Conventional Meaninglessness

By James Kwak

David Brooks may be a wonderful person, but I don’t like his columns (and I didn’t like Bobos in Paradise, either). It’s hard to put my finger on why, but he helped me out with yesterday’s column. For one thing, he has this annoying habit of trying to claim the reasonable center, often by making false equivalences between the two things he is trying to sound more reasonable than. So, for example:

“No place is hotter than Wisconsin. The leaders there have done everything possible to maximize conflict. Gov. Scott Walker, a Republican, demanded cuts only from people in the other party. The public sector unions and their allies immediately flew into a rage, comparing Walker to Hitler, Mussolini and Mubarak.”

Comparing the other side to Hitler is bad.* Pushing for legislation that hurts the other side is something else. In the abstract, that legislation may be justified; Walker did just win an election, after all. But it’s a completely different category from making stupid signs to hold at rallies, and it’s a classic David Brooks false equivalence.

But that’s just a minor peeve. It’s when Brooks adopts his pseudo-reasoned “everybody knows” tone that I get really mad.

“Everybody now seems to agree that Governor Walker was right to ask state workers to pay more for their benefits. Even if he gets everything he asks for, Wisconsin state workers would still be contributing less to their benefits than the average state worker nationwide and would be contributing far, far less than private sector workers.”

Brooks is trying to make you believe that “everyone agrees” that state workers should pay more because they don’t contribute enough toward their benefits. This is an important predicate if you want to make the case for slashing public sector benefits. But first of all, by “everyone,” Brooks seems to mean “whoever writes talking points for Paul Ryan,” who said, “State workers who have extremely generous benefits packages, [Walker’s] asking that they contribute 12 percent to their health care packages. It’s not a lot, it’s about half of what private-sector employees pay, and he’s getting riots.”

More importantly, though, I have no idea what Brooks’s (or Ryan’s) claim — that public sector workers pay less for their benefits than private sector workers — could even mean.

How much do you “contribute” to your benefits? Let’s say you work in the public sector and have a $60,000 base salary. You also have a health care plan that is worth $12,000, of which you contribute $3,000, so you end up with a post-benefit salary of $57,000 and a health care plan worth $12,000 for a total value of $69,000. Compare that to your sister in the private sector who has an $80,000 base salary but has to pay half the cost of her equivalent health plan. So she has a post-benefit salary of $74,000 plus a $12,000 health care plan for a total value of $86,000. You “contribute less to your benefits,” but your sister is much better off.

The idea that you can compare the amount that people contribute toward their benefits is based on the assumption that first everyone in the world bargains for salary and then everyone in the world bargains separately for benefits. That’s nonsense. Insofar as there is any bargaining, there’s only one bargaining phase, in which you bargain for both and all you care about is the total value. The amount you nominally “contribute” to your benefits is meaningless, because you also pay for benefits by accepting a lower salary. A lot of the pain over restructuring retirement benefits for unionized manufacturing workers was because their unions had specifically negotiated for those benefits instead of wage increases decades before — and management went along because it wanted to push those costs far into the future.**

So the only meaningful thing to look at when comparing public and private sector workers is total compensation. By educational level, this is what that comparison looks like:

The chart is from Menzie Chinn, based on data from a briefing paper by Jeffrey Keefe.*** At every level except “less than high school,” private sector workers make more than public sector workers. Furthermore, if you control for full-time status, education, years of economic experience, gender, race, citizenship, and organizational size, it turns out that public sector workers make about 5 percent less per hour than private sector workers.

Now, they may be getting something in exchange for taking less money: more job security, less stress, whatever. So I’m not claiming here that they are underpaid. I’m just saying that claims based on the amount that people “contribute” toward their benefits are meaningless. I’m not surprised that politicians like Paul Ryan make those claims. I’m not particularly surprised that David Brooks repeats them, either. I just wish he would stop.

Update: I agree that trying to measure whether public sector workers are overpaid or underpaid is difficult. You can always say that Keefe should have added more controls and would have gotten a different result. But the main nonsense I wanted to focus on is this idea that your nominal contribution to your benefits is a meaningful number at all.

* “‘Scott Walker’ Hitler” returns 400,000 results; “‘Barack Obama’ Hitler” returns 20.3 million results.

** This was before ERISA, which introduced more stringent rules for funding pension plans.

*** In case you’re wondering how public sector workers in aggregate can make more than private sector workers, even though private sector workers make more in every educational category except “less than high school,” it’s because public sector workers in aggregate are more educated than private sector workers.

113 thoughts on “Conventional Meaninglessness

  1. “Collective bargaining rights” for some, but not for others”….

    privatize the profits, socialize the losses…

    Paulsen’s speech – sign these 12 pages allowing us to do anything we want – THAT was not “collective bargaining rights”? What was that? Okay, more of a stick-up…put the money in this bag, or else…

    But they did the “or else” anyway, right?

    And if some people ask, “who are we without a land of our own?” as a bargaining right – “collectively”

    and then leverage 60 times over the value – of what it is up to now, half of single family homes “foreclosed” and empty in USA (and 30% real unemployment?)

    in order to get the fiat $$$$ to figure out who they are

    then, gee, what do you think the people thrown out of THEIR “land” are gonna do…?

  2. James – I’m having a brain fart here – did you mean the opposite of what you wrote in your third asterisk footnote? that public sector workers in aggregate are LESS educated than private sector workers? (after all, in the less educated category, they earn more, which would explain why the “All” category is slightly tilted toward public?)

  3. Oh, James, I have been just wishing David Brooks would stop ever since the first time I read one of his columns. Excellent post.

  4. @Carla

    Sigh … just heard the Economist magazine ranked Vancouver, BC, the most livable city in the world for the fifth year in a row. Ranked first among 140 cities. That part is nice. I live here so there are things I take for granted. I guess it’s human nature that explains the volume of complaints here.

    The thing I find worrisome is BC Hydro (one of the greatest hydro electric utilities in the world) is being incrementally privatized. Our corporate tax rate is lower than in the U.S. and the plan is to reduce it further to 15%. Then there is the claim our universal health care system is unsustainable and underfunded. No wonder.

    Off topic, just debriefing. Thanks.

  5. So the public sector unions are taking a big hit because of budget problems in Wisconsin. This is the state government the majority voted for.

    Has an economist examined how and if Wisconsin’s financial woes are linked to the 2008 financial crisis? Certainly, it did not help.

  6. I have long felt the same way about Brooks. He is an apologist who tries to pass himself off as a right-of-center moderate. It’s a business model that gets him gigs with the NYT, NPR, and Jim Lehrer. It’s pretty easy to see right through his BS.

  7. Almost one out of every 5 letter carriers in America has a college degree.

    Any economist should know that cost are sunk, and that you don’t pay for input factors based on how expensive they were to create at some time in the past.

    Controlling for “education” is absurd from the economic point of view.

    Perhaps you don’t have college degree yourself or you never studied econ 101.

  8. @Rich S

    I’ve heard engineers know everything about nothing and architects know know nothing about everything :)

    perhaps it might help if some of the guys at your office went to Florence for a summer, or tried reading Alexander Dumas pere in translation … just kidding

  9. James,

    Thanks for including the link to Keefe’s paper. I’ve seen a lot of claims in various places about the relative compensation of public and private sector workers–yours is the first I’ve found that gives some references.

    I’m wondering if you, or any of this blog’s readers, has references about this issue that go beyond Wisconsin. I’d be interested in seeing some actual data about some of the big states, or, better, national data.

    The point you make about total compensation doesn’t quite ring true to me. Given a choice between two jobs with the same total compensation, one of which gave me a more generous health care plan and less salary, and the other the reverse, I would almost always choose the one with more salary. The most “valuable” health care plans just provide extra coverage for first dollar expenditures, and sometimes provide frill coverage for unnecessary services. As a person who makes every effort to minimize my utilization of health care, I’d prefer a bare bones policy that stops me from getting wiped out if I get really sick and has lower premiums. So it isn’t just about total compensation. Of course, different people will have different value judgments about this trade-off between salary and benefits, and it may be that in population terms, dollar value of total compensation is a reasonable proxy for the total utility of the compensation package.

  10. Privatize the profits, alright.
    The union busting by Walker and co. is a smokescreen for this easter egg in the bill:

    ” 16.896 Sale or contractual operation of state−owned heating, cooling, and power plants. (1) Notwithstanding ss. 13.48 (14) (am) and 16.705 (1), the department may sell any state−owned heating, cooling, and power plant or may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state. Notwithstanding ss. 196.49 and 196.80, no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project under s. 196.49 (3) (b).”

    Click to access JR1SB-11.pdf

    And yes, the Koch’s were very high on Walker’s list of contributors. I’m sure that’s coincidental.

    I wonder what else is in the similar bills in other States…

    If the goal was to strong-arm unions into giving concessions, then it’s hard bargaining. But this easter egg authorizing a no bid, no oversight fire sale of public assets, to campaign contributors or not, is exactly the same problem as Washington + Wall Street – a wealth transfer from the public to private, from the people to the oligarchs. For this reason alone the sponsors of this legislation should be reviled by all of us peons whether or not we approve of unions.

  11. Personally, I take time off vs. more money. I enjoy my work, but it is work.
    So is time off counted w/ other benefits?

  12. Would be interested in link for the paper if you could please provide the same.
    One of the crucial aspects while discussing compensation is on pension benefits and how are you calculating the future benefits current value especially for DB (Defined Benefits) versus DC (Defined Contribution). And has actuaries view of the same has been taken?

  13. If you need some more reasons to despise brooks, see (Taibbi’s) (where Taibbi responds to a column by Brooks in which the latter basically says that the Haitians brought their disaster upon themselves) and (responding to a post in which Brooks argues that the rich are not being recognized for the fact that they ‘also have to work hard’)

  14. The nominal discount rate for most State funds is 8%, , which is completely irrealistic.

    Warren Buffet states 6.5% over the long term would be a good performance FOR HIM, and State pensions trustees ain’t Warren Buffet.

    If one need 100 to cover a 15 year liability with a discount rate of 8%, one needs 160 to cover the same liability with a discount rate of 4.6% (current rate one T-bonds of that maturity).
    For Wisconsin, it could be worse because the Assets are leveraged, but hey, it is “Head” ensioners win, “Tail” taxpayers loose !

    Note that the private sector is not much more realistic (the average private company trustee think that it is “only” equal to Warren Buffet, not superior). Additionally it is federally backstopped only for a fraction of its liabilities if returns are insufficient (through the PBGC), so a dollar in the future promised by a private plan should be worth less than a dollar in the future promised by a State. It is the contrary today, by a large margin.

    As long as this garantee will not be properly accounted and valued for, there will be mutual resentment from both side of the public/private fence.

    Nobody wants to see the truth regarding pension liabilities, just as nobody wants to see the truth regarding banks balance sheets…
    The latter is to protect banker’s pay, the former is to protect (eldest) pensionners cheques.

  15. The thing that ticked me about Brooks’ column was this bit, “Whatever you might say about Walker, he and the Republican majorities in Wisconsin were elected, and they are doing exactly what they told voters they would do.”

    Really? Did Walker run on a platform of ending collecting bargaining rights? I haven’t heard that one yet.

    Great graph James, thanks for sharing it.

  16. the light bulb just went on.

    Because K-12 education is such a large part of state budgets, what people are really complaining about is that we hire educated people to teach our young.

    Eyeballing the graph above we could save about 30% just by using high school educated educators instead of those elite master degree folk.

  17. well, New Jersey is next, ask former Governor Whitman why she ran out of Bush’s White House with her hair on fire (enronistas wanted IN to her electricity business)

    but NJ now has Governor Jabba The Hut with Princess Snookie on a Leash – let the hardball $$$ talk begin – man is it going to get ugly in NJ…

  18. James,

    There is more than one issue here:

    1. It appears that the governor believes that collective bargaining is more expensive to the state than an alternative (what?). That is not proven and it may well be affecting the freedom to organize, a fundamental right, even in the US. But, if no collective bargaining is legislated for Wisconsin gvt employees, maybe they should challenge that, or adjust their negotiating strategy towards bargaining stealthily. I do not know how far removed from organized crime Wisconsin public sector unions are (I would guess very far) so that should not be a reason to fight the influence of unions. There is plenty of evidence that non-criminal unions have many beneficial effects, and not only for their own members.

    2. Existing rights. As you imply, past bargaining has created quasi property rights. Contracts must be honored, even if a new administration does not like it. Rule of Law, right?

    Mind you, I am consider myself a libertarian, and from that perspective, people, also state employees, have a right to get the best deal they can get. Of course, if they have no rights and no bargaining power, that would be too bad for them.

  19. You have a situtation though where the only people left in town soon, are the ones who are owed pensions and the ones who are to poor to leave and therefore to poor to pay. This bunch eventually cries foul and the State/Fed steps in to compensate in the name of future revenues. Revenues that IL planned for 10 years ago and didn’t materialize were simply paid for by another bond drive, and then those were bolstered by the 2008 crisis. The exact same problems have cropped up again in many States and the same answers are wanting to be applied. When confronted with even thinking about balancing ones budget the perps run out of town, wanting the others to have time to think about what it is they are asking or demanding (as much time as they need to see things our way attitude). But these folks are rookies in deed, and in greed, and they won’t give up any rights when it comes to their own money and power. Trust me, I’ve been there before, and maybe things need to get ugly before folks will see the light of day.

  20. At every level except “less than high school,” private sector workers make more than public sector workers.

    Broadly speaking, yes. However, if you look at the total compensation of elementary and secondary school teachers, you will find that the public-private discrepancy is reversed. Public schools frequently lure excellent teachers away from private schools because of the large gap in compensation.

    Theachers unions are the exception to any “rule” regarding the benefits of public-sector unions.

  21. There is plenty of evidence that non-criminal unions have many beneficial effects, and not only for their own members……You have the same not proven problem as mention above, you can’t prove they are non-criminal behind the scenes, same as the Masons operate under they guise, you can’t prove it was us cause you were not there. Works good for rich, might as well apply it to eveyone.

    And like wise if the unions abused there position in the past, inorder to get today beefy benifits, and beef up the bennies of the CEO’s, they should want to carry on that policy so their offspring can enjoy the same situtation, anyone who diagrees, that would be too bad for them.

  22. I don’t believe Kwak made the argument that the cost of education justified paying more for college educated workers. It’s cute that you tried to impose that argument on him, but it’s not the argument he made.

    The “government” category includes lots of teachers, for whom education is pretty clearly a necessity, since they are expected to produce education. Government hires lots of administrators, who need to understand accounting, law, and stuff like that, all of which commands higher pay in the private sector than the skills acquired in high school. The higher level of education among public sector workers represents the skills that are needed for the jobs in many cases, not just checking a box to get paid more.

  23. This is not about Wisconsin’s budget.

    If Governor Walker was really concerned about the Wisconsin budget then why would he cut taxes of approx 100 to 140 million on business and the rich? Why does the legislation eliminating collective bargaining contain a clause giving away public assets and public contracts with no bid sales and contracts? Where are those deficit hawks? Where is the shared sacrifice? Where are those decry the wasting of the public purse? Why attack a public pension plan that is among the most solvent in the nation?

    Anyone serious about a deficit will look at both sides of the balance sheet, revenue and expenditures.

    How do you create jobs by eliminating jobs? No wonder the Madison WI Chamber of Commerce is supporting the protesters. They understand what Mr. Walker and Mr. Brooks fail to see, each public sector job supports other jobs in the economy because the government workers spend their earnings in the real economy. Those spending’s have a real impact on local businesses. Without spending in a consumer based economy with a GDP based primarily on consumption (70%) the economy goes into recession or depression.

    Mr. Walker and Mr. Brooks should step away from their ideological blinders and look at the real economy. Next they should be honest about the real purpose of their policies which have nothing to do with the budget of Wisconsin and everything to do with destroying the democratic base. Too bad the Democrats do not understand what is really going on.

    The Republicans and their policies must be held accountable for their results. According to some, Christi has lost over 30,000 jobs. The clock is ticking, where are the JOBS?

  24. Some of these guys would only go to a foreign country if it was for the purpose of dropping cluster bombs.

  25. The union has agreed to make concessions in an effort to help with the budget crisis. I don’t understand why they must give up their right to collective bargaining.

    I wish Brooks had included references for his statements. MOST people in the private sector have no idea what their benefits actually cost their company to provide. And many people think the cost of a doctor’s visit is equal to the cost of the copay.

    I’d like to know why Brooks thinks people in the private sector pay more for their benefits than public employees. Where is that data? Or is he just applying the broad brushstrokes of his ideology to the debate?

    I recognize that state governments have long been overspending (especially in my home state of Illinois.) But I’d like to know how much of the state budget problems can be linked to falling tax revenues, thanks to the recession, high unemployment and crashed real estate market.

  26. Not only that, but before he proposed destroying the union Walker signed a budget-busting tax cut. . . for the wealthy, of course. So now he’s asking working people to pay for that favor. He created a problem and is making others suffer for it.

  27. I realize this post isn’t exclusively about Christie but Walker is really in the same mold. What is being missed in all the budget cut lauding are the future results. It’s not hard to slash a budget, especially when you have national election aspirations and don’t have to live with your decisions in your own state. But what will be the results, what will happen to New Jersey’s crime rate, it’s education level, it’s teen preganacy and infant mortality rates. In Wisconsin, what will the unemployment rate be vs. Illinois, Minnesota and Michigan over the next few years?

    Welcome to Third World America, just hope you’re on the Oli side of the Oligarchy.

  28. I always disliked David Brooks’ columns too. He may be a great guy (Pol Pot was fond of children), but he never lets the facts get in the way of a whole-hearted endorsement of whatever right wing agenda item is is up for discussion.

  29. Brooks redefines the question so that the answer he wants looks reasonable. His style is that of a kid pretending to be a grownup. Although I am impressed at his unwavering ability to write boring columns. Pre-Brooks, I didn’t know nostalgia for William Safire was possible.

  30. Nor aure why the Times hires someone who can’t count. If everbody agrees and I don’t then everybody doesn’t agree. He kills too many trees for any good he does. All the claims by the right about public sector salaries make it seem like the public sector should hire more hamburger flippers to even out the averages.

  31. The title and theme of Brooks’s column is “Make Everybody Hurt”, and yet there’s a significant group of people he seems to exclude from “everybody”: The wealthy. Oddly enough, I didn’t see anything there about how the wealthy might share in some of the pain.

    Apparently, those who depend on government funds, for assistance or salaries, are fair game. But sharing the pain with the wealthy, say, by raising their taxes, is right out.

  32. The Private Sector/ Public Sector are now (and have been for awhile) being painted – “White Washed”- not by a broad canvas brush, but rather by a spray gun! Instead of “conquer and divide” as the usual stratagem for conquest, the inverse has been initiated…”consolidate and conquer”? The Federal Government and State Governments are in a marriage of collusion set on survival mode!

    The Private and Public entities will soon be a thing of the past with regard to “Collective Bargaining / Union’s, etc., thusly relegated to temporarily “TEMP” contract hiring! A phenomenon first seen in the 80’s, but is now firmly rooted in the american working culture of today. Obama’s “Health Care” has methodically socialized medicine for all, and opens the doors for consolidation with only the negotiation of a “Temp (Worker Salary) Contract” that will in all likelihood be set to expire “Non-Tenure” annually? Ironically the once prised “pension plans” can now be easily attained through various annuities,IRA’s, etc., so the lone (the pack has lost its cohesion forever, the beast has been domiciled?) wolf individual will fend for him/herself as this nefarious plot (this is just the genesis?) begins to unfurl. JMHO
    PS. I too don’t care for Brook’s forky-tongue!

    Thankyou, James and Simon :-)

    God Bless You, Julian Assange

  33. I like Brooks, and I think that JK’s hating on him is a bit of a cheap shot. Brooks certainly is slightly right of center, but he is very evenhanded for a popular national columnist. I can’t think of anyone else who is consistently willing to call BS on both the far right and far left. And the tone of his columns (or his NPR segments for that matter) is never angry, shrill, or dismissive. Frankly, I think it’s sad that reasonable centrists are increasingly despised by both ends of the political spectrum.

  34. I’m not at all sure that your comparison is as meaningful as you think it is. All bachelor, master, and doctor’s degrees aren’t equally valued. For example, the private sector will have a lot of engineers and MBAs, while the public sector has a lot of people with degrees in education. In the private sector the doctoral degrees will be more weighted toward medicine while in the public sector they will be university faculty. It isn’t like these groups have a choice of whether to work in the private or public sector. A few of them will, but most will fit into one or the other according to their choice of field of study.

  35. @Kwak,

    Amazing that you would compare a $60K public sector worker versus a $ 80K worker, but that’s only the start of your selective examples. By your own quoted stats, the differential in salary is 5% — not 25% in your example. And this makes me mad.

    But let’s compare when your two sisters retire. The public sector person will retire close to if not equal to what she made plus health benefits plus COLA increases. The private sector has what would be left of her 401K plus the joke of Social Security and Medicaid.

    Maybe you ought to read the study “The Intergenerational Transfer of Public Pension Promises,” which notes a multi-trillion dollar deficit from public pensions.

    Kwak, you are a quack.

  36. I am so sick of Brooks’ inability to see the truth and love of painting over hard knocks. I used to like his work prior to Obama and my partner tells me that “Bobos..” was a great book. Especially living in Burlington Vermont which was richly satirized in his book I see some of the hypocrisy he discusses. BUT the man is ignorant or scared to call out those that he dines with in the DC area every night schmoozing and kissing ass while simultaneously having his butt kissed. It would be nice if he actually got off his patronizing pedestal and walked the country trying to see what his colleague Bob Herbert so poignantly and accurately writes about weekly.

  37. Tippygolden: Vancouver is my favorite city, but for just one little thing — I can’t afford it. Other than that, I think it’s heaven.

    BTW, I hope the Canadians don’t have to try a “free market” health care system to find out how unsustainable and underfunded the U.S. alternative is. Apparently we in the U.S. can’t learn anything from your successes. Can’t you at least learn from our abject failures?

  38. MK —
    Great perspective on the race to become third world denizens. How you describe Christie’s
    work” reminded me of the recent Financial Debacle and one of the main reasons for why it was so huge — the big bucks were made on the worst loans (higher commissions) and that drove the securitizations and a lot of the bets on them going bad. It is a direct/parallel description of the actions that resulted in huge bonuses in real time for the perps while the negatives were pushed into the future. I’m old enough to remember the Comic Book and cartoon character Popeye and his companions. the one that accurately describes our current situation is “Wimpy” who had the memorable deal of all time: “I will gladly pay you Tuesday for a hamburger today.”

    I just remembered the fantastic deal that the former mayor of Chicago made by leasing (for 75 years) the parking meters of the city to a financial consortium that included major money from an Abu Dhabi fund. Needless to say the negatives did not come up until after Daley had left!

  39. I also question whether the chart reflects the retirement age in the public sector. In many cases, public employees can retire after 30 years service at 50-55 with a significant fraction of their pay, yearly adjustments for inflation, and full health care benefits. With an average life expectancy in the US now around 80, it is easily possible to spend more time collecting retirement than was spent working. I’m not sure anyone, no matter how hardworking, is entitled to 30 years of idleness at the public expense.

  40. Brook makes perfect sense: like virtually all well-heeled conservatives, his ideal-type of “labor” is the slave.

  41. David Brooks writes as bad as he can.

    He gets a prominent perch in the nation’s leading house organs simply because he does the bidding of those who own them.

    He represents the sad state of affairs of this generation of elites, one that would make former Soviets blush: a narcissistic mix of self-deception and self-assuredness.

    No matter what they do, count on them to do the wrong thing.

    In fact, you can take it to the bank.

  42. Good post, Ella.

    The demographics of New Jersey are being completely ignored by Christi because it is a distinct possibility that at least half of the most populated State in USA is smarter and real-world talented producers than he is and he knows it!

    There are Universities, community colleges, science research organizations, arts (ceramic, glass, metallurgy, music) – my god – what a rich cultural vein the State has! A motto on a bridge over the Delaware River from Trenton NJ to Morrisville PA used to say “Trenton Makes, The World takes” – and back in that time, they weren’t talking about kleptos stealing – they were talking about their world class high tech products – from turbine engines for grand ocean ships to some of the best china anywhere!

    And Christi is ignoring and WRECKING_CREW all the possibilities of such riches in culture and people talent in his state to EASILY leap frog into the future – virtually OVERNIGHT!

    It’s blatant hooliganism what Christi is saying and doing! How did he even get elected?! Shameful…

    Absolutely the WRONG leader at the WRONG time – the dude needs to be heckled off center stage – pronto.

  43. There’s a simple fact that bears repeating over, and over, and over, and… again. This so-called crisis is one more gift from Wall Street blowing itself up thanks to the persona greed, corruption, and fraud of those who inhabit it. The reason the pension funds are on the ropes is because they were filled with crap by the criminals who sold it to them as gold.

    Walker, having given enormous tax breaks to many of those same self-serving corporate elite, fills me with disgust. The emaciated remains of what was journalism doesn’t even have the chops to sort this out and report what, by any stretch of the imagination, is a seminal injustice.

    The only question is how long will this go on?

  44. Wisconsin’s financial woes are partly caused by gifts that Walker has been giving to the rich. Also, the public sector unions agreed to paying more for benefits before the protests. They are defending their right to exist.

  45. I live in Eau Claire, WI. The local school board, the City Council, the County Board and the Transit Commission have all passed resolutions opposed to Walkers attempt to restrict–virtually eliminate–collective bargaining rights for most public employees. We didn’t ask for this & we don’t want it. We’ve had 50 years of excellent labor relations here, and as our City Manager recently said “Collective bargaining is essential” to a well run and productive city. Sure it’s hard work, but in the end, everyone is involved, everyone has a chance to contribute to the solutions, and everyone takes ownership. If he bill passes, there will be serious consequences for some city services. The bus system gets $1.7 million of its $5 million annual budget from the feds. The feds do not fund systems without a collective bargaining unit, and they are fairly specific about what that means. The Department of Labor tells us that if Walkers bill passes, Wisconsin systems may no longer qualify for federal funds. Walker, no friend of public transportation, has also moved to reclassify transit as a social service, move it out of the segregated transportation fund and into the general fund, which would pretty much eliminate state funding. This isn’t just an attack on public and employees and their unions. This is an attack on cities, and on the middle class. Unfortunately 37% of union households in Wisconsin voted for Walker. I’m guessing they rue the day.

  46. David Brooks, whether he realizes it or not, is just another “running dog” of the Koch brothers. We all know what these developments throughout the Midwest and soon, elsewhere, mean.It is a question of whether we go back to the Gilded Age (or at least pre-New Deal) or the middle class and workers can protect their interests. This is the other side of the Koch’s Citizen United decision. The Tea Party doesn’t get this because they are owned and controlled by the folks who are financing these events. This about raw power, nothing else. David Brooks and his ilk either understand this and are willing aiders and abettors or they are idiots. Make no mistake. It is time to chose sides. No more touchy feelie, politically correct discourse will do. “Good night, David.”

  47. @some guy: I’m in complete agreement with you about Brooks, but feel compelled to point out that you could say all the same things about Barack Obama. And some of us do.

  48. taking your point a step further, what if he ran on a platform of slavery for the people? Would people like Brooks (etc.) laud him for keeping his campaign promises?

  49. Exactly.

    Why educate when educated people get so uppity?

    To give the perception of responsibility, instead of high school kids teaching at lower wages just increase the class sizes to 40, 60, 100 students. Same effect, both on the payroll and on quality of education.

  50. The whole concept of “center” has shifted far right. E.G. Obama is thought of as a liberal? Really? That shows how far to the right the “center” has shifted over the last 30 years. Brooks might be slightly “right of center” but the center is nowhere near where it used to be.

    The whole right-left classification in the US is complete horsehockey. It’s little more than how much religion you want with your fascism. The real indicator is whether you are with the corporations and megabanks, or not.

  51. And yet, those smart guys with all the extra degrees working for de gubberment did not think to regulate Wall St, cannot fix our ed. system, and have not figured how to shut down all sorts of civil servant payroll/pension abuse? Maybe some MBAs are more equal than others (and the “less equal” ones can’t get hired in the free market arena)?

  52. Dan — define “wealthy” and how low down the food chain do you go to rectify the deficit? I agree we have to load both ends of the calculation (expenses and revenues) but I read so many lines like this and don’t think adding a few marginal pts to the top 1, or even 5% is going to bring in much $…

    Just curious.

  53. First, may I say, emphatically, that I also have huge problems is the David Brooks, aw gee, disingenuousness. Everything about him is disingenuous, from head to toe, every motion, every word, all body language. He’s an aw shucks elitist, and that to me is nauseating!! Wow, glad you gave me a great chance to vent. It has much more to do with attitude than anything else. Obviously, he’s quite bright and quite sophisticated, and, actually, not very hard right at all.

    Then to his argument, even as couched in hyperbole, doesn’t have the ring of journalistic validity to it. The workers, I believe, have been willing to negotiate, and actually conceded virtually everything they were asked to concede. They have contended, from the beginning that their opposition was simply based upon Walker’s insistance on eliminating their right to collective bargaining. I am nowhere near being a unionist. For about a year and a half, in my early twenties, I was a Teamster. There was nothing special to it, except that I was a little put off at how my fellow workers were adament about doing everything by the book. I do believe that unions serve a special purpose, and that, used properly it can be an important one. No one wants our union members to go back to the conditions during the “sweat shop” days. And, even with unions, it is easy to see that coal miners don’t really have it so great, and lots of others. Then there was Jimmy Hoffa, and the old pension slush fund days, etc., etc.

    I really wish that folks like Walker would come to grips with rational governance. Today, I heard a tape of a conversation between one of the Koch boys and Walker that got me pretty upset (the Kochs have a major stake in Wisconsin and were massive Walker supporters in his election bid).

    Lastly, whether it’s Brooks, Rush, Maddow, or anyone else, our media is very much out of line in terms of its massive bias. I just so wish for the days of Cronkite, and others, who, I believe did their darndest not to editorialize so massively, especially when it came to the facts involved.

  54. @Roberto: It’s not about $$$, it’s about optics. We can’t convict and jail every criminal banker, but if we get enough of them people perceive the justice system as fair. Same logic applies to the tax system.

  55. I have no idea about the non-criminal status of Wisconsin public sector workers, but why not give them the benefit of the doubt?

  56. Then you would have to give everyone the benifit of the doubt, and you have accomplished nothing but traveling in a big circle.

  57. James,

    My comments are restricted to methodology.

    To properly analyze a compensation package one needs all data:
    1. total cash paid by the employer to the employee-less of course any deductions for employee share of benefits. One must sometimes dig in collective bargaining agreement for all.

    2 Funds paid to a third party for employee benefits ie: FICA, health insurance, retirement.

    3. number of hours actually work.

    Oft times this analysis, especially in the public sector, will produce surprising results, especially the factor of time actually worked.

    Other factors must then be considered, especially the
    value of the pension plan which can add greatly to the compensation package. And in a addition it is not unheard of that certain public safety contracts guarantee life time pensions and health care with retirement after 20-25 years.

  58. True and my point was not well made. Many of the deficit hawks continue to cut taxes and refuse to consider raising taxes under the mistaken belief that the revenue side of the balance sheet does not matter. According to their discredited theories of cutting taxes and cutting expenditures, these fiscal policies do not balance the budget. Reducing taxes does not raise revenue and cutting spending to the bone does not stimulate the economy. Further, cutting expenditures alone will not balance the budget. We have many administrations who have tried these policies and left the country with greater debt and deficits than when they came to office.

    Cutting expenditures must be balanced with revenue increases in order to balance the budget and give the government enough money to function. Cutting spending on the very agencies that enforce the law with regulation will leave us vulnerable for more predatory capitalism, exactly the same as if we limited the budget of police officers, courts and prosecutors in criminal law. The resulting disaster, cost the public trillions as established by the financial crisis.

  59. Annie,

    Thank you for educating me as to the vast richness of the NJ economy and it people. I never knew about the NJ vitality. My ideas are based on simple math and not the complex math that the media, wall street, big banks, or politicians try to sell us on. I live down here in the real world where 2+2=4.

    Best to NJ


  60. @ Ed

    Indeed…the exponential 2nd, 3rd “Golden Dipper’s”, all “buffed up and prettied up” at the final assembly line! Too be rolled out at 62 years young, ironically and unbashfully compensated to the equivalent of a terrible banksters’ payroll – so who is…really kidding who? This is your Unionized & Private sectors money, all tightly printed, and packaged nicely by yours truly [OUR] public government feeding off itself as a rabid dog gorges on its own flesh in a dizzying maelstrom of fait`accompli! How distasteful?

    Retire and become a consultant? Become a consultant until the aforementioned cycle de-regenerates[?], and a newly unionized /private loaded job will be yours in the waiting for your patronage via the public government granted through yours truly “Uncle Sam”!

    Isn’t it nice to be back in King George III of merry old England’s times present? Where nepotism and “Blue Blood Lines[?]” were one in the same. Whilst the 3rd and 4th Estate weren’t even given a name?

  61. The point I took out of David Brooks article is that it is hypocritical to exempt some public employees and not apply changes to all.

    While I generally agree with your positions, you forgot to include the pension side of total compensation when you made your comparison to private employee compensation.

  62. Roberto, the problem isn’t all the smart guys in the government who failed to regulate, etc. The problem is all those smart financial alchemists on Wall Street and all those smart guys in the Chamber of Commerce who hired all those smart lawyers and lobbyists to buy all those not-so-smart politicians and convinced up to cut taxes and gut the nation’s regulatory systems while shipping as many middle class jobs overseas as possible through “free trade” agreements. The result of 30 years work: the most grossly inequitable rich country on the planet. Then all those smart guys and politicians blame the teachers for the inability of our school systems to overcome the impact of massive poverty on educational outcomes. Hence the attack on public workers in Wisconsin. Nice racket they got going there.

  63. Roberto,

    Here’s a very rough set of numbers. In the U.S. in 2007, the top 3.65% of households had incomes over $200,000; this represents 17.5% of *all* household income. (Source:

    Assuming (warning: big assumptions here) that these percentages are accurate for Wisconsin, and that Wisconsin is average for the U.S. as a whole in household income, I find that Wisconsin’s wealthiest households (those earning over $200,000) are earning about $25 billion annually.

    So, if those households were charged an additional 0.5% income tax, then that would just about close the budget gap that Gov. Walker created last month. (And those households wouldn’t even feel 0.5% worth of pain, since they can deduct that state income tax on the Federal income taxes.)

  64. Not to mention, distortion of the income profile distorts justice and then we come to the hard landing.

  65. In the 70’s, the Rolling Stones had a song, “Jig Saw Puzzle” that had a line, about Grand Ma s burning up their pensions and crying, “It’s not fair!” A lot more exposure of pension service would be helpfull.

  66. Numbers can be tricky: “‘Adolf Hitler’ Hitler” returns 6.86 million results — fewer than the Obama iteration.

    My problem with David Brooks is that he is flatly dishonest. His repeated falsehoods on Israel-Palestine issues have been well-documented. He and Times editors have been informed — repeatedly — and Brooks continues to assert them again and again. The same has been done — repeatedly — with some of his favorite canards regarding labor, liberals, etc.

    He is a proven, malicious, deliberate liar. But he dresses it up in comparatively good writing and the rhetoric of moderation and ‘objectivity’ and that’s enough for the Times and the American mainstream.

    As for the Myth of the Virtuous Middle. This is dogma in the United States. And only in the US could someone like David Brooks be claimed to be moderate (or center-right).

  67. David Brooks is just hack, just like that other hack Tom Friedman. I think he knows that what he’s saying is bull, but he says it anyway because it makes him money, acting as a PR flak for CEO’s amd all of the big money patrons of NYTimes. There’s just no money in truth telling, but a fortune to be made repping for the rich and powerful.

  68. Yes. This is a streetfight, and Queensbury rules don’t apply. And Brooks is just a hack; he lies for money.

  69. Nonesense.

    Public school teachers must meet professional certifications and other requirements that are not necessary to teach in a private school. Some positive difference is expected.

    Also some teachers purposefully accept lower pay in order to avoid certifications, similar bureaucracies, and work in an environment where the administration has a wider latitude and greater authority in terms of student discipline.

  70. @Helen

    Norm Cimon in his comment makes sense. Its austerity caused by the pension funds taking a hit. They are filled with AAA-rated toxic waste sold by the TBTF banks.

  71. Nice job, Carla, thanks for the pointer to the video. Couldn’t agree more. As far as Brooks vs Obama, you are right of course, the same could be said about Obama, but yesterday it was Brooks’ turn ;-)

  72. It’s incredibly petty and totally pointless what the Governor of NJ is doing.

    And the unintended consequences are a SURE BET.

    Crime is increasing exponentially, and like the CIA website, where the data they post for the illiteracy rate is from 2004, or something,

    everything is being IGNORED.

    It’s so bad, it can only be some kind of mental illness at this point….it’s ILLEGAL for the military to use psy ops against USA citizens…

    just get rid of the oil subsidy…

    If you are of a certain age, it is turning out that your entire adulthood has been mutilated by ONE commodity being sovereign at the expense of everything that LIVES….that’s a madness that is neither logical or rational about “survival of the fittest”….

    it’s just NUTZ.

    Do you give a flying fig about Koch? Or David Brooks? I don’t even know who Brooks is – schmata business heir of Brooks Brothers? And Koch? NYC ex-Mayor’s big mouth nasty dinosaur brain cousin?

    That’s why I haven’t had a TV in the house for years – we’re not “married” to insufferable men throwing fiat $$$ to fan hatred….

    Good for the Brits – nice to know that a “majority” of a race – any race, btw – still is better able to make sane choices…too much melting pot? – not working for anyone…

  73. Too much politics and not enough economics. Politics isn’t why I read the blog. Please deliver more meat and less politics.

  74. Because all you need to fix our ed. system is smarts? Money is not necessary to hire teachers or build schools? And if you’re smart enough you can outsmart the lawmakers and the yobs who vote for them and regulate Wall St when all the regulations have been revoked? And do that without staff too?
    People like bobo and roberto are the reason you cannot have an intelligent discussion of policy in this country, because one side of the discussion has the intelligence and maturity of a 12 year old boy.

  75. Crap….Educational levels is way too simplistic a way to compare compensation for public and private workers. Attached study, based on BLS numbers, compared equivalent jobs, after eliminating jobs for which there is no comparable (air traffic controller, etc). Result: Federal workers salaries are 20% more than private counterparts. State and local workers are paid 5% less. But when you add in benefits, all public workers are compensated significantly higher than private workers. Additionally, although not in this study, the rate of wage increase over the last 10 years in the public sector has dramatically outpaced the private sector.

  76. @ Anonymous

    “and who is it you say make the economic decisions in america today?”

    PS. The “Federal Reserve Chairman” is/are hand (but by whom…the economic ghost in a hollowed-out Fort Knox) picked “No Vote”, so perhaps your halfway there to nowhere!

  77. I liked the ‘elected’ angle in that article, too. And by ‘liked’ I mean ‘wanted to throw my coffee cup at his head.’ Mubarak was ‘elected,’ too. In Mao’s Great Leap Forward of the 1950s, every local district held ‘elections,’ too. You got to pick which of the cadres was going to ‘represent’ you.

    The question isn’t whether there was an ‘election.’ The question is whether or not the population had the free ability to choose candidates that represented their interests or not. The vast majority of Americans typically vote ‘no’ on that question, by the way – that’s why we don’t vote at all.

    I’m from Wisconsin (born and raised) and a fair bit of my extended family voted for Walker. They did so because of social issues, not fiscal issues. The modern political system has created a (corporately) profitable marriage of social and economic issues, where you have to vote Republican if you’re against abortion (for example), but in doing so, you also vote for privatization of government programs, etc., etc. The social issue divisions allow the economic issues to be backgrounded in the extreme..

    I think this is largely the New Left’s fault from back in the 1960s, when they ditched the Unions for Social Issues, thereby alienating a load of their voter base (many of whom migrated to the Republican party for social reasons). Now nobody represents workers’ issues at all…

  78. You know, though, I think at this point you can pretty much say most of the wealthiest chunk of the US Population ALSO depends on government funds for assistance and salaries. There’s little functional difference between AIG and a ‘Welfare mom,’ except that the ‘Welfare mom’ feels a lot worse about the whole thing.

  79. They probably voted for Walker on social grounds (e.g. abortion, gay-marriage, whatever), not because they want their union busted up. That’s just an extra gift with purchase. ;)

  80. @ Mr M

    “eg. abortion, gay marriage, whatever”

    Let’s start with abortion, shall we? No woman in her right mind wants an abortion, period! It is a choice most will be haunted with till their dying days. Republicans will fight tooth and nail for the moral highground regarding ethical superiority – these high and mighty hypocrite’s.
    Why? This should shine some light on their wicked myopic, seemingly misogynist and misguided rationale. Republicans for the most part like cheap uneducated labor…the more the merrier. Please note my personal experience of living in a small town in the early 60’s where a young beautiful teenage girl got pregnant by a teenage boy (an acquaintance of mine…both). The girl used a coat hanger (this was the Russian-Roulette tool of the times to abort an early pregnancy) – she died alone, bleeding to death! Your daughter, my daughter doesn’t matter…she’s dead! I wonder how long it would take for a highly successful family to find an abortion Doctor in the same circumstances?

    Next, you talk about gay marriage. Are you aware that 50% plus of all functional/dysfunctional household families in the United States alone have a gay child if there is more than one sibling (in other words more than one child, with the percentages going up for a larger family) – are you “Aware”? A child doesn’t ask to be born different…it’s a genetic gene that dictates their makeup, period! Their not freaks…their our children – and love is their nourishment (certainly not hate) as any normal child would want! So please do not equate “whatever” too the democratic party…”The Party of Freedom”. That’s all I have to say…”live and let live” as God would have it,…

  81. What are public employee unions offering at the bargaining table in return for better wages and benefits? They are offering their votes next election.

  82. redleg, “The union busting by Walker and co. is a smokescreen for this easter egg in the bill:….”

    Wow, redleg, NOWHERE

    and I mean NOWHERE

    is MSM talking about the “with or without solicitation of bids”…

    Reading between the NJ fine lines…yikes!

    not just the Afghans wanting their continued “entitlements”, right?

  83. Look at the Atlanta GA water system to see how well for-profit, no bid privatization works.

    This should be the biggest news of the bill, and is the likely reason that the R’s want no modifications to the bill.
    It is also clear hypocrisy – if solving the budget deficit was indeed the goal an orderly, transparent bidding process for the assets (with complete specs detailing who is responsible for maintenance and improvements) would be a reasonable option to raise funds. Instead, it is no-bid, no oversight. Nothing but a power grab – prima facie corruption.

  84. A good post, James. The question of total package has been hugely neglected in the mainstream reporting.

    And there is another question you don’t address and that is the “implicit contract”. If I work for 40 years for less salary but higher pension benefits, is it fair that the pension benefits could be reduced just before I retire. I have no knowledge in the current debate as to whether that is actually happening. However, it has happened in other circumstances.

    And yet again there is a little smile at all this economic analysis. The overwhelmingly dominant factor as to whether someone is a teacher or not is simply whether their parents were teachers. Can it be that economists can’t handle that?

  85. The ‘smart guys’ didn’t want to regulate Wall St, that is where they are going to make their real money after leaving public service. Let me know when a ‘smart guy’ figures out how to prevent people from being greedy, self-serving, or just lazy, we will put him right on your ‘civil servant payroll/pension abuse’ problems (whatever that means).

  86. comparing compensation for similar jobs might make sense when comparing, say, registered nurses who have the same credentials and responsibilities. (In a private hospital ward vs. a similar ward in the VA, for instance.)
    Left out of this analysis is the fact that governments are often padded with extra workers – duplicate, triplicate, etc. This is common in local and federal jobs, and endemic in state jobs. I have seen small state departments with three six-figure p.r. people, yet a low count of press releases, press events, internal or external communication of any kind. This is the “Dilbert” factor, and it is no cartoon.
    Also, the job categories themselves do not bear comparison. There are zillions of ‘program managers’ and ‘budget analysts’ in the federal gov. that have no real counterpart in the private sector. They have decent pay, many are college educated (and get student loans paid off, year by year, as a perk never mentioned…) but what do they *do*?
    This needs to be accounted for when trying to compare the two aspects of employment.

  87. No, they voted for him ’cause his wife made him sack lunches so he could save the taxpayer money…

    Sh..u.not, those were his campaign commericals. The idiot-America-circle is complete.

  88. It’s a freakin’ JOKE how many predators attached themselves to the productive MIDDLE CLASS in USA – simply by STALKING a few archetypes,

    and thanks to the Patriot Act, they were ALLOWED to take down the infrastructure of the USA “in secret” – “region” by “region” – and Brokaw had a BIG idea that Redding, PA needs to hook up with the county to provide “services”…well how about that “region” of the world that got BILLIONS of USA taxpayer money in subsidies….

    So, yeah, what do they *DO*?

    Officially? Create scapegoats…and ghosts…and lions and tigers and bears, oh my!

    Take Jesus Christ down off the cross and watch a whole lot of social manipulation psychoBabble go down the drain to the black hole of their monkey brain imaginations…

    From Avatar – “I *SEE* you”…and they’re NUTZ.

    In the song, “Angel”, Sarah sings this line, “….So tired of the straight life, and everywhere you turn, there’s vultures and thieves at your back…”

  89. @ Annie, thanks for that link.

    They’re still peddling this crap, and I’m entirely sure this guy Freeman was paid somewhere in the “hefty” range, to produce a fetid bucket of swill.

    The “newspaper” (hehe) “report” did produce a noteworthy quote: “This is the equivalent of box cutters on an airplane,” Mr. Freeman said.

    LOL. Yeah, well, I suppose that IS true on a certain level……an unbelievable thesis unsupported by evidence or fact.

    And that part about Jesus, you got that right, too.

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