Morning Bell: The Ugly Face of Progressive Corporatism-"Just two days ago, Illinois Gov. Rod Blagojevich (D) stood with about 240 union members inside the shuttered factory of Republic Doors and Windows. The company had closed the factory before providing its 240 workers their due severance pay and accrued vacation time. Blagojevich was determined to bring the full power of the governor’s office to bear to make sure the union members got paid. Blagojevich threatened to stop the state of Illinois from doing all business with Republic’s creditor, Bank of America, if it did not help the laid-off workers at Republic. Yesterday, after Blagojevich was arrested on charges of conspiracy to commit fraud and solicitation to commit bribery, the nation discovered that Blagojevich’s threats not only fit his well-established pattern of behavior, but also exposed the inherently corrupting influence of organized labor. Blagojevich’s links to organized labor are long-standing and deep. According to the Center for Responsive Politics, when Blagojevich last raised money as a congressman, three out of his top five donors were organized labor groups, and combining unions from all sectors, no industry gave more to Blagojevich than labor did. The Chicago Tribune reports that as governor, organized labor was “his strongest political supporter.”
During his first year in office, Blagojevich helped pass ethics legislation adding new inspectors to investigate corruption, restricting gifts from lobbyists and limiting taxpayer-funded public service announcements that feature politicians. But Blagojevich’s arrest yesterday exposed all these efforts as a fraud. According to reports about the complaint filed against him:
"[Blagojevich] discussed the possibility of trying to get [President-elect Barack] Obama to get his wife appointed to a corporate board that paid a substantial salary or working out a deal where Blagojevich would obtain a high-paid position with a political action group affiliated with the Service Employees International Union. Prosecutors also allege Blagojevich threatened to withhold $100 million in state assistance for the financing or sale of Wrigley Field if the team’s owner, the Tribune Co., didn’t fire members of the Chicago Tribune’s editorial board who had been critical of Blagojevich."
Unfortunately, this shakedown mentality is all too common to the Service Employees International Union’s way of doing business. A Democratic source confirms that SEIU President Andy Stern is the “SEIU official” referred to in the federal complaint against Blagojevich. Since taking his union out of the AFL-CIO and forming the Change to Win federation in 2005, Stern has sought to assert his union’s influence over private equity firms, centralize his authority within the union by forcing various locals to merge, and negotiate large deals with employers without member participation.
All of this union-related corruption comes at a crucial point in U.S. public policy. Organized labor has a tall wish list for Obama’s administration, including the abolition of secret ballot voting in union organizing elections and ensuring that as much of the $1 trillion Obama plans to spend to stimulate the economy goes to Davis-Bacon compliant jobs. Our economy simply cannot afford organized labor’s priorities to be placed above strong economic growth."
Interesting comments from Jill Stanek at http://www.jillstanek.com/ concerning this Governor at: Breaking news: Blagojevich arrested-"Chicago Rep. Jesse Jackson Jr., D-IL, is the anonymous "Senate Candidate No. 5" whose emissaries IL Gov. Rod Blagojevich reportedly offered up to $1 million to name him to the U.S. Senate, federal law enforcement sources tell ABC News."..."Word is Congressman Jesse Jackson, Jr., is "Senate Candidate No. 5" named in the indictment against Blagojevich. If true, he's going down, too. He also is a rabid pro-abort who was 1 of only 15 congresspersons to vote against Born Alive in 2000"
Chicago Corruption Seen As ‘Cautionary Tale’ on Government Intervention-"With the government injecting itself into more and more private businesses, beware of more Chicago-style corruption, some conservatives are warning."
Auto bailout really bailout for Labor Union Costs?
Are Autoworkers Really Making $73 an Hour? No, Says UAW & NYT...-Are Big Three autoworkers really making over $70 an hour? Economics writer David Leonhardt, who on August 24, argued in a Times magazine cover story that candidate Barack Obama looked like "a fiscal conservative," strenuously argued the UAW and liberal line No Way in Wednesday's front-page "Economic Scene" column, "$73 an Hour for Autoworkers And How It Really Adds Up."
Leonhardt was picking up on a theme that's being pushed hard by Media Matters in defense of the United Automobile Workers against sets of figures complied by the automakers now pushing for a bailout from Congress. The Big Three as well as Wall St. analysts have figures that put the average compensation for a Big Three autoworker at a staggering $73 an hour (amounting to around $150,000 a year).
Seventy-three dollars an hour.
That figure -- repeated on television and in newspapers as the average pay of a Big Three autoworker -- has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that’s wrong with bloated car companies and their entitled workers.
To the Big Three’s defenders, meanwhile, the number has become proof positive that autoworkers are being unfairly blamed for Detroit’s decline. “We’ve heard this garbage about 73 bucks an hour,” Senator Bob Casey, a Pennsylvania Democrat, said last week. “It’s a total lie. I think some people have perpetrated that deliberately, in a calculated way, to mislead the American people about what we’re doing here.”
So what is the reality behind the number? Detroit’s defenders are right that the number is basically wrong. Big Three workers aren’t making anything close to $73 an hour (which would translate to about $150,000 a year).
....
The calculations show, accurately enough, that for every hour a unionized worker puts in, one of the Big Three really does spend about $73 on compensation. So the number isn’t made up. But it is the combination of three very different categories.
The first category is simply cash payments, which is what many people imagine when they hear the word “compensation.” It includes wages, overtime and vacation pay, and comes to about $40 an hour. (The numbers vary a bit by company and year. That’s why $73 is sometimes $70 or $77.)
The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck. At the Big Three, the benefits amount to $15 an hour or so.
Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour. It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits.
The third category is the cost of benefits for retirees . These are essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix -- dividing those costs by the total hours of the current work force, to get a figure of $15 or so -- and end up at roughly $70 an hour.
The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. The Big Three built up a huge pool of retirees long before Honda and Toyota opened plants in this country.
But blogger and Cornell associate law professor William Jacobson cited a Heritage Foundation report to show Leonhardt was being misleading. Jacobson wrote:
The Times claims that retiree benefits (equal to about $15 per hour for each current worker) shouldn't be counted in the cost per worker statistic, because Detroit automakers have so many more retirees.The Times is being intellectually dishonest. First, retiree benefits are part of the UAW-negotiated contract. Second, the stated cost per worker of $73 per hour includes only anticipated retiree benefits for current workers, it does not include what is paid for retired workers.So $73 per hour really does equal $73 per hour."
UAW Workers Actually Cost the Big Three Automakers $70 an Hour-"
More on the Economy
Government Spending Is Never the Answer-"A Christian Science Monitor article this morning argues that Roosevelt didn’t spend enough to jolt economy into recovery. Only when spending skyrocketed for World War Two did the economy recover (unemployment finally dropped, of course this was because everyone was mobilized either as soldier or to support the war effort – creating things which were then destroyed in fighting the war). The Article claims that “One big reason is that President Roosevelt didn’t spend enough to really boost the economy, historians say.”
Notice, that it isn’t economists that argued that the programs should have been bigger in order to boost the economy, but historians. This is like getting a philosopher’s opinion on astrophysics. It’s nice, but it shouldn’t be taken as expert.
The article goes on to point out that many economists do think that government spending can stimulate an economy. So, let’s examine this argument a little more closely. After 1929 and before World War Two, federal expenditures tripled as a percent of Gross Domestic Product. If we tripled federal expenditures as a percentage of GDP today, that would mean an additional 8.2 trillion dollars in government spending each year. That is because federal expenditures are already 20 percent of GDP.
Perhaps we don’t have to also triple the government’s role to have the same “stimulus” as Roosevelt. One might argue it is the amount of spending as a percentage of the economy that matters. Roosevelt added about seven percentage points overall of additional annual federal spending (bringing spending from about 3 percent of GDP to about 10 percent).
An additional seven percentage points of GDP today constitutes an additional $1 trillion per year. This is a lot less than 8.2 trillion, but it is still nothing to sneeze at. Yet, are we not already pouring in this much to the financial bailouts? This is the same amount of additional government spending already – hence the need for journalists to argue that FDR’s additional spending wasn’t enough.
The problem is that government spending will never be enough to stimulate the economy. Just think about it this way. We have GDP of about $42,000 per capita. The federal government spends about 20% of GDP. In England, government spends about 45 percent of GDP and GDP per capita is about $33,000. In Sweden, the government spends about 50 percent of GDP and GDP is only $32,000 per capita. In France, it is 53% and $30,000. As we all know, in countries where government spends approximately 100 percent of GDP hardly any output or value is created. This insight formed the basis for such respected indices as the Index of Economic Freedom.
So, the idea that injecting a jolt into the economy by having government spend more as a percent of GDP is highly suspect. If what Roosevelt spent was not enough – despite tripling the government expenditures at the time – we should wonder whether any amount will ever be enough."
