Saturday, October 12, 2013

Peas in a pod.

They despise each other, call each other terrorists and gangsters. They cannot imagine ways in which they are similar. They occupy opposite ends of the political spectrum. They each believe that they stand for essential higher values that much of the public chooses to ignore at their peril. They believe their actions, as much as they might engender public resentments, are in service of long-term goals critical to the well-being of their supporters and, ultimately, the public at large.

And in service of those values, they are willing to exercise the greatest leverage they have, at the point in time when the impact of that leverage is greatest, to accomplish goals that have proven to be out of their reach through the normal workings of government.

In a nutshell, they disdain the regular order of things and the workings of government when it does not produce the outcomes that they desire. And to them, those outcomes warrant wreaking havoc on the larger economy if need be.

The Tea Party caucus in Washington, meet the Service Employees International and the Amalgamated Transit Unions that represent the BART transit system employees in San Francisco. While the Tea Party caucus continues to keep the federal government shut down and world markets in an increasing state of anxiety, the BART unions have proven that they are willing to shut down the San Francisco area economy if their demands are not met, regardless of the harm inflected on hundreds of thousands of people across the region. In what has traditionally been a union town, more than three quarters of the public are opposed to the proposed labor action by BART workers in a recent poll, most of them strongly opposed.

The Tea Party, of course, has been front and center in the movement to undermine the power of public sector unions exactly because of the leverage unions have been able to exert--through the ability to strike and elect political supporters to public office--to achieve their goals. And to be sure, the ability of public sector unions to strike has been one of four significant sources of fiscal instability undermining the finances of local governments across the country. The other three: public financing of political campaigns that contributes to corruption deeply embedded in our democracy, financial derivatives that place great risk on public sector balance sheets, and the mobility of capital that has drained urban economies of their middle class job base.

The problem of public pensions is directly related to these four factors. Public pensions themselves are not the problem, but rather an evolving underlying economy that has undermined the assumptions upon which those pensions were based. A bit over a decade ago, public sector pensions were largely fully funded, and the projected investment return assumptions appeared reasonable. The structure of those pensions did not change. What changed was the validity of the underlying economic assumptions, and the impact on local economies of the combined forces of globalization and technology.

Ultimately, the challenge to BART workers is that the median middle class incomes of taxpayers and transit riders who ultimately fund their wages and benefits have stagnated over the past decade. As such, BART workers are not simply asking for a fair share for themselves, but to improve their economic position relative to the commuting public that they serve. As such, fact finding and arbitration--the traditional means of resolving labor disputes--would be unlikely to achieve union demands. Arguments about the 1% and income inequality have little salience in a situation where the funding is derived from the BART riding public and local sales taxes. Larry Ellison does not ride BART, and even Google employees have their own bus system.

Like the Tea Party, BART workers have the strong support of barely one-quarter of the population. Yet, there is little doubt that those that support the goals and tactics of the BART unions particularly revile the Tea Party, and would be loath to acknowledge those things that they have in common. Both the Tea Party and Bart unions are attempting to use the threat of massive economic dislocations to achieve outcomes that they have otherwise been unable to achieve. And both find themselves confronting a public that finds economic blackmail to be an unacceptable strategy for the pursuit of parochial political and economic interests, and as such risk long-term public opprobrium that may undermine any near term gains they believe they can achieve.