Public-sector unions: Two wolves & a sheep vote on what’s for lunch

“Two wolves and a sheep voting on what to have for dinner.” James Bovard’s critique of democracy also applies to public-sector unions. Unions and union-backed politicians are the wolves. Taxpayers are the sheep.

Public-sector union representatives “will often be on both sides of the collective bargaining table,” explains law professor Stephen Bainbridge. Union leaders are on one side; their “bought and paid for politicians” are on the other.  Unions fund politicians’ campaigns, and the politicians reciprocate by facilitating extravagant union wages, benefits, and protections.

The “process of collective bargaining … cannot be transplanted into the public service.” warned the pro-union Franklin Delano Roosevelt. Time columnist Joe Klein adds: “Industrial unions are organized against the might and greed of ownership. Public employees unions are organized against the might and greed…of the public?”

Public-sector unions are organized against the tax-paying public. A unionized private-sector firm risks losing customers if its union successfully strikes, protects lazy workers, resists labor-saving technologies, abuses pension policies, secures excessive job security, or demands exorbitant compensation. Not so with public-sector unions. Taxpayers are stuck paying for expensive government services.

How expensive? Wages for unionized local and state government employees exceed their nonunion counterparts by more than 11%, concludes labor economist James Sherk.  They are also more likely to receive pensions and have their employers pay all of their medical insurance premiums. It’s no surprise that highly unionized governments burden taxpayers with more debt, as Cato Institute policy analyst Chris Edwards notes.

With public-sector unions, taxpayers just get fleeced.

The Boulder Daily Camera published this article on February 26, 2011.

See also:

• Chris Edwards, Public-Sector Unions,” Cato Tax & Budget Bulletin, March 2010. (3 pages, good place to start, many good references to follow.)
• Chris Edwards, “Public Sector Unions and the Rising Costs of Employee Compensation,” Cato Journal, Winter 2010. (29 pages)
• Rand Simberg, Who’s Been Overreaching, Again? (many great points & links), via his article in Pajamas Media.

 

Education needs freedom, not phony “investments” in the government school cartel

Beware politicians’ “investment” con. People typically invest their own money for their personal gain.  But politicians “invest” by confiscating taxpayers’ money for their own political gain. The education “investments” in the 2011 State of the Union address take your money to strengthen the bloated government school cartel. In return, the President and his political allies receive campaign contributions from teachers’ unions.

President Obama praises the post-Sputnik “investment” in education. But subsequent PSAT math scores fell or stagnated for decades while school funding soared. Now he wants to “prepare 100,000 new teachers” in engineering, science, and math. Why? Since 1970, the number of teachers per student has increased by 50% and the cost of K-12 government schools has almost quadrupled. Meanwhile, national standardized test scores have not improved.

The president is no better with higher education.  He has increased tax-subsidies for higher education and says the United States should have the “highest proportion of college graduates in the world.”

But thanks to political meddling, there may be too many college students already.  ABC news just reported that “After four years, 36 percent of [college] students did not demonstrate significant improvement” in “key measures of critical thinking, complex reasoning and writing.” Economist Richard Vedder found that “30 percent of the working college graduates in the U.S. … have jobs that do not require a college degree.”

President Obama says “our free enterprise system … drives innovation.” Then instead of restricting parents’ school choice with monopolistic politically-controlled schools, he should promote free enterprise in education.

A version of this article was published in the Boulder Daily Camera on January 29, 2011.

Other responses to the state of the union:

• John Stossel his own address
• economist Don Boudreaux:
  

  My concern about the president’s cozying-up to business differs greatly from the concern that animates the political left. Contrary to popular presumption, being friendly to business is not the same as being pro-economic growth or pro-free-market.

• columnist David Harsanyi: “Obama says that ‘none of us can predict with certainty what the next big industry will be or where the new jobs will come from.’”  But then Obama goes and picks winners with your money.

Colorado Medicaid reform: federal matching funds promote waste

The Colorado legislature should cut wasteful spending by Medicaid and the Child Health Plan Plus. When these programs spend a dollar from a Colorado taxpayer, the federal government gives them a dollar taken from a taxpayer in another state.  Hence, Medicaid and the Child’s Health Plan program administrators are rewarded for spending more and punished for spending less.

These programs devour about ten percent of the state budget. Hence it’s no surprise that “Colorado faces a budget deficit of between $50 million and $257 million for the rest of this fiscal year,” reports the Denver Business Journal. Balancing next year’s budget could require $1.1 billion in cuts — about 5% of the budget.

Federal matching funds rewards extravagant spending. Administrators can expand their budgets, staff, and salaries. Programs stray from serving the truly needy, as the Independence Institute’s Citizens Budget documents. So lax was the recent Child Health Plan Plus expansion that about six of every ten new enrollees had private insurance.

Low enrollment fees and copayments also encourage imprudent spending. For example, it’s just $2 for a podiatrist visit.

A penny squandered is a penny “earned.” Colorado Medicaid made errors processing claims more often than private insurance, which cost taxpayers thousands of dollars. But the feds reward them for this, too.

Instead of federal matching funds for Medicaid, Colorado should request a lump-sum block grant. This would reduce perverse incentives.

A version of this article was printed in the Boulder Daily Camera on January 15, 2011.

How to keep New Year’s resolutions

“New year’s resolutions doomed to failure,” trumpeted a Guardian.uk headline this time last year. The article describes a study by psychologist Richard Wiseman, which found that not even one in four people “managed to stick to their resolutions.”

But we can learn from the minority who kept their resolutions. They “tended to have broken their goal into smaller steps.”  This echoes the advice of David Allen, author of the best seller Getting Things Done.

Those successful with resolutions also told friends about their resolutions and rewarded themselves when achieving goals, reported the Guardian. Economist Tyler Cowen offers an intriguing way to combine these practices. If you resolve to exercise, you can “post a bond with your friend, your spouse, your exercise partner, or someone you won’t (or can’t) lie to. You lose the money if you don’t exercise according to a pre-arranged plan with well-defined quantitative goals.” Cowen suggests that gyms can be the “enforcer” by collecting “a bigger upfront fee and they pay us each time we show up” and complete specified exercise program.

If this sounds far-fetched, consider the success of similar strategies for smokers who want to quit.  Known as contingency management programs, participants receive a reward when they stop smoking. Summarizing a study published this month, Local Tech Wire reports that “smokers will quit if rewards are right.”

This was published in the Boulder Daily Camera on January 1, 2011.

Men’s suits at 1910 prices! … In gold, not U.S. dollars.

A man’s suit costs about the same today as it did 100 years ago. Not in dollars, but gold.  For at least a century, an ounce of gold could buy you a quality man’s suit. In 1910 the suit would cost around $25, according to the Morris County historical prices survey. Today an ounce of gold is around $1,400, or a nice suit at Nordstrom.

Why tolerate our government’s monopoly on money? Money is a medium of exchange and a store of value. But our government produces inflation-prone fiat money. The Federal Reserve devalues your earnings by effectively printing more bills. The Fed also manipulates interest rates, which promotes economic booms and busts fueled by malinvestment. A million YouTube viewers learned this from the hilarious rap video, “Fear the Boom and Bust.”

Money wasn’t always like this. My 1935 dollar bill says “silver certificate” across the top and “One dollar in silver payable to the bearer on demand” under George Washington’s portrait.  A dollar was a unit of measure — a specific weight of gold or silver. A dollar was a certificate of deposit for a real commodity with stable value over time – independent of its use as money.

If you like fiat money like today’s U.S. dollar, fine. But that’s no reason to support its having a government-granted monopoly on money. Let dollars compete with other monies, such as those backed by previous metals, in a competitive market, as 2009′s Free Competition in Currency Act would allow.

The Boulder Daily Camera published this article on December 18, 2010.

Further reading:

• What Has Government Done to Our Money? by Murray N. Rothbard. Full text and excellent audio version (you can download the mp3s) on-line at Mises.org.
• “Is the Gold Standard Still the Gold Standard among Monetary Systems?” by Lawrence H. White, Cato Institute Briefing Paper, 2008.

Boulder Valley Comprehensive Plan: buy open space yourself, don’t tax others

If you want open space, buy it. Don’t tax others.

Billboards tarnish the Flatirons while houses climb the foothills to meet them. This is what “city planners believe the Flatirons could look like today if the city had not enacted restrictive land-use policies,” reported the Daily Camera. Boulder’s Department of Community Planning and Sustainability spent your tax dollars on such images to convince residents that only its authoritarian land-use restrictions can prevent such a dystopian scene.

Not so. For over a hundred years private land trusts have preserved open space — not with government force — but through voluntary cooperation and donations.  The Land Trust Alliance lists 34 local Colorado land trusts.  “Land trusts have protected over 1.57 million acres in Colorado, more than 80% of all conserved land,” reports the Colorado Coalition of Land Trusts. This is four times the acreage that local Colorado governments restrict through forced open space policies.

Leonard May of PLAN-Boulder County refers to those with a “philosophical objection to (government and) restrictions” to whom he “can’t explain” the benefits of open space. He ignores the difference between preserving open space through land trusts versus doing so through legal restrictions.

Land trusts depend on voluntary cooperation, taking responsibility for promoting one’s own values, and respecting the rights of others to pursue theirs. Compare this with government-enforced open space, which forces everyone, willing or not, to fund it. It’s elitist legislation that effectively excludes poor residents from town by propping up homeowners’ property values.

The Boulder Daily Camera printed this article on December 4, 2010.

For more on open spacing and planning, see the work of Randal O’Toole and R.J. Smith.

Photo credit: The Daily Camera article on the Boulder Valley Comprehensive Plan.

Monarch High, Monarchy, Bongs, & the Rule of Law

The Daily Camera asks its editorial advisory board about the controversy at Monarch High School in Colorado:

A controversy over school rules, leadership and parenting erupted at Monarch High after the Boulder Valley school board decision to reinstate a student [Dylan Quick] who had been removed from the student council. The board voted 5-2 to reverse a decision by the principal and supported by the superintendent to remove a senior as head boy of the Louisville school, after he had been caught with marijuana paraphernalia at the school. The student council constitution states that a head boy can’t be removed without first being impeached by the council, and the boy’s parents, including his father — the Adams County District Attorney — had complained that the rules were not followed. What do you think?

My response:

“Monarch High is not a monarchy!” protesters could have chanted. By superseding the Student Council Constitution, the principal resembles a monarch high on power. “The King is above the law,” England’s King James I proclaimed in 1598.

Carlos Gonzalez, MVP voting, & Ken Buck’s spoilers

Has the Rockies’ Carlos Gonzalez won the National League MVP award?  The public doesn’t know yet, but we know how the voting works. Baseball writers don’t vote for one player. Instead, they rank their top ten, with higher ranked votes worth more points than lower ranked votes.  The player who accumulates the most points wins.

This version of preference voting reflects the electorate’s preferences better than our government elections do. If your favorite candidate is not a top contender, voting for him might make him a “spoiler” and help put your least favorite candidate in office. Instead of supporting your favorite candidate, you may resign yourself to voting for the proverbial “lesser of two evil” top contenders.

Newly-elected Secretary of State Scott Gessler endorses a solution: range voting. It’s like preference voting, but you can award each candidate any number of points within a specified range.  A simple version of range voting called “approval voting.” Vote for as many candidates as you like. The one with the most votes wins.  In this year’s election, if you preferred the Libertarian most and Michael Bennet least, you could vote for the Libertarian, but also for Ken Buck to help defeat Bennet. Some Buck supporters blame non-leftist candidates for spoiling a Buck victory. Instead, they should blame elected Republicans for supporting our crude voting system that makes spoilers possible.

“The state legislature should allow home rule municipalities and counties to develop voting methods that meet their needs, including approval voting and range voting,” says Gessler’s website. Boulder’s political parties should consider collaborating to bring one of these methods to Boulder County.

A version of this article was printed in the Boulder Daily Camera on November 6 2010.

Thanks to Dale Sheldon-Hess for pointing out the difference between range voting and preference voting.  I was operating within a word limit and wrongly figured that the MVP-style voting was a type of range voting.

Daily Camera reports misleading statistics on Boulder County incomes

Last week the Daily Camera reported that median Boulder County household incomes had dropped “nearly 12 percent” since 1999.  But the Camera did not mention the less alarming news — that per capita incomes have increased over the same time period by 1.5 percent, adjusting for inflation.  This is according to two reports by the U.S. Bureau of Economic Analysis: “Personal Income for Metropolitan Areas for 2009” and “Local Area Personal Income , 1998-2000.”

This sounds strange, but household income figures can mislead. Higher per capita income can decrease household income.  As economist Thomas Sowell notes, “Increased real income per person enables more people to live in their own separate dwelling units, instead of with parents, roommates, or strangers in a rooming house.”

Per capita income statistics aren’t perfect, either. The city or county could pass more zoning laws that inflate housing prices. These exclude poor people, and hence per capita income increases.

If you want to more accurately compare 1999 with 2009 incomes, look at income mobility, which compares the same flesh-and-blood people each time. For example, the Tax Foundation reports that “nearly 60 percent of households in the bottom income quintile in 1999 were in a higher quintile in 2007.”

But income mobility doesn’t tell the whole story either, as it neglects the value of employee benefits. “Health insurance costs relative to payroll increased 34 percent between 1996 and 2005,” write economists from the RAND Corporation.

A version of this article was printed in the Daily Camera on October 2, 2010.

Thanks to Linda Gorman for the link to the RAND study.

For further reading, I recommend Thomas Sowell’s article “Income Confusion.” He discusses the issue in dept, including income inequality, in his book Economic Facts and Fallacies.

Tea Parties, GOP primaries, and elections

The Daily Camera printed my response to the following question in its September 18 edition:

Looking to fall, the Tea Party — though loosely defined and with no official structure or leadership — will play a major role in the November elections, having sealed up several important primaries. But some Democrats have chosen to see Tea Party victories as their own, saying that the Republican Party will be the one that suffers as the newly excited, more conservative base siphons votes from the establishment. What do you think?

My response:

Who cares if elections hurt political parties? What matters is how well winning candidates represent voters’ preferences.  But Democrats and Republicans cooperate to support our lousy voting system at our expense. Known as “simple plurality voting,” it shields the two major parties from third-party competition. Like all government barriers to competition, this degrades product quality. In elections, the degraded products are the candidates.

In our elections the winning candidate need only be the proverbial “lesser of two evils.” Because of vote-splitting, he need not best represent the preferences of the voters. For example, even if more voters prefer either Dan Maes or Tom Tancredo to John Hickenlooper, Hickenlooper’s victory is ensured if the other two split the vote.

The “Tea Party victories” in primaries also show problems with simple plurality voting. Voters who prefer either the “Tea Party candidate” or the establishment Republican may combine to exceed those who prefer the Democrat. But the Democrat need only defeat the Tea Party candidate.

Here’s a simple way to run elections that both avoids these problems and chooses candidates that better represent voters. First, repeal or liberalize ballot access restrictions. Government should not keep candidates off ballots. Second, use “approval voting,” which means you can vote for as many candidates as you want. Whoever gets the most votes wins.

For example, you could vote for both Tancredo and Maes. No spoiler effect. No vote splitting. No in-fighting.  And compared to instant runoff voting, approval voting is simpler and does not punish popular second-choice candidates.

* * *

There’s some debate about which is system is better: approval voting or instant-runoff voting (IRV).  Last month I endorsed instant runoff, thinking that the range voting was the only better, but prohibitively complicated, alternative. But approval voting is the simplest form of range voting: you give a candidate either a “1″ or “0″ instead of more discretized range, e.g., 1, 2, or 3.

A couple of articles about IRV vs. approval voting are:

Approval Voting vs. Instant Runoff Voting, FairVote.org (groups favors IRV)
Range and approval voting vs. IRV, by “Maikeru,” which links to an article at RangeVoting.org about how instant-runoff can promote 2-party domination.

I haven’t read this book, but have heard good things about it: Gaming the Vote:  Why Elections Aren’t Fair (and What We Can Do About It), by William Poundstone.