off. Everyone knew forever it was going to go off eventually. Nobody did anything to stop it. I'm an optimist who tends to believe the country's leaders will do the right thing in the nick of time before it's too late. When I see what happened to GM, I'm not so sure. Nobody even tried to avert catastrophe, it was all "I'm gonna get mine which the getting's still good!"

Chrysler too, and Ford nearly (it survived through the luck of having made almost all their assets liquid serendipitously at just at the right time).

---to be continued---

Handle said...

---part II---

Here's the thing. This dynamic became the default way that all unions operated. Management always chooses the time bomb. And in public sector unions with even more short-term focus on winning the next election, and the promise of hugely-valuable electoral support from the unions - Democracy Always Chooses The Time Bomb (take a look at the national debt to GDP ratio projections of nearly every developed country if you don't believe me - catastrophic across the board within a generation.)

Now, is it possible you could somehow salvage private and public sector unions, say, by regulating or banning the time-bomb? Maybe, but I don't think so. There's this "defined contribution vs defined benefit" talk, but that's not much different than workers having to independently set aside a portion of their wages and put them in a personal investment account or a 401K. That's not what unions want - they want guaranteed security. Which is, of course, what everyone wants.

But guaranteed security depends on a stable world of guaranteed and growing revenues and from all accounts, living in that world was a nice ride since the end of WWII but that era is now quickly coming to an end. Actually, it started coming to an end a while ago, except we successfully papered over it, for a while.

The main things that Unions accomplish for their members is to relieve one of the fundamental human anxieties - risk aversion. People want stability and are terrified of random volatility. They want a steady job, at steady pay, and a steady pension and steady medical coverage until the day they expire, and they want somebody else to guarantee them all of that.

I'm sympathetic to that. I'm especially sympathetic to people who worked hard, played by the rules, and made life plans on the basis that those those promises would be honored. But those promises cannot be honored and ought never to have been made. They were just lies that made things easy for the liars, but everybody is a collaborator when it's always somebody else's problem to get the money.

Somehow we are going to have to re-balance the equation between flexibility and adaptability in our institutions and security and stability in the lives of ordinary Americans. It is in the nature of Unions to begin with the potential to be benign partner symbiotes but decay into antagonistic parasites and ratchet that balance gradually away from equilibrium and in the direction of sclerosis.

I don't believe that tendency can be redeemed. When times were good, it didn't matter. But times are no longer good. In the next decade or so, we're going to need so much more flexibility to deal with near-chaotic change than we've experienced for the last 70 years. Unions will not give us that flexibility, they are, again, by nature, fundamentally opposed to change - because all people, by their nature, don't like change.

Perhaps The State can find a way to assist the risk-taking and institution evolution we require while simultaneously making it so that people's lives don't have to change that much. I'm skeptical, but it's not implausible. Either way, it'll be a new idea, not this old one. It could be your new idea. It should be your new idea.

Elia Isquire said...

Thanks a lot for that, Handle. It was very eloquent, but more important thought-provoking.

I'm sympathetic to your fundamental position but the continued inability of progressives/liberals/the left to come up with that idea -- and some very smart people have been trying very hard for quite some time -- makes me worry that it's just not there.

But, to be honest, I consider myself willing to be convinced that the union model just won't work in the modern era -- but I don't consider myself convinced just yet. The one part of your argument that I'd like to get into with more detail, if we could, was your comment that the developed world -- all of it -- sits atop a ticking time-bomb. I've read conflicting takes on that; I'm not experienced nor informed enough on macroeconomics to know which I find most convincing.

Thanks again, though. It worries me that more of the progressive world isn't devoting its time to this very question -- that it isn't being treated by the American left, yet, as the question -- and I appreciate the opportunity to suss it out, however ineffectually, here.

timb said...

Handle, that was thoughtful, but I do have a piddly question (it seems small, but I think it shows you either analyzed the problem incorrectly or over-looked the solution).

The Union survived the Chrysler and GM bankruptcy and are doing as well as they used to. If the time bomb went off and destroyed a bunch of suburban management types, why did the union thrive?

Anonymous said...

okay comments on 'lottery ticket america' seem to be turned off so:

this is really great but the occupational licensing paragraph couldn't help raise a smile from a longtime reader who's very aware of your Yglesias Problem -- that disappointed romance.

i have no objection on the substance, but for pete's sake how can you not know yglesias LIVES IN A CONDO?