More Silly Economic Thinking in the ‘Burgh

According to the Post- Gazette followers of Paul Krugman’s school of incoherent economics, the cause of our country’s slow economic growth is inadequate government spending and the unwillingness to levy higher taxes. Their silliness is encapsulated in the assertion that cutting spending will cost some Federal government workers their jobs, thereby worsening the nation’s jobs picture. Apparently, the geniuses who came up with that gem have never noticed that the bigger the Federal civilian payroll the weaker the nation’s private sector ability to create activity and new jobs.

Here is the sad truth. The U.S. has been under the whip hand of massive deficit spending for three years as well as the most "stimulative" monetary policy imaginable. And still the economy languishes with subpar growth and ongoing large layoff announcements. Granted, the housing collapse and the attendant financial crisis of 2008 meant recovery would take longer and be more difficult than a typical recession.

However, the President and the Democrat controlled House and Senate opted to begin piling huge new regulations on the economy through constitutionally questionable Obamacare, the EPA and the NLRB that, taken together, have acted as a massive anchor on the economy. The administration’s fealty to organized labor was demonstrated through the terms of the auto company bailouts, support for Card Check, refusal to denounce the goonish tactics of labor unions in Madison Wisconsin, and more recently the insanely destructive NLRB ruling on the Boeing Company’s plans to open a manufacturing facility in South Carolina. Regardless of how the courts eventually rule, this NLRB-and by definition Obama supported-action has cast a pall over the nation’s free enterprise system. Nothing can be more chilling to business investment than the prospect of government agencies telling companies they cannot locate legally in a state of their choosing.

The unwillingness of proponents of ever more spending and taxes to realize the damage already being done by that approach and their inability to link the heavy handedness of government regulators and burdensome regulations to the increasing caution of business people to invest or hire new workers or retain existing workers speaks to an ideological blindness of monumental proportions. Sadly, decades of programs that have made a large fraction of Americans dependent on government or the beneficiaries of government regulations, along with the fact that 50 percent of citizens pay no income tax, have created a huge voting bloc who are completely vested in keeping government growing in size and scope.

As noted in a blog last week, handout and entitlement programs can be sustained only by having a growing private sector economy capable of producing adequate tax revenues at low tax rates that do not threaten after tax rates of return on investment. Failure to recognize the need to strengthen and encourage the free enterprise system through a better set of tax and regulatory policies will inevitably be the nation’s undoing as a republic of free people.

Pittsburgh Prevailing Wage: Union Power Play

Pittsburgh’s Councilman Shields will propose a prevailing wage bill that is expected to mandate that employees at businesses with a City contract or receiving any City subsidy be compensated the same as City employees doing the same job.

Since City employees other than managers are likely to be union members, the compensation requirement would effectively unionize all newly covered workers in terms of pay and benefits. But unless they are union members they will not have a contract covering work rules and they will not have to pay dues. Thus, the non-union workers covered by prevailing wage would receive the benefits without the union dues cost.

If the employees covered by the prevailing wage are union members but are earning less than City workers, the new law will in effect supersede collective bargaining agreements. And we have been told for years those agreements are sacrosanct. That appears not to be the case if the government decides to force the company to pay more than the negotiated contract calls for.

In the case of the non-union workers getting union pay and benefits, the question must be asked: Why would unions support the proposed bill? Why not simply ask that Council require the workers on City contracts or on projects getting a subsidy join the union? Legally, that might be hard to enforce if the workers vigorously oppose being compelled to join a union and fail to vote to be represented.

All told, one must wonder why the prevailing bill is so important to unions. It must be viewed as just another way of showing their strength in the City and reminding politicians who is in charge.