California's budget dilemma

The State of California's controller, John Chiang, recently visited the Westlake Village area and gave a talk about the budget problems he faces and the future prospects for the state.  According to the local paper, Acorn, the controller talked about how the real estate crash of '07 caused a huge shortfall in revenues and an inability to meet the obligations of the state, predicting "It's going to be a rough couple of years", before things improve.  Chiang went on to discuss how the state's future depends on the skill set of the population (education system), financial capital and infrastructure, are the most important elements of the California economy and that all three of these components are now severely weakened by this crises.  He also talks about how Californians were living beyond their means before the crises and how the state will be in even greater trouble if commodity prices increase and consumer spending decreases.  Okay, all this analysis is interesting, at least to him, but what is the state doing to bring expenditures in line with revenues and what is it doing to address the outrageous stranglehold the public service unions exert over the economy, a condition that has been a growing issue for decades?  Not a peep!  Chiang offers no advice on getting the unions under control nor how to address the pension fund shortfall that represents a claim on taxpayers that for the present, at least, dwarfs everything else he talked about.  This City Journal piece suggests some of the issues Chiang and his cohorts should be talking about because they are immediate and if they don't get addressed there will be no money for any of the big picture issues he spent his time addressing.  What we're seeing here is a public official, in office as a choice of a governor who in turn is in office as a result of union financing and support.  Think these guys are going to get a handle on the really big problem?  It's pretty clear from Chiang's presentation they would rather talk about macro economic issues than address the union issue.

ADDED: This City Journal piece sets the record right with respect to exactly how much the 1.85 million state and local government employees are costing the rest of us.  There is no way this huge imbalance can or will continue.

The Meaning of the Wisconsin Debacle

To fully understand the events in Wisconsin today, one has to understand the roots of the problem of runaway public union benefits over time.  The crises did not happen over night, and is not wholly the result of the latest recession.  Truth is, as Steve Malanga tells us in this in depth explanation in the Autumn of 2005 issue of the indispensable City Journal, over 5 years ago, things were out of control even back then and have obviously only gotten worse.  In the modern economy, unions eventually destroy all industries and businesses once they come to dominate.  The classic example is the auto industry decimated by union rules and excessive pay for many years and now just a shell of its former self. In the public arena it all started once  unions got their tentacles into governments at all levels after they were allowed to collective bargain by the vote seeking, union friendly Kennedy Administration of the early 1960's. The result is what is now unfolding in Wisconsin and around the country.  Governments at all levels are broke, can't raise taxes anymore, and are in the process of imploding.  Overtaxed workers in the private sector, those who pay for the lush salaries and benefits of the government workers, have had it and are finally pushing back with a vengeance.  It was just a matter of time before the unions destroyed the public sector.  That time has finally arrived.  Here, in the words of a union representative speaking to a meeting of NEA members and union workers, is their unvarnished philosophy.  Since it's clear from the views expressed here that collective bargaining is the Holy Grail of their movement, the reason for the militancy of their stand in Wisconsin and elsewhere becomes obvious.

This column by Jonah Goldberg provides a succinct history of how and why public unions were enabled to bargain collectively.  A very big mistake that we've been paying a big price for many years.

ADDED: Here we have yet another perspective on the problem with collective bargaining and the cost of government.  As pointed out here the average government employee's compensation is now double that of the private sector.

ADDED: And here is a piece by Paul Greenberg in which he quotes the work of a U of Arkansas economist who does the math and shows how the public service employees in Wisconsin now receive fringe benefits valued at 75% of their wages as compared to 25% in the private sector.  Is there any reason why the Governor Walker wouldn't try to limit collective bargaining to just wages?

ADDED:  Back to Steve Malanga who points out here how unions successfully circumvented local town councils and school board oversight and budget controls by getting the state legislatures to pass arbitration laws favorable to unionized workforce.