Friday, March 11, 2011

How would the media and public react to the following fact pattern:

AIG, still owned by the US Government, is required to have the compensation and benefits of its Management Board (i.e the top 20 employees, including the CEO) set by a panel of 15 US Senators.

The 20 members of the Management Board decide to form the We Love Insurance Union (“WLIU”), and gain the right to collectively bargain with its employer, the US Government.

The WLIU collects dues from each member of the Management Board, and these dues are used exclusively to contribute millions of dollars to the re-election campaigns of the 15 US Senators who set their compensation and benefits.

When the WLIU negotiates with the 15 US Senator panel, they all agree to a contract that requires the US Government (i.e. taxpayers) to pay the WLIU members a competitive annual salary, mandates lifetime job security, and requires taxpayers to fund 95% of the lifetime costs of gold-plated health care insurance and a pension that guarantees the WLIU members 100% of their last years compensation, for life, after they retire at the age of 50.
I’m pretty sure this would cause Rachel Maddow, Bill Maher and Michael Moore to spontaneously combust from rage…and for once, I would agree with them.

This hypothetical story is ridiclous, but is it fundamentally different from the fact patterns surrounding the public unions we have today? No.

Government employees have formed unions (teachers, bus drivers, sanitation workers, etc.) which have been given the right to collectively bargain with the Government. The unions collect dues from its members which are used to contribute to (i.e. bribe) the campaigns of politicians who run the government. Those politicians accept the money, win their elections and end up on the other side of the bargaining table when the union comes in to renegotiate their contract. Since you don’t bite the hand that feeds you, the politicians give the unions whatever they want, because, hey, it’s just taxpayer money and they could really use those union contributions to help with the re-election campaign.

The Union helps the politician get elected, and the politician rewards the Union’s support with generous employment contracts.

It’s no wonder why collective bargaining for public employees is perhaps the costliest conflict of interest this country has ever seen. Over the last 50 years or so, Federal, State and Local government employees have purchased their right to collectively bargain with the taxpayer, reaping huge rewards along the way (incredibly favorable work rules and job security – regardless of performance -and above all, incredibly lucrative benefits packages for life). It’s taken 50+ years, but the bills are starting to come due, and, unsurprisingly, it turns out governments can’t afford all their promises. Unions served a very important purpose to protect workers at coal mines, constructions sites and similar environments decades ago, but as legislation has evolved to protect employees in the workplace, whether unionized or not, the usefulness of unions has run its course, particularly in the public sector.

My question to the protesters in Madison and the pro-public union pontificators on TV – would you support my fictional WLIU?


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