Monday, September 14, 2015

Public unions have created a financial debacle

States such as Illinois, California, New York are on a separate path from the rest of the United States. They are experimenting with the liberal tropes that government union jobs make for a strong middle class, that higher taxes are noble and have no negative consequences, and that the successful should pay for the generous benefits lavished by the state on the ordinary.

Will the last successful person in each state please turn out the lights on the way to Texas?

California's reliance on a small group of taxpayers to subsidize chronic overspending creates wild fluctuations in government collections. When one-time events like Facebook's IPO occur, it fools politicians into believing that the resulting revenues are continuous, so they build in baseline spending assuming that.

Behind them are the public service unions that really run California, pushing for perpetually higher salaries, benefits, and pensions for their members.

When market cycles reduce IPOs, revenue collections inevitably fall, yet the spending remains. California then borrows to cover the shortfall, because reducing union-driven spending is impossible in California's leftist paradise.

Silicon Valley's companies may be liberal and willing to pay higher taxes, but many of their employees are not. California is shedding talented people at an accelerating rate. California's policies are killing the goose the lays the golden egg.

Think of the purpose of unions back when the industrial age in America took hold. Union representation enforced private businesses to refrain from worker abuse, unsafe practices, unfair wages, discrimination, etc. – all well and good.

Fast forward to the unions of today.

Union representation in private business isn't really needed with competitive capitalism and the amount of oversight given by regulations and the newsy world we live in. In fact, private business unions are shrinking.

However, that isn't the case for the unions that have worked their way into government contracts. They do not belong in government contracts in the first place because the reasons for union representation do not exist in state or federal government jobs (i.e., job safety issues, discrimination, worker abuse, etc.) like they did in the manufacturing sector of private business.

Instead, these unions exist to squeeze state governments for every bit of money and benefits they can get, realizing that state governments keep going to the well and tax higher for it, and in the case of the federal government, tax higher or print more money for it.

Don't believe me? What do these unions fight for continuously? It's collective bargaining and retirement and health benefits -- almost exclusively. When did you recently (if ever) hear about unsafe working conditions or discrimination issues?

Unions know they can sink a private business on profitability, but they don't see government as having that problem since they don't have to make a profit, only balance a budget (except for the federal gov't it seems). To unions, government contracts are endless cash cows.

Meanwhile, it has turned into a big business unto itself, complete with huge amounts of power among big union bosses gobbling up insane salaries and benefits with the dues paid by members. Where we are now is that their greed has created a dilemma – either we continue down this road to maim or kill the golden goose or pull back.

The ignorant union workers do the bidding of their union bosses, becoming ugly and abusive as they fear loss of their ever-growing entitlements. Something has to give. It's either pull back and survive or face drastic benefit losses. The end of the road is at hand. It won’t be easy though because the union members have subscribed to greed in a big way, and like a crack addict, there's no cutting back.

Public unions have created this financial debacle throughout the land with states like Illinois, California, Wisconsin, New York, Michigan, and Massachusetts all saddled with unfunded pension and health care liabilities.

Of course, the liberal's answer to this lack of revenue is to tax everyone higher, typically through property taxes and even sales taxes. This is a clear example of redistribution except it requires the many non-state government personnel to fund the fewer union members, both working and retired.

Ultimately, by virtue of state governments yielding to union pressures, states either have to cut services or increase taxes or both – or else go bankrupt when that limit is reached and then file for U.S. federal aid.

In the meantime, businesses are being crushed with higher operating costs than those businesses in right to work states. Can you really blame businesses for wanting to relocate to more friendly business environments?

There will be those that defend the unions, most likely because they are one of the recipients of these more often than not lavish benefits. What they also fail to realize is that they're killing the golden goose and ultimately pricing themselves out of the competitive range of not only other states, but the world economy.

States that do not take serious action to curb this runaway debt, will see a large outflow of its citizens to other states. The few that remain will have to bear the brunt of it all while the union pensioners have retired to Florida or some other cost-friendly state without a care in the world and knowing they gilded the lily.

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