Quotulatiousness

April 5, 2014

Chris Kluwe’s suggestions for more constructive NFLPA texts-to-players

Filed under: Football — Tags: , , , — Nicholas Russon @ 09:16

When they’re not on the playing field or otherwise engaged in preparing for the games, NFL and other high-profile sports players lead normal-ish lives. Most of them manage to blend in to the local community, but some achieve notoriety for their off-the-field antics. Chris Kluwe is still a member of the NFLPA (the union for NFL players), so he gets their occasional communications to the membership like this text message:

Mindful of the opportunity to help out some of those players whose off-the-field activities might get them into trouble, he has a few suggestions:

November 13, 2013

The NFL “closed shop”

Filed under: Business, Football, Law, Liberty — Tags: , , , , — Nicholas Russon @ 10:35

In Reason, S.M. Oliva discusses how the NFL’s exemption from normal labour regulations makes it difficult to assess the rights and wrongs in the Miami Dolphins “bullying” situation:

Many libertarians see nothing wrong with the NFL’s labor system. Even in a pure free market, employers and unions could enter into “closed shop” agreements like the NFL’s CBA. But as we all know, professional sports hardly exist in a free market. The NFLPA itself holds a government-sanctioned monopoly over all current and future NFL players. Indeed, Martin was not even a union member when the NFLPA signed the current CBA in 2011.

More importantly, in a free market any closed shop would face competition from new entrants seeking to exploit the incumbent’s labor restrictions. There’s little risk of that with the NFL given that most of its infrastructure is subsidized by government. This includes not just stadiums built with billions in taxpayer financing, but also player development, as most NFL players are the product of college football programs subsidized by state-run universities.

There’s also the perverse incentives created by federal antitrust law. The collective bargaining process creates an exemption from antitrust law. Without that exemption, most NFL labor policies, such as the draft, would be deemed illegal. Now, that’s hardly a libertarian outcome. But consider the NFL’s position. The more rules and restrictions they can stuff into the CBA, the lower the risk of future antitrust lawsuits. Thus, the exemption encourages the NFL (and the NFLPA) to centralize as much of its labor policy as possible.

That means there’s little motive to experiment with more flexible labor policies. Individual teams can’t offer employee incentives or enforce discipline in any way that conflicts with the CBA. When there are workplace disputes like the Dolphins situation, the bureaucracy acts not to “protect” employees, but to ensure nothing disturbs the government-granted authority of the league and its monopoly labor union.

QotD: Trade unions

Filed under: Bureaucracy, Economics, Quotations — Tags: , , — Nicholas Russon @ 00:01

If they are timid in some respects, the Trade Unions are aggressive in negotiation and cannot be otherwise. To keep in business a union has to do something. Each year there must be a fresh demand, without which the union will lose membership. Members expect to see some return for their subscriptions and union officials are not paid to be inactive. Lacking a grievance, they will have to invent one. Realizing this, the directors must make a show of reluctance, postponing the inevitable concession until it looks like a victory for the employees. If the union is quiescent it will lose membership, most probably to another union. Its officials, honorary or paid, can always gain consequence on the other hand, from their decision to do battle. Any Trade Union has, therefore, a built-in aggressiveness, without which it can hardly survive. Nothing can be more damaging to the union official than the rumour that he is friendly with the management. This can only be the result of blackest treachery, it is assumed, and the official has to stage a conflict in order to secure his own re-election. Aggressive toward management, the unions are almost as aggressive toward each other, competing for membership and staging frontier disputes over the exact territory which belongs to each. Nor is this unrest the fault of individuals. It is a characteristic of union organization and one for which there is no obvious remedy.

C. Northcote Parkinson, “The Feet of Clay”, Left Luggage, 1967.

October 16, 2013

Cultural organizations and unions

Filed under: Economics, Media — Tags: , , , , — Nicholas Russon @ 07:41

Richard Epstein looks at two recent disputes between unionized employees and cultural organizations:

This past week featured two stories about major orchestras dealing with their adamant unions. The first incident occurred on Wednesday, October 2 at Carnegie Hall in New York City. A fancy opening night gala, featuring the violinist Joshua Bell and the young jazz performer Esperanza Spalding, was called off due to a surprise strike by Local One of the International Alliance of Theatrical Stage Employees.

The second dispute, still unresolved, involves the protracted labor impasse at the Minnesota Orchestra. On October 1, true to his promise, star music director Osmo Vänskä resigned because of the inability of the orchestra and its musicians’ union to hammer out a new contract in time to prepare for concerts scheduled at Carnegie Hall on November 2 and 3. The issues in these two labor disputes could scarcely be more different. But each of them, in its own way, illustrates the long-term toll that American labor law takes on the cultural lifeblood of our nation.

The incident at Carnegie Hall raised more than a few eyebrows when it was revealed that the strike was organized by the five full-time Carnegie Hall stagehands who were members of Local One. Their annual compensation in wages and overtime averaged a cool $419,000 per year, making them — one properties manager, two carpenters, and two electricians — five of the seven highest paid workers at Carnegie Hall after Carnegie CEO Clive Gillenson. Other union members in unspecified numbers were called in to help from time to time, presumably at rates on par with those Carnegie Hall paid to its full time workers.

As befits the sorry state of labor relations in the United States, the dispute was not about the status of these five workers. Rather, it focused on the new jobs that would open upon the completion of a new education wing in 2015. Mr. Gillenson was not exactly breathing fire when, well-coached in the pitfalls of labor law, he eschewed any anti-union sentiment and announced that he expected union workers to take the stagehand slots in that new facility. It was just that he insisted on dealing with unions that lacked the clout and the wages of the hardy men from Local One.

[...]

The bargaining dynamics could not have been more different in the Minnesota dispute. It is no secret that unionized musicians command a short-run monopoly premium for their members. The orchestra knows that it can earn back some fraction of that wage premium by securing the most talented musicians. But by the same token, any generous deal opens the orchestra up to financial ruin if its endowment shrinks or if its key donors cut back their support in hard times. But usually the large gains for older musicians carry the day.

Unions in all industries — think of the debacle at General Motors — do not do well in negotiating givebacks to management. Yet, ironically, the higher the premium that unions are able to extract during good times, the larger the give-backs are needed to bring the employer’s fiscal position into balance during bad times.

Just that dynamic was in play with the Minnesota Orchestra. The high wages before 2009 led to one round of union concessions. But in 2011, the budget was still out of balance, and management came back with a request for further cuts of about 32 percent. It later softened its demands to insist on wage cuts that would reach 25 percent after three years. Those cuts would be offset by a one time $20,000 bonus, which would, of course, not be part of the wage base in future years.

The union proposals were for pay cuts in the range of six to eight percent. This would have left an annual deficit in the order of $6 million. In the end, no deal could be reached, which precipitated Vänskä’s departure and the subsequent huge hit to prestige of the orchestra’s hard-earned international reputation.

September 24, 2013

The horrors of Greek Austerity strike!

Filed under: Bureaucracy, Europe, Government — Tags: , , , — Nicholas Russon @ 09:02

Those poor Greek civil servants … this is so hard on them:

In a sign of just how hard the austere financial climate is hitting, it has been reported that the Greek government has been forced to put an end to one of its civil servants’ most treasured privileges. We speak, of course, of the Hellenic Sir Humphreys’ entitlement to an extra six days a year paid holiday if they are compelled to work with that frightful engine of misery, the computer.

Reuters reports that the long-standing regulation, in which all Greek government workers compelled to use a computer for more than 5 hours a day get an extra day’s leave every two months, was axed in an official announcement on Friday.

September 17, 2013

A brief history of fifty years of American economic thought

Filed under: Economics, USA — Tags: , , , , , — Nicholas Russon @ 07:07

Tyler Cowen wraps up the rise and fall of “right” and “left” economics in the US since the 1960s:

Throughout the 1970s and most of the 1980s, the so-called “right wing” was right about virtually everything on the economic front. Most of all communism, but also inflation, taxes, (most of) deregulation, labor unions, and much more, noting that a big chunk of the right wing blew it on race and some other social issues. The Friedmanite wing of the right nailed it on floating exchange rates.

Arguably the “rightness of the right” peaks around 1989, with the collapse of communism. After that, the right wing starts to lose its way.

Up through that time, market-oriented economists have more interesting research, more innovative journals, and much else to their credit, culminating in the persona and career of Milton Friedman.

I’ve never heard tales of Paul Samuelson’s MIT colleagues mocking him for his pronouncements on Soviet economic growth. I suspect they didn’t.

Starting in the early 1990s, the left wing is better equipped, more scholarly, and also more fun to read. (What exactly turned them around?) In the 1990s, the Quarterly Journal of Economics is suddenly more interesting and ultimately more influential than the Journal of Political Economy, even though the latter retained a higher academic ranking. The right loses track of what its issues ought to be. There is no real heir to the legacy of Milton Friedman.

July 25, 2013

Misappropriation of William Lyon Mackenzie

Filed under: Cancon, History, Liberty — Tags: , , , — Nicholas Russon @ 09:22

Richard Anderson on a recent attempt to “re-imagine” the real William Lyon Mackenzie:

Flag of the Republic of Canada 1837It seems unlikely that William Lyon Mackenzie was the chillin’ sort of dude. In fact he was a notorious hot-head. Nor was he fond of big government. During his brief and ill-starred rebellion Mackenzie actually had a flag made up with the word LIBERTY written on it. He was a libertarian avant la lettre and would likely be utterly horrified at the size and scope of modern municipal government. For a public sector union to appropriate him as a sort of mascot for “public service” is chutzpah at its finest.

One of the many things that rankled Mackenzie, he was inclined to react strongly to injustice, was tightly knit oligarchies who use government power to fleece the ordinary citizen. In his day they called it the Family Compact. Today we might call it the Liberal-NDP-Government Union Axis. Not as catchy, but again I’m not WLM. I’m omitting the provincial Tories as their haplessness renders them more amusing than contemptible at the moment.

[...]

I haven’t the slightest clue as to Mackenzie’s views on diversity, the Upper Canada of his day was as white as a lily. From the records that have come down to us he seems to have been a fairly enlightened man. What he would have made of Toronto’s demographics we can only guess at. We are on more certain ground as to government providing “assistance to its elderly, infirm and financially disadvantaged.” Mackenzie would almost certainly have opposed government involving itself in such essentially private matters. Those incapable of fending for themselves were the responsibility of the churches, private charities and of last resort the municipal government. Relief for the poor was remarkably stingy both from necessity and principle.

The solution to “poverty” in early Victorian Canada was typically an axe and a few acres of land. There is little indication in the historical record that the rebel of 1837 was some kind of proto-socialist. That CUPE is implying as much is disgraceful.

June 26, 2013

The many personae of Bob Rae

Filed under: Cancon, Politics — Tags: , , , — Nicholas Russon @ 08:07

At Gods of the Copybook Headings, Richard Anderson says goodbye (for now) to Bob Rae:

There has, in truth, not been one Bob Rae in Canadian public life. There have been several, each slightly less obnoxious than the last. The ex-interim Liberal leader holds the rare distinction of actually having improved with age. From student radical and Rhodes Scholar, to NDP hell raiser who helped topple Joe Clark’s government, to enabler of David Peterson’s coup d’grace for the Ontario Tory dynasty in 1985. The Bob is a very well travelled pol. Few vote chaser survive this long in the game, so a measure of respect is due. I’ll measure it out by the thimble.

Yet whatever he has done before or since, Bob Rae will always be the first and so far only NDP Premier of Ontario. Rae could win the Nobel Prize tomorrow and his obituary would still mention his epic single term as Premier. While I’ve never met the man, perhaps a saving grace for us both, he is the first political figure of whom I have a clear image. There is no figure in modern Ontario politics, aside from Mike Harris himself, who was as thoroughly despised as Bob Rae.

[. . .]

Rae Days were a sincere attempt to be politically Left wing while also fiscally sane. Roy Romanow was doing similar things in Saskatchewan at the time. But Prairie socialists seem to be saner than Ontario socialists. Perhaps it’s something in the water. An intelligent labour movement would have recognized that Bob Rae was trying to save their necks. The blockheads running the public sector unions in the early 1990s did not realize this or did not care to acknowledge fiscal reality. These were the sorts of people who refer to their fellow union members as “brothers and sisters.” They hadn’t gotten the memo about the failure of socialism. Judging by their successors the public sector union movement still hasn’t.

It’s believed that at some point in 1993 or 1994, looking out of his office at Queen’s Park toward a sea of protesting civil servants, that Bob Rae realized he was a Liberal. His brother was a Liberal. Many of his friends were Liberals. From time to time Liberals were known to balance the books and speak in coherent sentences. The Liberals were the party of sane statists. Since he was the NDP Premier of Ontario he decided to ride the whole thing out, delaying the election until the last possible moment. Mike Harris won. Bob Rae went into exile for eleven years and the rest is history.

With the Bob gone Justin is now left without adult supervision. Certainly Gerald Butts & Co are there to direct their ward, but they’re not grizzled old veterans. In his short stint as interim Liberal leader Bob Rae showed himself as smooth, graceful and facile. A long haul from the awkward socialist geek who stunned the country by winning power a generation earlier. Politics is a game won by professionals. For all his many sins and occasional virtues, Bob Rae was a professional politician. Justin Trudeau is not. There is some hope in that.

May 9, 2013

Let ‘em strike!

Filed under: Business, Cancon, Government — Tags: , , , — Nicholas Russon @ 09:00

We’re in the final week before the LCBO is threatening a strike. Michael Pinkus suggests we should let ‘em walk:

For the third time in a decade the LCBO is holding Ontario hostage — and just like they did in 2005 and 2009 when the threat of a strike was on the table, they’ll be an 11th hour (more like on the 11th hour and 59 minute mark) resolution where the LCBO employees get everything they want because the province does not want to lose the revenue the LCBO brings into the province. Screw the teachers, they take money out of the system, but the LCBO brings it in, so they should get whatever they ask for, right? It’s the approach taken by every government who has “stared down” the LCBO, and lost. Not that I’m necessarily for the teachers, but if it’s a choice between educating our youth or feeding our appetite for liquor I know which side I fall on … and so would any right minded Ontarian — it’s the booze that wins out every time.

And just like in 2005 and 2009 the LCBO will make a ton of money in the days before the “strike”. It’ll be a feeding frenzy of mammoth proportions in the aisles, right up to the last hour. Shelves will be decimated as people stock up for what surely will be touted as long, drawn out labour strife … that’ll never come. And why do I say that? Because any right thinking Ontarian knows that if the LCBO goes on strike it means more than loss of revenue to the province, or an inability to get out of country booze … it means the end of the LCBO (and everyone involved knows that).

Take a peak around us privatization is today’s buzz-word and it’s all around us. In our own country, to the south, in Europe — at corner stores, in supermarkets and in specialty stores … heck even Pennsylvania is getting into the act of loosening their liquor laws (and nobody thought that day would come) — but not here in NO-FUN-Tario, a have not province … we sit under the rules and thumb of the Liquor Control Board. If they go on strike questions will be raised as to why we have a provincially run system, why we support unionized workers, or why we can’t be more liberal with our booze (plus you just know some idiot will want to declare it an essential service). So it does not behoove the LCBO to walk off the job and the government won’t allow it because they’ll be tough questions to answer. So don’t go betting the farm on a labour dispute and seeing picket sign toting employees at the local Board store — this one will end like all the others, with the LCBO threatening to walk out, a mass throng of buyers the day before, and the sun rising to a new dawn the next day with a new deal for LCBO employees … and all will be right in Ontario for another 4 years … when we’ll do it all again.

Update: A report in the Toronto Star claims that Ontario could earn a $1 billion windfall by allowing private liquor stores into the province:

“If the Ontario liquor industry mirrored ours in B.C., instead of $1.6 billion going to government, that number could be around $2.7 billion,” he states in his 15-page speech, which highlights the pluses for locally produced wines, beers and spirits.

With 635 stores and 219 convenience store locations in rural and northern Ontario, the LCBO last year reported net sales of $4.71 billion — up $218 million — and handed over to the Ontario treasury an all-time high of $1.63 billion, not including taxes.

“If Ontario allowed private liquor stores, consumers would have access to hundreds of new VQA wines, craft beers and spirits.”

His comments come at a time when the LCBO plans to spend $100 million on expansion, including express outlets in 10 large grocery stores and expanded VQA sales, and while Tory Leader Tim Hudak calls for the booze monopoly to be privatized and for beer and wine to be sold in corner stores.

“A bit of competition makes the world go round . . . I think now that we are (in) 2013 it’s time for some change,” Hudak told reporters at Queen’s Park.

B.C. has had a mix of private and public liquor stores “to create better choices for producers to sell and for consumers to buy,” Baillie said.

Ontario currently does allow a tiny number of private wine stores to operate, but under incredibly restrictive conditions. For one thing, they’re only allowed to be located in areas the LCBO has determined are “underserved”, they may only sell wine from a single winery or winery group, and the number of stores is limited to the licenses that were granted to certain wineries before 1993.

Oh, and the kicker to all those restriction? If you manage to put in a store in an “underserved” area and make a profit? The LCBO can then turn around and re-designate your area to invalidate your license or place one of their own stores in the area and take away the business you’ve built up. Catch-22.

April 14, 2013

An alternative Britain would be “Cuba without the sunshine”

Filed under: Britain, History, Media — Tags: , , , — Nicholas Russon @ 10:06

Dominic Sandbrook recounts the history of a slightly different Britain: one where Margaret Thatcher lost to Jim Callaghan in 1978:

As historians now agree, Mrs Thatcher never really stood a chance: Britain was not ready for a woman prime minister. As she herself had remarked only eight years earlier: ‘There will not be a woman prime minister in my lifetime — the male population is too prejudiced.’

In her place, the Tories turned to the bumbling figure of Willie Whitelaw, an old-fashioned patrician Wet whom they decided would connect better with the British electorate.

In the meantime, the country was reeling from crisis to crisis. Scarcely had Callaghan returned to No 10 than his premiership was consumed in the notorious Winter of Discontent. As one group of workers after another — lorry drivers, railwaymen, bus drivers, ambulance drivers, caretakers, cleaners, even grave-diggers — walked out on strike for higher wages, the country ground to a halt.

Buoyed by his election victory, Callaghan was in no mood to compromise. Rather than break his declared 5 per cent national pay limit and risk higher inflation, he declared a State of Emergency and summoned the Army to drive Britain’s petrol tankers.

It was a catastrophic mistake. On February 12, 1979, a date that has gone down in history as Black Monday, fighting broke out between pickets and soldiers at one depot outside Hull.

In the chaos, one soldier — carrying live rounds, in contravention of orders — opened fire and killed five people. It was one of the most shocking moments in modern British history.

Callaghan resigned the next day, the last honourable act of a decent man overwhelmed by events. But contrary to his expectations, the Labour Party did not turn to his Chancellor, the bushy-browed Denis Healey.

Instead, they lurched to the Left and elected as their new Prime Minister Michael Foot, with his flowing white locks, walking stick and impassioned socialist rhetoric. The real power in the land, however, was Foot’s colleague Tony Benn, who replaced the disgruntled Healey as Chancellor. And in the next few years, it was Benn who presided over the most sweeping socialist measures any Western country had seen in living memory.

To the horror of many in industry, Benn insisted that Britain’s declining economy needed a dose of shock therapy. The top rate of income tax went up to 98 per cent, and the government announced a one-off 5 per cent ‘equality levy’ on households with income over £50,000 a year.

As frightened investors began to withdraw their money from the City of London, Benn introduced sweeping exchange controls. He also, in an attempt to shore up Britain’s crumbling manufacturing base, introduced the most stringent import tariffs in the Western world.

The reaction was pandemonium. As inflation shot over 25 per cent and unemployment went above two million, horrified European leaders insisted that Britain’s new policies were incompatible with membership of the Common Market.

But Benn was adamant. ‘You turn if you want to,’ he told his party conference in 1980. ‘Labour’s not for turning.’

The following year, as the economic picture continued to worsen, the Government introduced controls to stop people taking sterling out of the country. As a result, the foreign package holiday market collapsed — although landladies in Blackpool said they had never seen more business.

There were rumours that Foot was planning to move his turbulent Chancellor, but they were blown away when, in April 1982, Argentine forces landed in the Falklands.

H/T to Roger Henry for the link.

April 11, 2013

QotD: An underclass that’s too rich

Filed under: Britain, Economics, History, Quotations — Tags: , , , — Nicholas Russon @ 10:05

I hear quite a bit of that these days — almost like a local version of East German “ostalgie“. Old British friends say to me, well, say what you like about the 1970s — nothing worked; if you wanted to buy a new car, it was as if post-war rationing was still in effect — but all the same life in the village seemed a lot more pleasant back then. There’s something to this: the benign side of oppressive statism is often a kind of public restraint. And more than a few folks seem to feel, with the benefit of hindsight, that it’s better to have unionised thugs nutting scabs on the picket line than freelance yobs in hideous leisurewear infesting ersatz-American high streets catering to their every frightful whim from one end to the other. For the modern liberal, this is a new dilemma: an underclass that’s too rich.

Mark Steyn, “The Unfinished Revolution”, Daily Telegraph, 2004-05-04 (link goes to Steyn’s own site)

Ontario’s LCBO workers vote in favour of a strike

Filed under: Bureaucracy, Cancon, Government — Tags: , , , , , — Nicholas Russon @ 08:50

Michael Pinkus is looking forward to a potential LCBO strike:

Call me an anarchist but I want the LCBO to go on a nice, big, long strike. And by the time you read this newsletter I am 100% sure that the sheeple of the LCBO will have given their bargaining team the go ahead for strike action. Now the LCBO’s contract was up on March 31, 2013 — which means currently the guys and gals roaming, stocking and generally keeping track of the aisles are without a legal contract with the provincial liquor board. I’m not about to get into the nitty-gritty of the contract negotiations, but when I read in the Liquor Board Employees Division (LBED) Bargaining Bulletin: “The offer we received from management can only be described in one word: Outrageous!” — well I just felt that I had to look a little deeper to see how the LCBO was screwing their own people (which is a nice change from the people of Ontario they screw daily).

What outrage would I find on the pages of the LCBO’s proposal? Are they locking the doors and throwing employees out on their ears? Are they proposing actual punishment for selling to minors (like the sting David Menzies did in July of 2012)? Will there be repercussions for doing a bad job, breaking the law, real penalties?

Now I have met, had dealings with, and actually, once upon a time, worked alongside some very good LCBO employees, most of them casual part-timers — but I can tell you that for every one good one there’s two that are lazy, surly and just generally people you don’t want to deal with in a retail situation — and sadly, those are the one’s you are likely to remember. So from the LBED Bargain Bulletin dated March 1, 2013 here are 2 of the 9 crazy demands the LCBO is making of their employees and the Union’s response to those “outrageous” proposals (I highlight my favs, but you can read the full bulletin here):

[. . .]

But who really suffers from an LCBO strike? California, Spain, Italy, France, Australia, Chile, in other words import wines and liquor producers, who can ONLY sell through the Province run monopoly, and they’ll be demanding the LCBO settle so their products get into the hands of Ontarians instead of sitting idly in warehouses collecting dust. Meanwhile local producers could see a boon as Ontarians thirst for wine is not met by the LCBO but instead by in-province wineries. Tourism to wine producing areas should also see an uptick; instead of visiting Grandma on a Saturday afternoon the family would pile into the car (with Grandma) to tour the highways and bi-ways of Ontario wine country. A long LCBO walk could mean that Ontarians finally get the taste for their homegrown wines en masse and will then demand greater access — one weekend away is quaint, but having to make the trek each and every weekend may prove too much. And with that kind of demand we could see movement in this province towards a freer market system with independent and corner wine stores. Maybe the government will get tired of having to pay all those wages, negotiating with an inflexible union and decide to sell off the LCBO — preferring instead to reap the rewards from taxes instead of paying the price of labour unrest … sigh, wouldn’t that be nice?!? As for the employees, the good ones will have no trouble finding a job in the public sector [I think Michael means private sector here], many in the same kind of newly created positions. The others? Well they’ll just go back to ditch digging where they belonged in the first place.

April 8, 2013

The “Winter of Discontent” that brought Margaret Thatcher to power

Filed under: Britain, Economics, History — Tags: , , , , — Nicholas Russon @ 14:42

Megan McArdle explains the temper of the late 1970s in Britain:

To understand the legacy of Margaret Thatcher, you need to understand Britain’s “Winter of Discontent,” in which striking public-sector workers nearly paralyzed the nation. Actually, you have to go back a bit further, to the inflations of the 1970s. Americans remember the “stagflation” of the 1970s as bad, but in Britain it was even worse — the inflation rate peaked in 1975 at over 25 percent.

Governments on both sides of the pond decided that the solution to inflation was to simply declare, by fiat, that prices would not rise so much. In America we got Nixon’s wage and price controls. In Britain, they got the government’s 1978 vow to hold public-sector wage increases to 5 percent — at a time when inflation was running to double digits.

The public-sector workers, as you might imagine, did not like that. And in Britain, the public-sector workers had immense power. Trash piled up in the streets. The truck drivers who ferried goods all over Britain went on strike — and the ones who didn’t, like oil tanker drivers, began feeding their destinations to “flying pickets” — mobile groups of strikers who would go from location to location, blockading them so that workers couldn’t get in and goods couldn’t get out. The BBC called them the “shock troops of industrial action” and that’s an accurate picture; effectively mobilized, flying pickets can grind the wheels of industry to a halt. Which is what they did in the winter of 1978-79.

In Liverpool, the gravediggers went out, leaving bodies unburied for weeks. By the end of January, half the hospitals in Britain were taking only emergency cases. Full of righteous fury, the unions flexed every muscle, demonstrating all the tremendous power that they had amassed by law and custom in the years since the Second World War. Unfortunately, they were pummeling the Labour Party, which had given them most of those powers. And the public, which was also suffering through high inflation and anemic GDP growth, had had enough. They elected Margaret Thatcher, a Conservative grocer’s daughter without roots in the working-class power structure of the labor movement, or the elite power structure of Britain’s famously rigid class system. She systematically went about dismantling the two main sources that gave labor the power to essentially shut down the United Kingdom: lenient strike laws and state ownership of key industrial sectors.

[. . .]

Her detractors should remember that as terrible as it was for the miners when the pits were closed, these mining operations were not sustainable — nor was it even desireable that they be sustained so that further generations could invest their lives in failing coal seams. The work was dreadful. The coal was too dirty for the environment, or the delicate pink tissue of the miners’ lungs. And even if Britain had wanted to keep mining the filthy stuff, it was getting too expensive to dig it out. The mines were playing out, not because Margaret Thatcher was mean, but because the cradle of the Industrial Revolution had burned through much of her coal.

In short, Margaret Thatcher destroyed an industrial system which had yes, provided workers with a secure livelihood, but yes, also done so at an unnacceptable cost. These two things are the same legacy. They cannot be parted.

Her achievement was not inevitable. But looking back at the Winter of Discontent, I’d argue that it was necessary. The alternate future for a United Kingdom where the labor unions hung on was another decade or two of failing state firms and economic decline. By the early 1980s, the UK’s per-capita GDP was lower than that of Italy. You can maybe argue that there was some alternative Social Democratic future, Sweden-style, or perhaps the discovery of an alternative path to capitalism. But it’s hard to look at the convulsions of 1970s Britain and argue that this was a happier past that the nation should pine after. And I find it hard to argue that Britain’s economy could have been modernized without taking on the unions; their veto power made even such obvious steps as shutting down failing mines effectively impossible.

As I wrote a few years back:

My family left Britain in 1967, which was a good time to go: the economy was still in post-war recovery, but opportunities abroad were still open to British workers. My first visit back was in [mid-winter] 1979, which was a terrible shock to my system. I’d left, as a child, before the strikes-every-day era began, and my memories of the place were still golden-hued and happy. Going back to grey, dismal, cold, smelly, strike-bound Britain left me with a case of depression that lasted a long time. It didn’t help that the occasion of the visit was to attend my grandfather’s funeral: it was rather like the land itself had died and the only remaining activity was a form of national decomposition.

February 6, 2013

Why does every infrastructure project cost more?

Filed under: Bureaucracy, Government, USA — Tags: , , , , — Nicholas Russon @ 00:01

In his nominally NFL-related column, Gregg Easterbrook usually manages to insert interesting topics that are not in the least related to football:

Where Is the Bridge to Nowhere When You Really Need It? Another reason unprecedented increase in the national debt is not resulting in newly built infrastructure to help the economy grow is that government projects keep taking longer and costing more. Two years ago on Reuters, your columnist opined, “A combination of top-heavy bureaucracy, union rules, cost-plus profits and graft have made recent federally funded construction projects insanely expensive and slow. When the funding comes from borrowing by Washington, then businesses, unions and local petty officials have a self-interest in running up the cost while dragging their feet.

That column ended by noting the slow pace and cost overruns in plans to replace the Tappan Zee Bridge on the Hudson River north of New York City.

Now two years have passed, and guess what’s happened to the Tappan Zee Bridge replacement project? It’s no closer to beginning. New York Magazine reports that $88 million has been spent just to study a bridge replacement — not for architecture drawings, just study. The original Tappan Zee Bridge, completed in 1955, cost $675 million in today’s dollars and required three years to complete. New York State officials are saying the replacement will cost at least $3 billion and take five years to build. New York Magazine warns the price is lowballing for an expected cost much higher.

New York is demanding that the federal government fund most of the new bridge. Borrowed funny-money would be used; contractors and unions would have every incentive to drag their feet, running up the bill, while corrupt politicians would want the project to last as long as possible, so there was more funny-money to steal.

Meanwhile the existing Tappan Zee Bridge continues to crumble and nothing’s being done. At the current snail’s pace, a new bridge is many years away. What if the existing bridge collapses? Politicians will claim they were never warned, just as they claimed they were never warned before storm surge from Hurricane Sandy smashed up lower Manhattan, Long Island and Hoboken, N.J. Running up the national debt is bad enough; not building what the country needs is even worse. But politicians observe that behaving recklessly, then blaming others, is what advances their careers. Barack Obama acted recklessly with the nation’s finances, and was re-elected. Chris Christie did nothing to prepare New Jersey’s low-lying city from storm surge, then blamed others, and made the cover of Time magazine. Where is the political leader who will place acting responsibly ahead of self-promotion?

November 27, 2012

Comparing Walmart to Costco

Filed under: Business, USA — Tags: , , — Nicholas Russon @ 10:16

Megan McArdle explains why the facile comparison of the two big US retail firms does not make as much sense as people think:

One simply cannot have a discussion about Walmart’s wages without someone bringing up Costco. It seems to be de rigeur, like tipping your waiter, calling your mother on her birthday, and never starting your thank you notes with the words “Thank you”. So lets get it out of the way before the supper gong goes.

[. . .]

Costco has a more highly paid labor force — but that labor force also brings in a lot more money. Costco’s labor force, paid $19 an hour, brings in three times as much revenue as a Walmart workforce paid somewhere between 50-60% of that. (There’s a bit of messiness to all these calculations, because of course both firms have employees who don’t work in stores — but that’s the majority of their workforce, so I’m going to assume that the differences come out in the wash.)

This is not because Costco treats its workers better, and therefore gets fantastic productivity out of them, though this is what you would think if you listened to very sincere union activists on NPR. Rather, it’s because their business model is inherently higher-productivity. A typical Costco store has around 4,000 SKUs, most of which are stacked on pallets so that you can be your own stockboy. A Walmart has 140,000 SKUs, which have to be tediously sorted, replaced on shelves, reordered, delivered, and so forth. People tend to radically underestimate the costs imposed by complexity, because the management problems do not simply add up; they multiply.

One way to think about this is Thanksgiving dinner: how come you, who are capable of getting a meal on the table 364 nights of the year, suddenly find yourself burning things, forgetting the creamed onions in the microwave, and bringing the mashed potatoes to the table a half an hour late? Because when you’re cooking sixteen things instead of four, it is not the same as cooking four four-item meals. There are all sorts of complex interactions involving things like heating times and oven space, and adding more people to the problem, while probably necessary, itself multiplies the complexities.

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