By Kevin Meyer
This post is going to tick off a bunch of folks from both ends of the political spectrum, but there's a limit to how much centrist libertarians like myself can take before our heads explode. Perhaps it takes being such a centrist, thinking instead of blindly rationalizing the illogical and downright ridiculous like those that cling to either extreme, to see the connections and systems involved.
So I've thrown all my balderdash and bloveating together in one post so those so inclined can simply blissfully ignore today and wait until something more meaningful tomorrow. However there are some organizational lessons we can derive from this nonsense.
Let's start with a dose of history that seems to be forgotten by those demonstrating against Wisconsin Governor Scott Walker's plan to scale back public employee union collective bargaining rights. Does anyone remember who once said "it's impossible to collectively bargain with the government?" Or perhaps who called public employee unions "unthinkable and intolerable?" Some right-wing Tea Party nutcase? Nope, George Meany, president of the AFL-CIO, and that liberal icon and welfare state creator himself, President Franklin Delano Roosevelt.
The founders of the labor movement viewed unions as a vehicle to get workers more of the profits they help create. Government workers, however, don’t generate profits. They merely negotiate for more tax money. When government unions strike, they strike against taxpayers.
Government collective bargaining means voters do not have the final say on public policy. Instead their elected representatives must negotiate spending and policy decisions with unions. That is not exactly democratic – a fact that unions once recognized. George Meany was not alone. Up through the 1950s, unions widely agreed that collective bargaining had no place in government.
So what happened over the last few decades? Quite simply, bad management. And that's where I get to tick off the other side of the spectrum. I'm not opposed to unions or collective bargaining – in my opinion they are the result of bad management and leadership in both the private and public sector. Those organizations were treating and paying their employees like they were simply pairs of hands – instead of humans with a remarkably valuable brain attached to those hands.
A funny thing happens when you realize there's a brain involved: you are able to tap into a creative energy that generates more value than you are paying for, therefore you treat the repository of that brain much better perhaps including paying more, which thereby makes the brainy employee no longer believe a union is required to "combat" management. That's why unions don't seem to take hold in the best organizations – there's really no need.
If you have a union, let alone are combating a union, you probably deserve it. If that union negotiated for benefits that are damaging your competitive ability, then shame on you for being on the other half of that negotiation and agreeing to it – and not realizing there was a mutually beneficial way forward by valuing the brain attached to the hands. Yes Governer Walker, there is another way. Try it.
The lesson: understand the true value and opportunity of your resources, especially the people in your organization.
That's not negating that something has to be done about the problem of mounting public pension liabilities. Only the dwindling number of followers of the increasingly irrelevant Paul Krugman still believe that Keynesian economics works – how many more costly attempts do we need? Like it or not public pensions need to be renegotiated. Sounds like the Wisconsin unions, as well as those of other states, are willing to do so. Spending needs to be cut – in all areas, yes including defense.
A few folks look back at history and say we should simply return to the higher tax rates of yesteryear, simply because significant growth was also occurring during that period. There's just one big problem with that simplistic solution – it isn't yesteryear. History is information, a guide, not a rule. The world is a radically different place.
Geographical boundaries no longer restrict the flow of income, wealth, and capital. As many of us are keenly aware, global competition for wealth and knowledge is intense. Just as with state boundaries becoming meaningless leading to massive wealth and population migration from states like New York to states like Florida and Arizona, raising taxes now do the same on a global scale. Wealth and capital rapidly migrate to those parts of the world where it can be used more effectively. That's already happening with many countries reducing personal and corporate tax rates – and generating more income from more business and investment activity – while some countries like the U.S. remain stubbornly high with some folks even wanting rates to go higher. Raising taxes almost always creates a net reduction in tax revenue these days.
The lesson: know history, but also understand the context of that history so appropriate lessons can be derived.
It's been amusing to watch lawmakers from Wisconsin and Indiana flee to neighboring states to avoid voting on bills they don't like, often to the applause of constituents sharing their political views. But wait a minute – wasn't it only a year or two ago that that same party was decrying the "tyranny of the minority" when filibusters were used in a similar fashion. What goes around comes around… and then goes around. You were elected to work, you happen to be in the minority, live with it. Debate and change people's opinions and perhaps things will change the next time around. Ignoring duty is a dangerous precedent.
I was also puzzled by Obama's recent decision to not defend the Defense of Marriage Act (DOMA). Now I don't personally agree with DOMA either, but simply not defending it creates an interesting precedent. Could we imagine a future President deciding not to defend a duly enacted law he decides she (!) doesn't support… like health care? Although deciding not to defend is different than deciding not to enforce – the latter would effectively create a constitutional crisis. Perhaps it already has.
The lesson: do your job. If you don't like it, debate and work to change the decision. Don't just ignore it – or even worse continue to punt the problem down the road.
On a similar note, the right often pretends to agree with libertarians that the government should get out of people's lives – and then they try their own social engineering that sometimes approaches or even surpasses the entangled social constructs created by the left. An example? How about marriage. These fights on who can marry who are mind-bending. Lately it seems like I can point to more same sex relationships that are more stable than most traditional relationships I know of. So why doesn't government simply get out of the marriage business altogether? Poof! Problem solved. Marriage is a social and religious construct, not government.
The lesson: are you creating some of your own problems but just putting your nose where it doesn't belong? Perhaps by simply redefining your operational boundaries some problems will go away.
That points to another mindset that somehow needs to change: that spending correlates to results. Education is a prime example – the U.S. spends more by nearly 40% than countries like Finland, Japan, and Norway. But some folks still insist we should pay more? Be serious. Lean education anyone? The same concepts can apply to all public sectors.
The lesson: before jumping to the easy answer of increased spending, look inward to identify efficiencies. And those efficiencies are not usually reductions in brains, but reductions in complexity.
Over the past week I've come across no fewer than three articles from left-leaning folks claiming Social Security should be left out of the current budget reduction efforts because "it doesn't contribute to the deficit." There are generally two aspects of this bizarre argument and it took me a while to understand the perspective that generates it.
The first is simple – the argument that "Social Security is fine for almost another 20 years" and "even after that it can pay out 70% of planned benefits" – and with that they consider it sound and solvent. Nothing like admitting there's a problem staring you in the face and then kicking the can down the road. 20 years ain't long – to many of us 1990 seems like yesterday.
But the more interesting argument is how Social Security is supposedly a zero drag on the economy. It finally hit me that those making the argument haven't had the benefit of managing large complex systems – just operating in singular entities. Perspectives are narrowed and the blinders are on.
Yes Social Security is currently roughly neutral, technically off budget, and funds have actually been sucked out of it to pay for unrelated pet projects – an irresponsible budget machination wrought by multiple administrations of both parties. But as part of an overall system, even a standalone self-funding agency or operation is still an issue if the system has problems.
An analogous example would be a company with with one profitable division and five unprofitable divisions. The profitable division simply cannot stand alone in the system if the other divisions are deemed worthy or necessary – it has to be considered as part of the whole. The entire system exists within a pool of limited resources – tax and general income dollars in the case of the public sector – and decisions need to be made that potentially impact even the profitable division. Increasing draws on that limited pool, even if converting that increased draw results in greater offsetting benefits and therefore an illusion of solvency by the profitable division, still reduces the funds available to the other divisions. And if those unprofitable divisions are doing worthwhile things – like many aspects of government – it becomes an even greater problem. And now if you consider the system to be the global economy and not just the U.S. economy – keeping in mind globalized competitive effects – well, you get the picture. I hope.
A similar situation exists in organizations that have been forced to downsize – there's generally extreme difficulty adjusting to the reality of simply being smaller with fewer resources. Any number of projects can still be identified that are worthy of investment and able to generate positive returns – but the funds available for investment simply don't exist at the same level. Good and profitable still doesn't mean possible.
The lesson: consider the entire system, not individual entities. Think more global – and I don't necessarily mean that in terms of geography.
But now I'll bounce to the other side of the spectrum to upset my right wing friends. Why does my Social Security withholding stop when I hit a relatively modest income level? If Social Security was designed to be a safety net, why should I expect to receive payments if I have been fortunate and successful? I guess it wouldn't bother me if that changed. However if it was supposed to be just a safety net, why has it morphed into a full retirement plan for many folks?
The lesson: we do have an obligation to support the less fortunate. That makes us good stewards of society, and we never know when we might become part of that demographic. It happens.
Time to wrap this up. Thanks for listening, perhaps even considering and thinking, and I promise you I'll be back to lean tomorrow!