America’s Biggest Mistake?

The ongoing debacle in Wisconsin brings to mind the problems of how best to govern when the U.S. Constitution was being debated. One of James Madison’s most powerful and persuasive arguments in defense of the principles underlying the Constitution was the idea that competing interests would limit the opportunities for one group or another to abuse the rights of others.

In The Federalist No. 10 and his "Vices of the Political System", Madison delineates this argument clearly. "The Society becomes broken into a greater variety of interests, of pursuits, of passions, which check each other". And further, "The great desideratum in Government is such a modification of the Sovereignty as will render it sufficiently neutral between the different interests and factions, to controul one part of the Society from invading the rights of another, and at the same time sufficiently controuled itself from setting up an interest adverse to that of the whole Society."

Madison, who understood all too well how democracies and republics had failed in the past worked to create a government with divided powers with checks and balances on each other. But beyond that he knew that powerful non-government interests would try to use government to protect and enhance their specific interests. Thus, his admonition that government not set up interests adverse to the whole Society.

Unfortunately, the decision to allow public sector workers to organize into labor unions represents the starkest possible violation of Madison’s admonition. The inherent problems with government worker unions were recognized by Franklin Roosevelt and were long viewed as antithetical to good governance. As we have seen where government workers are in unions, a massively unhealthy incestuous relationship between employees and elected officials has developed. The unions work to ensure the election of officials who will do their bidding. The officials make sure the workers are well taken care financially and have their jobs protected.

We can see the damage to state and local government finances that stem from that relationship. The question is, "can the problems be resolved without further serious damage to the economies and civility of the affected areas?" Sadly, none of this was necessary. Paying attention to the wisdom of James Madison would have served the nation well.

The World Where Public Employees Are in Charge

In a version of the inmates running the asylum, we are witnessing what happens when public sector employees get enough power to dictate policies and performance.

Three news reports today illustrate this distressing development. Moon teachers are threatening to walk off the job if they do not get a satisfactory contract. And that undoubtedly means wage increases and cushy working conditions to go along with their already ultra generous pensions. Port Authority drivers are suing the Port Authority because it wants to change the days major holidays are recognized, presumably for purposes of reduced service. Drivers are incensed because it will interfere with the ability of senior drivers to choose to work on the paid holidays and they might therefore miss out on double time and half or greater pay.

And the most preposterous example of what the world where unions dictate how things are run has to be France. Airports are so undermanned and fuel supplies so tenuous that the government is asking carriers to reduce the number of flights into France. Tourist destinations are closed, travel within the country iffy and unpredictable. All traceable to the insanity engendered during the revolution and the philosophy of its intellectual progenitors and defenders.

Can we be far behind? Pennsylvania certainly is not. The Commonwealth ranks high among the states that have travelled farthest down the path of ceding ever increasing power and control to public sector unions. And this is exactly what Madison warned us against, i.e., the state becoming partners with special interests and, in the case of public sector unions, developing an incestuous and freedom destroying relationship.

Who Rained on Labor’s Parade?

Newspaper reports on the Labor Day parade Downtown noted that something was missing from the march: spectators. In fact, people walking in the parade outnumbered people watching. What gives?

Was it the economy? One union official flippantly noted the bad economy and remarked that people who would normally be there were probably out looking for jobs. Was it the weather? We can rule that one out as Monday stood in stark contrast to the 2009 affair when it was noted "the cool, drizzly weather appeared to thin the parade crowd considerably".

Or could it be a sign of taxpayer disenchantment with unions and theirnever ending quest to make government bigger, more inefficient andcostlier?

Except for union members and their immediate families andthe hardest of the hard left, labor’s all out support of Obamacare,stimulus spending to save government jobs, card check, and higher taxes on the national level and the presence of their influence in state and local policy including the lack of Right to Work or prevailing wage reform, continuing threats of teacher and transit strikes, and opposition to outsourcing and privatization is finally getting through the public’s consciousness as being a majorcause of the ongoing funk in the economy.

Too many municipalities?

Establishment elites and their allies in the liberal media continue to rail against the 130 municipalities in Allegheny County as the source of high government costs, inefficiencies, and slow economic growth.

Wonder why these folks never consider the great era of prosperity and growth that occurred decades ago when Allegheny County had "too many" municipalities? It puts the lie to their argument.

The main reason for slow growth has been the rise of unionism, especially public sector unions, that have driven up costs of government service, led to higher taxes and created massive interference with the working of the free market and dependence on government directed development.

Therein lies the major problem with the County’s slow economic growth and population loss. Reducing the number of municipalities might lead to some improvement in delivery of services, but it can also lead to worsening results as well. Pittsburgh, the largest municipality by far in the County, spends almost $1,400 per resident to provide government services and Pittsburgh schools spend $20,000 per student. Most municipalities and school districts in the County spend nowhere near those levels.

So, tell us again why all the focus on "too many" municipalities as opposed to talking about how to deal with the real obstacles to prosperity.

Merger Hopes Meet Union Reality

The product of the Commonwealth’s first voluntary school district merger-Central Valley District in Beaver County-could be headed for a work stoppage. That’s right: the district that had to deal with how to align schools, levy and collect taxes, and come up with a unified name and mascot apparently didn’t pay enough attention to its workforce. As the head of the PSEA stated "our members want to see this merger work. They also need fair and reasonable contracts."

And in Pennsylvania those members can walk off the job without punishment and shut the school system down. With issues of vacancies, transfers, work hours, and health care in contention, it is not much of a stretch to think that there are hurdles with how to align the separate work units that existed in the previously un-merged districts. Recall that is a recent blog we pointed out how the high school would have two principals.

Merger advocates-whether they be in the camp of combining school districts, municipalities, or counties and municipalities-take note: public sector unions are not an issue to take lightly in a proposed consolidation. Even the task force charged with studying a Pittsburgh-Allegheny County merger sidestepped the thorny issue, noting that "personnel costs often rise when two different pay and benefit systems are integrated, because, most typically, employees move to the more generous compensation and benefits package". Think that dynamic is not at work in Central Valley?

Pennsylvania’s Anti-Growth Trifecta

govt state

The decades’ long anemic growth of Pennsylvania’s economy has been well documented. Consistently over many years, the state has posted job gains ranking among the bottom five or ten states. That should come as no surprise given the business climate and regulatory environment special interests have saddled the Commonwealth with. Let’s look at three of the worst of the legislative and policy measures inhibiting Pennsylvania’s growth.   



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PA at Half a Dozen School Strikes This Year

News came over the weekend that the Penn Hills School District and its teachers have reached a five year contract that followed a strike that lasted from February 2nd to February 9th. Parents who were affected by the strike must have been relieved to hear that the District’s negotiator said that the pact is "substantially the same as the tentative agreement offered to the teachers in January." Yet another example of the teachers using the strike tool to try and extract more benefits through their power to strike.

So how does the school strike landscape look thus far in the 2009-10 school year? According to the School Boards’ Association, there have been six strikes including Penn Hills. Two others have occurred in western Pennsylvania (South Butler and McGuffey) and affected over 25k students.

We have pointed out in our publications and in testimony to the General Assembly that Pennsylvania is one of only a handful of states permitting school strikes. PA even outpaced Ohio and Illinois on strikes, even though the other two states have many more school districts. PA prohibits certain types of public employees from going on strike, but teachers are not in that group. Don’t expect the state to act anytime soon on extending the prohibition.

Port Authority Facing Deficits


News reports tell us the Port Authority is staring at a $25 million deficit in the current fiscal year, and possibly another $25 million next year. They complain that revenues are down and fringe benefits, especially health care, are rising quickly.


Is anyone surprised?  Back in 2008, the Port Authority Board caved to union demands and agreed to a contract with no savings in it other than far distant pension and health care payments. A savings that could be reversed in future contracts.


The union was threatening a strike that could have savaged the local economy and brought massive hardships to transit users and produced highway traffic tie-ups. And as usual, the Authority blinked.


Thus, the Port Authority will now be forced to (a) go hat in hand to Harrisburg to ask for more money (b) raise fares again and/or (c) reduce service and layoff drivers and mechanics. This is what happens when a financially strapped entity fails to do its duty and stand up to unions. But wait. The management is hamstrung because it dares not take a strike for fear of what happens to the economy and the fact that it might end up losing some of its already slim user base.


So the problem really goes back to Harrisburg and the state government where there is no real effort to take away the transit workers’ right to strike.  Consequently, severe financial problems will continue.  As we have recommended many times, the Port Authority must stop filling vacancies and when 20 positions open up due to attrition and retirements, it should outsource routes those jobs supported.  Over time, the Authority could make a significant dent in the ability of the transit union to overpower the Board in contact negotiations.  We will know the Authority is serious when they announce a complete hiring freeze.

Pension Reform Blooms in the Garden State

Just over the border from Philadelphia-the city that accounts for 80% of the aggregate shortfall of all local pension plans in the Commonwealth-reform of public sector pensions is taking shape.

According to an article in the Philadelphia Inquirer, the reforms would include a roll back of a 9 percent pension increase approved in 2001, a requirement that new part-time workers to receive 401(k)-like plans rather than defined benefit plans, and a minimum threshold of weekly hours worked for employees to qualify for a pension. A constitutional amendment would force the state to fully fund its pension obligations over a seven year period.

These changes follow several attempts earlier in the decade to obtain long-term change in the state’s pension system. With long range pension and health care obligations estimated to be around $112 billion (that’s for the state only, not the locals), some lawmakers have decided to take the issue on. There will be tremendous pushback from the state’s public sector unions. Consider it a prelude to life in Harrisburg in 2011.