Tag Archives: Economic Illiteracy

Three cheers for the Janus SCOTUS decision and right-to-work laws in 27 states

Political contributions from unions are overwhelmingly given to Democrats and leftists
Contributions from unions are mostly given to Democrats and leftists

Some people think of unions as a force for good. Perhaps they were in the past, but a little reading of economics shows how they actually produce very bad results for workers. In addition to that, unions are actively trying to influence the outcome of elections in 2020, using the money collected from their members. Fortunately, there have been two great developments recently that limit their power.

Here’s a recent story from Just the News:

Leaders of several public and private sector unions are threatening to organize walkouts this fall for teachers, truck drivers and service workers in an effort to protest police killings.

“The status quo — of police killing Black people, of armed white nationalists killing demonstrators, of millions sick and increasingly desperate — is clearly unjust, and it cannot continue,” said a statement issued over the weekend by various arms of the American Federation of State, County and Municipal Employees, the Service Employees International Union, and National Education Association.

[…]The union leaders also called for defunding police departments and universal health care.

You can see their progressive convictions coming out in how they distribute the money they collect from their members.

The Washington Examiner reports:

Organized labor has given more than $1.3 billion to Democratic Party organizations and liberal nonprofit and activist groups since 2010, while 1 percent went to conservative groups or causes, according to a survey of federal data.

The giving is starkly different from the beliefs of most rank-and-file union members, many of whom lean Republican.

Having said all of that, there were two pieces of good news about labor unions that I think we should celebrate during Labor Day.

First of all, there was a very good decision to allow teachers to opt out of having to pay union dues in all 50 states. Second, a large number of states have enacted right-to-work laws, which allow employees in union-dominated jobs to be able to work without being forced to join a union.

This article explains both:

While every public sector employee across the country now enjoys right to work protections under the First Amendment as a result of the 2018 National Right to Work Legal Defense Foundation-won Janus v. AFSCME Supreme Court decision, private sector workers in the 23 states that have yet to pass a right to work law can lose their job for refusing to tender dues or fees to a union.

Right to work protects each worker’s freedom of choice, but the advantages of right to work hardly stop there. Enshrining workplace freedom also brings significant economic benefits to the 27 states that have passed right to work laws.

Between 2009 and 2019, right to work states saw the total number of people employed grow by 16.9%. That’s nearly double the 9.6% gain in non-right to work states, according to an analysis of federal government statistics compiled by the National Institute for Labor Relations Research, or NILRR.

The study also found that, after adjusting for the cost of living, the mean after-tax household income in right to work states was about $4,300 higher than for households in forced-unionism states in 2018, the most recent year for which household income data is available.

The connection between right to work laws and better economic performance is not a surprise. Business experts consistently rank the presence of right to work laws as one of the most important factors companies consider when deciding where to expand or relocate their plants and facilities, where they will create new jobs and new opportunities.

Take the manufacturing sector, for example. The NILRR analysis revealed that employment in the manufacturing sector increased by 10% in right to work states from 2009 to 2019, over three times the 2.9% gain forced-unionism states saw over that same period.

Right to work laws clearly make economic sense, but protecting employee freedom has always been their central feature.

I really liked the Janus decision and right-to-work laws, because I don’t think that conservative workers should be forced to join a union in order to earn a living. The unions should not get access to worker money for free – unions should have to earn their worker’s money by providing value. And the worker should decide whether there is value there, or not.

You can see a full breakdown of union contributions by political affiliation for 2019-2020 here at Open Secrets.

We can see how Democrat presidential candidates would govern from Democrat-run states

California's ignorant Democrat governor Jerry Brown keeps failing
California’s ignorant Democrat governor Jerry Brown keeps failing

A lot of low-information voters decide who they are going to vote for based on the words the candidates speak, and how those words make them feel, and what their peers will think of them. They see their vote as membership in a club, not as a way to get policies that will actually produce real-world results. Thankfully, we can know what results Democrats produce by looking at Democrat-run states.

Let’s start with the Democrat-dominated state of California, which has pursued some of the most aggressive Green New Deal policies in recent years. The prediction from Democrats is that Green New Deal energy policies will lower the cost of energy and produce abundant energy to fuel economic growth. Is that what happened?

Consider this article from National Review:

More than 2 million people are going without power in Northern and Central California, in the latest and biggest of the intentional blackouts that are, astonishingly, California’s best answer to the risk of runaway wildfires.

[…]The same California that has boldly committed to transitioning to 50 percent renewable energy by 2025 — and 100 percent renewable energy by 2045 — can’t manage its existing energy infrastructure.

[…]California governor Gavin Newsom, who has to try to evade responsibility for this debacle while presiding over it, blames “dog-eat-dog capitalism” for the state’s current crisis. It sounds like he’s referring to robber barons who have descended on the state to suck it dry of profits while burning it to the ground. But Newsom is talking about one of the most regulated industries in the state — namely California’s energy utilities, which answer to the state’s public utilities commission.

So, what happened? What happened is that the Democrats pursued a pretty standard play book in which they regulated the energy industry, forcing them to focus on green energy. And the result of that policy was higher electricity prices, higher gas prices and blackouts. By the way, the utility company has filed for bankruptcy, which is certainly not going to help matters.

They really should have known that this would happen, because other countries, like Germany and Canada for example, tried it first. And the results are the same: higher electricity prices and rotating blackouts. Is it any wonder that business owners are fleeing the state, or outsourcing their operations to areas that are more reality-based?

But that’s not all. What else do environmentalists do? They block the thinning out of forests which prevents forest fires. So what happened next?

Meanwhile, California has had a decades-long aversion to properly clearing forests. The state’s leaders have long been in thrall to the belief that cutting down trees is somehow an offense against nature, even though thinning helps create healthier forests. Biomass has been allowed to build up, and it becomes the kindling for catastrophic fires.

As Chuck DeVore of the Texas Public Policy Foundation points out, a report of the Western Governors’ Association warned of this effect more than a decade ago, noting that “over time the fire-prone forests that were not thinned, burn in uncharacteristically destructive wildfires.”

In 2016, then-governor Jerry Brown actually vetoed a bill that had unanimously passed the state legislature to promote the clearing of trees dangerously close to power lines.

The result of their environmentalist policies? Massive wild fires. California already has a homeless epidemic going on, and the wildfires will only make that problem worse.

But that’s not all, there’s more failure to achieve in other areas:

Californians know that having tens of thousands of homeless in their major cities is untenable. In some places, municipal sidewalks have become open sewers of garbage, used needles, rodents, and infectious diseases.

Yet no one dares question progressive orthodoxy by enforcing drug and vagrancy laws, moving the homeless out of cities to suburban or rural facilities, or increasing the number of mental hospitals.

Taxpayers in California, whose basket of sales, gasoline, and income taxes is the highest in the nation, quietly seethe while immobile on antiquated freeways that are crowded, dangerous, and under nonstop makeshift repair.

Gas prices of $4 to $5 a gallon—the result of high taxes, hyper-regulation, and green mandates—add insult to the injury of stalled commuters. Gas tax increases ostensibly intended to fund freeway expansion and repair continue to be diverted to the state’s failing high-speed rail project.

Residents shrug that the state’s public schools are among the weakest in the nation, often ranking in the bottom quadrant in standardized test scores. Elites publicly oppose charter schools, but often put their own kids in private academies.

Californians know that to venture into a typical municipal emergency room is to descend into a modern Dante’s Inferno. Medical facilities are overcrowded. They can be as unpleasant as they are bankrupting to the vanishing middle class that must face exorbitant charges to bring in an injured or sick child.

No one would dare to connect the crumbling infrastructure, poor schools, and failing public health care with the non-enforcement of immigration laws, which has led to a massive influx of undocumented immigrants from the poorest regions of the world, who often arrive without fluency in English or a high school education.

Stores are occasionally hit by swarming looters. Such Wild West criminals know how to keep their thefts under $950, ensuring that such “misdemeanors” do not warrant police attention. California’s permissive laws have decriminalized thefts and break-ins. The result is that San Francisco now has the highest property crime rate per capita in the nation.

Nothing is working. It’s a complete disaster. And it has to be blamed on Democrats, because they have super-majorities in the state House and state Senate, not to mention the Democrat governor.

Although Democrats like to present themselves as science-based and intelligent, the best way to measure scientific understanding and intelligence is by comparing intentions to results. Smart, reality-based people achieve what they tell others they will achieve. If a Democrat claims that they will get X result (e.g. – you can keep your doctor, you can keep your health plan, your health insurance premiums will go down) and they get opposite results across the board, then you know that they are not scientifically-literate or intelligent.

The best way to get the results you want is to elect people with a record of achieving results. That’s why we look at a candidate’s resume and references before hiring them – at least in the private sector. Democrat voters should know better than to hire candidates based on appearances and words and feelings. We need to learn from their failures.

Elizabeth Warren and AOC agree: give convicts and illegal immigrants welfare, enact rent control

Elizabeth Warren is telling people that we have 11 years to live
Elizabeth Warren has a much better way to spend the money you earn

This week, Warren and AOC announced their support for giving taxes paid by U.S. citizens, permanent residents and people here legally on work permits to illegal immigrants. Watch the video below, and read the story, and ask yourself whether you think it is your job to pay for welfare for people who wouldn’t even go through the process of coming into this country legally.

Here’s a short video clip from Fox News:

The Washington Free Beacon reports:

Democratic presidential candidate Elizabeth Warren endorsed a Rep. Alexandria Ocasio-Cortez (D., N.Y.) policy proposal that includes taxpayer-funded welfare benefits for illegal immigrants.

Ocasio-Cortez’s proposal, dubbed “A Just Society,” calls for nationwide rent control and bans the federal government from denying welfare benefits based on an individual’s immigration status and previous criminal convictions. Warren became the first Democratic presidential candidate to endorse the plan, calling it “just the type of bold, comprehensive thinking we’ll need” to make “big, structural change.”

[…]Ocasio-Cortez’s proposal, consisting of six separate bills, calls for the expansion of welfare. Bills three and four make it illegal for the federal government to deny welfare benefits to ex-convicts and illegal immigrants.

[…]The last bill in Ocasio-Cortez’s proposal establishes health care, housing, and healthy food as government-provided rights.

[…]The legislation does not address how to pay for the rising cost of welfare, nor does it explain how it would accomplish its goals.

Remember, AOC and Warren already have the Green New Deal on the table, and the cost for that is $94.4 trillion over 10 years. So where will they get the money for this new plan? Would they do it with their own money? No, they want to do it with your money. They want to do it with your employer’s money. They want to do it with the money earned by the companies in your 401K plan. 

By the way, regarding the rent control. If there is one thing that you learn in Economics 101, it’s that rent control policies do more harm than good. It causes a shortage of living space for the poor, because the people who rent out living space cannot make enough money as they can in other investments. So, they stop investing in rental properties.

The Free Beacon article notes:

Ocasio-Cortez’s second bill, titled “The Place to Prosper Act,” calls for federal rent control by imposing a 3 percent national cap on annual rent increases. Similar legislation has failed at the local level amid concerns that such policies increased housing prices while limiting supply. A recent study by the American Economic Association found that San Francisco rent control policy “drove up market rents in the long run, ultimately undermining the goals of the law.” The Council of Economic Advisers found that in 11 metropolitan areas with housing regulations, deregulation would reduce homelessness by an average of 31 percent. More than 80 percent of economists surveyed by the University of Chicago in 2012 found rent control to be bad policy.

This is not controversial. Harvard University economist Greg Mankiw is the author of a very widely used economics textbook. In his textbook, he has a section where he reports on what economists (academic and professional) agree on, across the ideological spectrum. The number one item on the list, with the highest level of agreement, is that rent control does not work.

He writes:

My textbook covers business cycle theory toward the end of the book (the last four chapters) precisely because that theory is controversial. I believe it is better to introduce students to economics with topics about which there is more of a professional consensus. In chapter two of the book, I include a table of propositions to which most economists subscribe, based on various polls of the profession. Here is the list, together with the percentage of economists who agree:

  1. A ceiling on rents reduces the quantity and quality of housing available. (93%)

You can read the rest of the list on his blog, but AOC and her ally Elizabeth Warren probably disagree with all of them. And that’s who the American left are looking to for leadership. People with no knowledge. People with no achievements. People who have never solved economic problems in the private sector in their entire lives. Warren and AOC have no demonstrated achievements in the area of economic policy. There are just speaking words that make them feel good, and get applause. They don’t know what happens next, if they ever get their ideas put into law.

If you’re not already paying off your debts and saving money, you’d better start. Because when these Democrat demagogues get power, you are going to feel the effects of their economic illiteracy where you live and where you work. Remember Obamacare? We lost our doctors, we lost our health plans, and the costs of our health insurance went up. If you elect an imbecile to make policy decisions, you will be made to feel the effects of your choices.

Why is America so much more prosperous than other nations?

It occurred to me that young people are being taught in government-run schools that central planning of the economy by the federal government works better than allowing states to decide policy for themselves. Naturally, the students – lacking life experience and at the mercy of the unionized teacher’s grading pen – have no choice except to be indoctrinated. But what are the facts?

The genius of America is that the Founding Fathers allowed the federal government to only have power in certain areas of life. Other areas of policy were delegated to the states. This allows states to try different policies to see what works best, or even just what works best for them. Then the other states have the option to emulate that success, or continue doing what doesn’t work. States that do what works will see more success, with more businesses and people migrating to their states. States that persist in doing what doesn’t work will see business and taxpayers flee. That is the genius of America’s design.

Federalism encourages states to operate according to the “principle of subsidiarity”, which is an economic principle that states that problems are best solved at the lowest level possible (individual -> family -> church – > business -> community -> local government -> state government -> federal government). This is because the people at the lowest level have the most KNOWLEDGE about how to solve the problem.

Case study: right-to-work laws

Let’s look at an example – unions and right to work laws. Starting after world war 2, some states decided to pass right to work laws. These laws allowed workers to decide for themselves whether to join a union or not. Since workers had the choice about whether to join the union, the union had to care about the workers and advocate for them, instead of enriching themselves at the expense of the workers via corruption and thuggery.

Here is how different states adopted right to work laws at different times:

Map of states showing adoption of right-to-work laws
Map of states showing adoption of right-to-work laws

What happened in these states? Well job creating businesses started to move from forced-union-membership states to right-to-work states. Why? Because unions were stopping them from innovating. Companies would figure out new ways to improve productivity, such as using machines and computers. But the unions would step in and insist that the old ways were best. The unions wanted their union members to just be able to do the same job, e.g. – pulling a lever over and over, for the entire 35 years of their career. And the unions wanted their members to be paid like a software engineer or a doctor for pulling a lever over and over. The unions also wanted to make sure that underperforming workers could never be fired, or replaced. And so on. Companies realized that they couldn’t compete in a global market like this, so they got up and left for right-to-work states.

Here’s what happened next:

Rates of employment in forced union states vs right to work states
Rates of employment in forced union states vs right to work states

States with right-to-work laws never said that there couldn’t be unions, only that workers wouldn’t have to join a union to work. And in right-to-work states, not only did workers not join unions, they voted not to unionize at all. This resulted in a massive decline in private sector unions in America:

Decline in private sector union membership
Decline in private sector union membership

As a result of job creating businesses not being hampered by union corruption and thuggery, American businesses quickly outpaced their rivals in forced union membership states in productivity, as measured by GDP. They also outpaced the productivity per worker in other economically illiterate countries. Why? Because allowing companies to innovate meant that workers were using more machinery and computers to do their jobs. They learned new skills. Underperforming workers could be replaced with workers who were willing to grow and adapt. Non-union workers higher productivity allowed them to find other jobs if they were laid off.

Right to work states innovate, creating more skilled workers
Right to work states innovate, creating more skilled workers

The job security of the American worker comes from his improved worker productivity – not from the union. Not only did unemployment go down in right to work states (more jobs!) but salaries and benefits also increases, as companies had to compete with each other for workers. However, companies were ok with paying more for workers, because they would rather pay ONLY the workers who deserved it, rather than pay one rate for all union workers, regardless of performance.

This article from the far-left New York Times explains how slaries and benefits rise when job creators move to right-to-work states: Income Rises When Right-to-Work Laws Are Passed because job creators must offer workers a lot in order to get them to sign. Not just salaries and benefits, but realistic development plans to grow the workers skills, making them even more resistant to layoffs and economic downturns.

Quote:

While some persons may favor right-to-work laws largely on philosophical grounds (people should have the freedom to decide whether they want to belong to a union or not), the major reason I support such laws is that they seem to promote prosperity — specifically, higher incomes. Real personal income in the right-to-work states rose nearly twice as much as in other states from 1970 and 2013.

To be sure, most of that reflected higher population growth in right-to-work states — there was massive in-migration to these states from the states denying workers the right to not join a union. Yet even after correcting for population growth, income per person on average rose somewhat more in the right to work jurisdictions. Capital moves to right-to-work states with a more stable labor environment, and that increases labor demand and, ultimately, income and wages.

Although unions mostly died out in the private sector, the ones that remained actually functioned well as unions – focusing on their workers instead of enriching union bosses. They had to, because if they didn’t, then the workers would just opt out of them. The only places where unions still survive is in the public sector, i.e. – government. This is because government is (by law) a monopoly, where consumers have no choice except to accept the garbage that they are offered. They can’t go anywhere else for a lower price, or a better product, or a better service. Public sector unions are immune to innovation, because they lobby the government to prevent any improvement or accountability.

Here is an example of a public sector union’s effort to “help the customer”:

Political contributions by the American Federation of Teachers union
Political contributions by the American Federation of Teachers union

And here’s what those efforts to “help the customer” produced for the customer:

Education spending has tripled since 1970
Education spending has tripled since 1970

They aren’t really helping the customer, are they? What they do is collect dues, enrich their union leaders, intimidate their opponents with threats and force, and then give money to secular left politicians to prevent their customers from opting out of a system that doesn’t produce higher quality and lower prices for the customer. The secular left politicians pass laws that prevent the customers (parents) from being able to get a better product (education for their children) for a lower price. We should abolish public sector unions in order to get the benefits for the customer that we see in the private sector.

Labor unions donated $765 million between 2012 and 2016, and 99% went to left-wing groups

Political contributions by the American Federation of Teachers union
Political contributions by the American Federation of Teachers union

Astonishing article from the Daily Signal.

Excerpt:

Unions across the country donated $765 million to various organizations over the last four years, and 99 percent of that cash went to liberal-leaning causes.

Labor unions gave $764,952,394 to left-wing special interests between 2012 and 2016, according to the Center for Union Facts. Of the nearly $765 million, 99 percent of union political contributions went to left-wing causes. The Center for Union Facts compiled a comprehensive database of information about labor unions in the United States: outlining union spending, salary information, dues revenue data, and more using data from the U.S. Department of Labor.

Examples of who gets the money:

The department’s data show between 2012 and 2016, roughly $240 million went to left-wing political groups. Labor unions gave $77 million to special-interest groups and another $13 million to environmental groups. Over $25 million went to groups like the Coalition of Black Trade Unionists, the National Association for the Advancement of Colored People, and the Rainbow PUSH Coalition.

During this same time frame, almost $307 million went to the Democratic Party and aligned groups, including Media Matters, the Clinton Foundation, Mi Familia Vota, the National Democratic Club, the Advocacy Fund, Progressive Democrats of America, and Planned Parenthood.

[…]Here’s how much a few pro-abortion groups received from labor unions since 2007, according to Luka Ladan, communications director for the Center for Union Facts:

  • Planned Parenthood: $1.18 million
  • Emily’s List: $810,000
  • NARAL Pro-Choice America: $45,000

Examples of who gives the money:

Here are the dollar amounts since 2007 that a few labor unions have given for abortion lobby funding:

  • American Federation of Teachers: $1,150,000
  • American Federation of State, County, and Municipal Employees: $520,100
  • International Association of Firefighters: $10,000
  • Service Employees International Union: $180,000
  • United Association: $40,000
  • United Auto Workers: $100,000
  • United Food and Commercial Workers International Union: $35,000

Teachers, non-import auto workers, government employees. All pro-abortion. I never buy cars made by union employees, I’d just be funding abortionists.

I think there was a time in America’s history where unions were actually doing some good, but that time has long gone. We can’t allow labor unions to take the country in the direction of Greece and Venezuela, otherwise none of us will have jobs, and we’ll be selling our bodies for food, like they do in other communist countries. I would like to see some legislation banning public sector unions outright, and then a national right to work law should finish off the private sector unions, since rank-and-file private sector union workers are typical not radical leftists. We definitely need a national voucher law to get the money out of the public schools and back into the hands of parents.

Whenever well-meaning people vote for more taxpayer more for union-dominated fields like education, keep in mind that a  significant portion of this money gets funneled back into anti-American causes. Be careful about wanting to spending more taxpayer money “for the children”, because it often turns out to just be more taxpayer money for the Planned Parenthood, or for the Clinton Foundation, etc.