Monday, April 16, 2012

The Truth About Wisconsin

A huge lesson has been taught in Wisconsin’s actions.  It is that once again monopoly control over any commodity including labor promotes massive corruption and the deliberate gaming for self interest in the distribution of favors.  The cure is always to throw the door open and allow competitive bidding to run loose for a while.  In that case, incumbency still provides a decided edge, but the sense of power and entitlement is eliminated and managers have a chance to end obvious abuses.

In Wisconsin, just cleansing the system of visible abuse is allowing the system to move forward on a sound financial basis.

We presently face a similar situation in BC where the teacher’s union in particular is singing the radical song and is presently emboldened by weakened political atmosphere.  Yet the whole system needs to be shaken from top to bottom and it is only a matter of time.

When I worked briefly in government service forty years ago, it was accepted that a shift to private industry for a manger would generally effect a twenty percent improvement in income.  All indications are that the reverse is true today.  Wisconsin tells us why.  It is not just the medical system that has been gamed to death.

The Truth About Wisconsin

 Posted by Jacob Laksin
Apr 11th, 2012

Last week’s Republican primary in Wisconsin was not the biggest battle in the Badger State. That will come this June, when Wisconsin Democrats, backed by the raging might of state and national government unions, will attempt to recall Republican Governor Scott Walker in a fiercely contested general election.

It will be a difficult fight for the embattled governor. That stems in large part from the boldness of Walker’s 2011 budget reforms, which made him a hero to conservatives even as they turned him into a hate figure for unions and the left. First, Walker ended the unions’ automatic collection of dues from members’ paychecks, cutting off a major source of union funds. Next he required state workers to contribute a modest 5.8 percent of their salaries toward their pensions and to cover 12.6 percent of their health insurance premiums, thus bringing Wisconsin closer in line with private sector and national averages and giving the state a chance to get a grip on its spiraling finances. Most controversially, he restricted most public unions’ collective bargaining to salaries, canceling a corrupt and fiscally unsustainable cycle that saw unions negotiate generous perks with the same politicians they helped elect.

None of this has gone down well with the unions. If early signs are any guide, they will do everything they can to paint the reforms as a failure. As they push ahead with the recall, Walker’s opponents claim that he has presided over the “destruction of public education;” that he has forced thousands of teacher layoffs; and that he has triggered a “political and governing crisis.” The evidence, though, shows otherwise. Not only have Walker’s reforms not brought calamity upon Wisconsin, but there is a growing body of data that they have succeeded in precisely the policy areas that unions charge them with destroying.

Public education is a prime example. So far from being destroyed, the state’s public school districts have benefited from a wealth of savings made possible by Walker’s reforms. By limiting collective bargaining, Walker freed school districts to set contracts without union pressure for the first time in decades. The benefits have been significant. As the Wisconsin Policy Research Institute’s Christian Schneider points out in City Journal, collective bargaining produced contracts that forced the state’s school districts to purchase health insurance from WEA Trust, a non-profit tied to Wisconsin’s largest teachers union, the Wisconsin Education Association Council. But after Walker’s reforms limited collective bargaining, districts could strike that requirement from their contracts and put the provision of health insurance up for bid in a wider market.

The result was savings. Schneider notes that when the Appleton School District put its health insurance contract up for bid, the WEA Trust “suddenly lowered its rates and promised to match any competitor’s price.” Thanks to the lower costs, Appleton is expected to save $3 million in the current school year. Appleton is not an anomaly. According to a report by the MacIver Institute, a free-market Wisconsin think tank, following the reform of collective bargaining, at least 25 school districts in Wisconsin reported switching health care providers or plans or opening insurance bidding to outside companies. The institute found that the measures will save the districts $211.45 per student. And the savings were not hypothetical. The institute found that, as of last September, certain school districts already had savings of $162 million dollars, or approximately $507 per student, as a result of Walkers’ reforms. If more school districts followed their example, the institute calculated, Wisconsin could see savings in the hundreds of millions of dollars.

The savings were particularly embarrassing for Walker’s political foes. After Walker’s budget passed, Milwaukee’s Democratic Mayor Tom Barrett, a potential challenger in this summer’s recall, hysterically warned that the governor’s cuts in state aid would make the city’s structural deficit “explode.” Not only did that not happen but because the city no longer had to negotiate health-care benefit changes with unions – a direct result of the curbs on collective bargaining – the city actually posted a $11 million net gain for its 2012 budget. But then that wasn’t the kind of “explosion” Barrett had been threatening.

As a consequence of the savings, many of Wisconsin’s school districts have been able to avoid the kind of painful layoffs that teachers unions had warned were imminent. For instance, the Wauwatosa School District faced a $6.5 million shortfall and the prospect of cutting 100 jobs. But because the teachers union abided by Walker’s budget and agreed to pay a higher percentage of health insurance premiums and contribute to their retirement plans, the school was able to save all of the jobs. Similarly, the Kaukauna School District was able to transform a $400,000 deficit into a $1.5 million surplus, allowing the district to hire more teachers and even to set aside money for merit pay, something teachers unions’ had long opposed. Indeed, as the governor’s office notes, new teacher hires outnumber layoffs and non-renewals of teaching jobs by 1,213 positions. That’s not to say that there have not been layoffs. The governor’s office points out, however, that nearly 70 percent of those layoffs have come from the three school districts that rejected Walker’s reforms.

There are also growing signs that decreasing the burden of the public sector has allowed Wisconsin’s private sector to revive. In January and February alone, Wisconsin gained nearly 20,000 private sector jobs, even as its unemployment rate was around 6.9 percent – the lowest in the state since 2009. From a budget deficit, Wisconsin is projected to post a budget surplus in fiscal year 2012. Rather than “ruining” Wisconsin, as Walker’s union detractors maintain, he may have sown the seeds of its economic recovery.

It does not follow from these achievements that Walker has accomplished everything he set out to do. Private sector job growth remains sluggish, despite the recent upturn, and Walker is still some distance from making good on his campaign promise to create 250,000 jobs. Still, it’s hard to see how these challenges will be overcome if the state reverts to a status quo ante that saw public-sector unions and Democrats join forces to run up a $3.6 billion deficit and unleash the kind of budget crisis that made Walker’s austerity reforms necessary.

Wisconsin’s voters seem to be coming around to that view. Although the state remains deeply polarized, Walker’s favorability ratings are on the rise. A recent Marquette Law School poll showed Walker in a statistical dead heat with his possible Democratic challengers. The bigger problem for Democrats is that the reforms they are intent on demonizing have resulted in cost savings and jobs rather than the crisis that their union allies had predicted. If that becomes more widely known in the months ahead, that truly would be a disaster for Walker’s opponents, albeit not of the kind they had been warning about.

1 comment:

Anonymous said...

This is a GOP attack on a basic American right to organize, join a union, and strike. This is not about money, but worker's rights.