Racing Downhill

More bad news for most of us this week, with a federal judge ruling that Detroit can go into bankruptcy and cut pensions, Illinois legislators voting on a bill to cut pensions there, another judge ruling that employers can force employees to arbitrate and not have an option of class action suits.

I have a deeply ambivalent relationship to public employee unions.  While I believe very strongly in the right to form a union and collectively bargain, public employee unions have much better luck gaming the system by making contributions to the politicians who then determine how much money to give the union workers.  In the private sector, an independent labor union can't game the system, at least not this way.  In the private sector too often the interests of my representative are more aligned with the unions than the public purse.

But that said, the attack on benefits that were won in negotiations reflects a distressing tendency in public life these days, which is to solve your problems by making everyone else as miserable as you are.  Your employer's dumped your pension in favor of some 401-K?  Well, you can't get your 401-K back but you can cheer on as someone else's pension gets dumped too!  Yay!  Win!

Sorry, it's not.

If you think it is, you might enjoy reading this Rolling Stone article about how we're "saving" pensions by giving money to Wall Street.

So in Detroit, a lot of not very rich people, many of whom are still living in Detroit, are going to see their retirement income cut, which will reduce what they can spend, which will reduce the economy in Detroit, which is going to save Detroit.  For the most part, these people aren't the people who made any of the decisions on what contract terms to agree to, on how to fund pensions, they're innocent bystanders who are going to be hurt.

While states and localities across the country are cutting back pensions left and right, they are engaged in madcap competitions to give Boeing hundreds of millions of dollars in tax breaks and other incentives to encourage them to locate an assembly line for a new version of the 777 in their state.  Boeing makes billions of dollars, and it wasn't enough to have the State of Washington give billions of dollars in tax breaks if the unions for the skilled workers who build the planes didn't agree to share in the "sacrifice" of these billions of dollars in profits and tax breaks for the company by agreeing to givebacks.

Hunger Games: Catching Fire has taken in hundreds of millions of dollars in global box office and will make huge profits for Lionsgate.  It filmed in Georgia to take advantage of tax breaks, and again, states and localities across the country are engaged in this race to give huge film companies that are part of major media conglomerates tax breaks to entice productions from one state to another.

Can people see the problem here?  Even as we silently cheer or to too little to protest attacks on the working men and women of this country, we also cheer when our states take the money they're saving and give it to very rich companies in pursuit of a zero sum game of taking business from one state or locality to another.

I'm not even sure, at the end of the day, that these kinds of tax breaks do very much for the states and localities that give them.  Oh, they can find statistics that say that the film tax breaks are worth their weight in gold, but you know what they say about statistics.  Against that, there's this icky feeling that the only way you can get business is to bribe it to come your way.  There's this icky feeling, or at least there should be, in supporting companies that don't really support you, that feel they're entitled to take government money, screw workers as much as they can, in pursuit of the almighty buck.

And as with too many policies supported by corporations, it's kind of short-sighted.  Take Walmart.  Walmart is kind of getting creamed by a lot of government policies.  Food stamp cuts take money out of the hands of Walmart shoppers, and thus out of the hands of Walmart.  If Walmart paid its employees more, a lot of money would come right back into Walmart stores.  If this were to happen as a result of an increase in the minimum wage that would force Walmart competitors to pay more as well, it wouldn't disadvantage Walmart, because Target and even Amazon which still needs warehouse workers would face the same labor cost pressures as Walmart.  But Walmart does everything it can to keep downtrodden employees downtrodden.  It threatens to pick up its toys if cities talk about raising their minimum wage or passing living wage laws (some of those do target Walmart, but if Walmart would advocate for a global increase in the minimum wage it would face less targeted living wage legislation).  Even as it downgrades its earnings forecast because people don't have money to spend, it won't help give people more spending money.

For a competing perspective, enjoy this article somebody tweeted out to us several weeks ago from investors.com, which rails against how we are becoming dependent on government largesse.  108M+ people on means-tested government welfare programs, 101M+ people with full-time jobs.

It ignores a few basic facts.  Minimum wage is under $8.  8x35x52 -- that's under $15K for a full-time employee.  When I grew up and looked behind the counter at Burger King, I saw a lot of people my age.  That was over 30 years ago.  Now, the people at Burger King and Walmart aren't teenagers working for gas money.  They're people trying to support a family on $15K a year, unless they have two jobs or have two incomes or something like that.  How can you possibly do that?  How are you going to help these people by cutting food stamps?  And did you know that over half of personal bankruptcies are caused by medical expenses?  Most jobs that pay $8 an hour don't, pre Obama-care, come with good health insurance.  You can't buy your own when you're making $15K a year.   I'm lucky; I make enough money that I'm now seeing my take-home take a four-figure annual drop because of Affordable Care Act taxes.  Unlike most people, I don't think my income benefits by making life worse for other people.  My income benefits when people have money to buy books, when they have money to go to college and get educated because educated people buy more books, when they have time to spend with their kids talking to them and working with them on homework and reading too them rather than rushing from one bad job to another because a single minimum wage job isn't enough, not able to afford good child care and hoping the car doesn't break down and that everyone in the family stays super healthy.