Now You Tell Us -- "Curbs On Unions Likely To Starve Activist Groups"

"Curbs On Unions Likely To Starve Activist Groups" -- that's the lead headline (top right of page A1) in today's print edition of the New York Times.  In the online edition, it's "Supreme Court Labor Decision Wasn't Just a Loss for Unions."  The gist of the article is that this right-wing Supreme Court is now going after our friends to de-fund them.  To Pravda, that seems to be a big problem.  To me, it seems like there's a rather gigantic scandal going on here that has nothing to do with what Pravda thinks is the scandal.  

The Times's article discusses the effects of the Supreme Court's decision last week in the case called Janus v. AFSCME.  That's the case that invalidated so-called "fair share" payments, which are the payments that many state and local governments have required their employees to make to labor unions, even if a given employee declines to join the union.  Henceforth, under the majority opinion in Janus by Justice Alito, if a government employee does not want to join a labor union, he does not have to pay the union anything as a condition of keeping his job.

OK, but how exactly is this going to "starve activist groups"?  After all, prior to this decision, didn't non-members of the union already have the right to decline to contribute to the union's political activities, and to limit their payments to the portion of union dues that supports collective bargaining activities? 

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The Difference Justice Gorsuch Has Made

Neil Gorsuch was confirmed to the Supreme Court on April 7 last year, and on April 9 I welcomed him with a post titled "A Few Places Where Justice Gorsuch Can Make A Difference."   That post took note of the remarkable fact that, while the "conservative" justices on the Supreme Court often disagreed with each other in high-profile cases, that was never the case for the "liberals."  In any case viewed as politically important to achievement of some policy outcome favored by the progressive movement, the "liberal" justices could always be counted on to vote as a unified bloc.  From that post:

The overriding philosophy of the "liberal" bloc has been discussed many times on this blog, and there is nothing complicated about it.  The basic concept is that the government consists of neutral, apolitical experts whose job it is to move us all towards greater and then perfect justice and fairness through the magic of more and more laws, rules and regulations.  The neutral experts must be given full authority and discretion to rule over the people in order to complete this project.  Obviously the government [and not the people] must run the country, because otherwise there would be chaos!  Or, even worse, unfairness!

Once you observe this unified voting for more bureaucratic power over the people enough times, you might even get the impression that perhaps these justices care little about upholding the Constitution, and mostly care about making sure that "our side" wins and the other side gets suppressed.

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At NYCHA, Spectacular Failure -- Or Is It Spectacular Success?

Anyone who pays even a little attention to the bureaucratic/socialist business model quickly figures it out:  the fundamental problem is that the people who run the system view "success" not in achieving their stated mission, but rather in growing their own staffs and budgets.  And the way to grow your staff and budget is to reveal that the problem you are tasked with addressing is worse than anyone ever thought, and only more money can cure it.  In other words, the way to "success" is through failure, and the more spectacular the failure, the better.

Last July, I highlighted a particularly notable example of this phenomenon in the New York subway and commuter rail system, in a post titled "In Government, Failure Is The Way To Get Yourself More Money."   The system had just suffered a disastrous series of derailments and other major delays -- things that should have been completely avoided through normal, ordinary maintenance.  Facing a political firestorm, the Governor demanded immediate fixes; and the bureaucracy responded as you would expect they would:  We can do it for an immediate cash infusion of an extra $800+ million!  And, why wasn't the previous multi-billion dollar annual budget sufficient to do the job?

The genius of this is that, in the crisis of the moment, with derailments and delays constantly in the news, nobody stops to ask why the vast sums of money they were already getting were not sufficient to maintain the system.  Is the current budget being used effectively?  This question is just too crude to be asked in the middle of such a crisis.  Certainly, the politicians are unanimous in their view that this is not the time to start blaming the inefficiency of the unionized work force, but rather is an opportunity to hit up the taxpayers.

Today the functionaries at the Metropolitan Transportation Authority are in the process of being shown up as rank amateurs at this game by their compadres at another New York bureaucracy, the New York City Housing Authority.

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How To Run For Governor Of New York

How To Run For Governor Of New York

So you want to run for Governor of New York?  No problem -- it's easy!  We can look to the emerging re-election campaign of current Governor Andrew Cuomo to see how it's done by the pros.

There are a few basic rules.  Rule number one is, every time the New York Times comes up with some kind of ridiculous new regulatory initiative or spending program to solve the problems of humanity, you implement it immediately (with other people's money, of course).  This is the functional equivalent of the magician's diverting the observer's attention while the real activity goes on somewhere else.  The progressive do-gooder will fall for it every time!  

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Not So Fast With That Trillion For Infrastructure

With the tax reform law under their belt, all the talk is that President Trump and the Republicans in Congress are now going to pivot to "infrastructure."  This is the ultimate proposal that could get truly universal popular support.  After all, everyone knows that our infrastructure is "crumbling."  Trump campaigned on a promise to fix that with a trillion dollar program.  Infrastructure spending "creates jobs" (it must -- you can see the people working!), and, when completed, the projects are tangible and surely seem to be adding something to the economy.  This is a win, win!  Who could possibly be against it?

Well, that's why we have contrarians around here.  Government dispensing the infinite pile of free money at these levels creates irresistible incentives for graft and corruption on a gargantuan scale.  In the world of infrastructure spending, it's one thing when the government first identifies a project believed likely to enhance the welfare of the people, and then funds it gradually as money becomes available.  Infrastructure funded on this model could well become a net enhancer of the people's welfare.  The Interstate Highway System would be an example of this model.  But that's not what we're talking about here.  What we're currently talking about is the government first deciding, with no specific projects in mind, that the trillion dollars is going to be spent; and then soliciting ideas from people who want to get in on the largesse.  The prospects that most of the money will be well spent are very slim.  

Even in the best of circumstances, involving desirable and even badly needed projects, the incentives of government processes can lead to tremendously negative results.  Let's consider today what is going on in subway and tunnel construction in New York.

First, there is a legitimate need for additional subway and tunnel construction in New York.  On the East Side of Manhattan, there once was an elevated train line that stretched the length of the island along Third Avenue.  In 1955 they tore it down, with the promise that it would shortly be replaced with a new subway running along roughly the same route one block East, under Second Avenue.  Sixty-three years later, only about a mile and a half of the Second Avenue line has been built.  The other subway on Manhattan's East Side, the Lexington Avenue line, is crowded much of the time to the point of being unusable.  Build-out of the Second Avenue line would greatly ease congestion and improve mobility.  As a second example, there is only one tunnel under the Hudson River to carry all of the Amtrak trains plus all of the New Jersey Transit commuter trains.  That tunnel is used at capacity (at least on weekdays) and needs major repairs, which cannot be done while scores of trains are running through the tunnel every day.  So a new trans-Hudson tunnel is widely agreed to be a priority infrastructure project for the region.  

But if these projects are so necessary and important, why haven't they already been built?  The answer is that, with coercive government assistance, a small number of labor unions have gotten themselves into a monopoly position where they can demand enormous sums for themselves and their members, absent which they have the ability to block these projects.  As a result, prospective costs of construction of these and similar projects are wildly, wildly out of line.  Every time somebody puts a number on how much one of these things will cost to build, it's good enough to kill the project for another few years.

Note that the issue is not that it is inherently too expensive to construct subway and railroad tunnels.  Rather, the issue is that our costs are not twenty or fifty percent too high, but five to ten times international norms.  With costs that wildly out of line, nothing gets built.

I first covered this subject three years ago, in November 2014.  At that time, one of those gubernatorial "blue ribbon panels," the MTA Reinvention Commission, had just come out with a big report on how to solve the MTA's problems.  My take was that they had (as usual) missed "the elephant in the room" -- the elephant being the wildly out-of-control construction costs.  The "Reinvention Commission" devoted all of its time and energy to finding "new funding streams" to pay for projects (in opaque and unaccountable ways), without ever considering whether something needed to be done about the out-of-control costs:

[E]very time some project gets proposed, a price tag gets attached to it that is so enormous that next to nothing can or does get built.           

My post built on the invaluable work of Alon Levy of Pedestrian Observations, who has single-handedly compiled international cost comparisons, for example between New York and places like London, Paris and Milan.  Levy's work has shown that tunneling for trains and subways that can be done for $300 - 400 million per mile in those cities somehow costs $1.5 billion to $3 billion per mile in New York.  Wow!

And now, three years late to the game (but we'll take it) the New York Times finally weighs in yesterday with a big front page article by Brian Rosenthal headlined "The Most Expensive Mile of Subway Track on Earth."  I spend enough time bashing the Times that this time I should give them some real credit for putting in the effort to identify the reasons that New York's costs are so crazily out-of-line.

Some excerpts from the Times article:

Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show. . . .  

The reasons for the M.T.A.’s high costs start with the sheer number of people employed.  Mike Roach noticed it immediately upon entering the No. 7 line work site a few years ago. Mr. Roach, a California-based tunneling contractor, was not involved in the project but was invited to see it. He was stunned by how many people were operating the machine churning through soil to create the tunnel.  “I actually started counting because I was so surprised, and I counted 25 or 26 people,” he said. “That’s three times what I’m used to.”

The unions and vendors declined to release the labor deals, but The Times obtained them. Along with interviews with contractors, the documents reveal a dizzying maze of jobs, many of which do not exist on projects elsewhere. . . .  

There are “nippers” to watch material being moved around and “hog house tenders” to supervise the break room. Each crane must have an “oiler,” a relic of a time when they needed frequent lubrication. Standby electricians and plumbers are to be on hand at all times, as is at least one “master mechanic.” Generators and elevators must have their own operators, even though they are automatic. An extra person is required to be present for all concrete pumping, steam fitting, sheet metal work and other tasks.

In New York, “underground construction employs approximately four times the number of personnel as in similar jobs in Asia, Australia, or Europe,” according to an internal report by Arup, a consulting firm that worked on the Second Avenue subway and many similar projects around the world.

Now we're going to have a fresh trillion dollars to pay for such projects.  So what if the Hudson River tunnel will cost $20 billion instead of the $3 - 4 billion that it might cost in another city?  So what if the Second Avenue subway build-out will cost $20 billion instead of $3 - 4 billion that it might cost somewhere else?  Shouldn't we just go for it?

Actually, this is important.  The fact that these union practices are government-sanctioned does not mean that they are not an extreme form of graft and corruption.  No matter how badly needed, these projects cannot and should not be built until either the unions bring the costs under control or a way is found around the union blockade. 

A trillion dollars of infrastructure spending?  It will all disappear with almost nothing to show for it if we are not careful.                

Sometimes The Adverse Results Of Unionization Occur Rather Suddenly

At my tag for Unions (located under the Archive tab) you will find many tales of heavily unionized industries undergoing long and steady decline.  These are industries like steel, automobiles, tires, supermarkets, and the Postal Service.  All of them have experienced gradual job losses in the hundreds of thousands over the course of several decades among unionized workers, although in most of the examples non-unionized competitors have arisen and thrived.  The job losses have come as the unionized firms have gradually downsized or, in many cases, gone bankrupt.  As I put it in this post back in June 2015, "Gradually, the unions put their employers out of business."   

Sometimes it's not so gradual.

Which brings me to the tale of the DNAInfo and Gothamist websites.  DNAInfo was founded in 2009 by entrepreneur Joe Ricketts as a site for in-depth reporting of local news in the New York City area.  Ricketts is also known as the lead owner of the Chicago Cubs.  I have read DNAInfo often, and linked to it many times.  It frequently had local stories not available elsewhere.  (In case I haven't mentioned it, the coverage of local stories by the New York Times is terrible.)  Earlier this year, DNAInfo acquired another NYC-oriented site called Gothamist, and the two merged.  Around the time of the acquisition and merger, there were some layoffs.  Even after the layoffs, neither of the two sites was profitable; but they were carried by capital infusions from Ricketts, even as he tried to work toward profitability.

In April the editorial employees of the combined businesses announced their intention to join a union, the Writers Guild of America, East.  Ricketts refused to recognize the union, and tried to dissuade the employees from pressing forward with a letter on April 19.  Excerpt:

I always thought of DNAinfo as a united team doing something that no one else has figured out how to do: building a viable business around neighborhood news. . . .  I want you to know that I still believe we are [on the same side]. We’re either going to make this business successful together or we won’t. And, frankly, I’m not interested in a company with an “us” versus “them” dynamic.    

The employees insisted on pressing forward, so the NLRB called a vote.  The vote was held a week ago, October 26.  The union won handily, 25-2.

The next day, it was euphoria among the union and the newly-organized employees.  Hollywood Reporter reported the story on October 27.  From Lowell Peterson, Executive Director of the WGAE:

“The people who write and produce content for digital news companies have made it crystal clear that they believe collective bargaining is essential to building sustainable careers,” said WGAE executive director Lowell Peterson. “The employees at DNAinfo and Gothamist have joined more than 700 of their colleagues in winning a voice on the job. We will form a strong, engaged bargaining committee to negotiate a contract that addresses their concerns and meets their needs.”

And from the DNAInfo-Gothamist Organizing Committee:

“This vote came after a long campaign for voluntary recognition, and we want to thank everyone who supported our effort to protect the workers of DNAinfo and Gothamist, which have been widely recognized as indispensable to local and neighborhood news in New York City.”

The euphoria was short-lived.  Today Ricketts announced that he was closing the sites.  All of the employees will be laid off.  Oops!  Perhaps they should have taken the time to read Ricketts's blog.  He had a post on September 12, basically forewarning what was in store.  The headline was "Why I'm Against Unions at Businesses I Create."  Excerpt:

I will . . . tell you what I know, and I know about starting and growing businesses.  I know that businesses constantly face a barrage of obstacles to survival – never mind success – and, in the face of that, everyone at the company needs to be pulling together or that company won’t make it.  I know that keeping a company growing and thriving requires focus and tireless effort by everyone.  Indeed, in my opinion, the essential esprit de corps that every successful company needs can’t exist when employees and ownership see themselves as being on opposite ends of a seesaw.  Everyone at a company – owners and employees alike – need to be sitting on the same end of the seesaw because the world is sitting on the other end.

I believe unions promote a corrosive us-against-them dynamic that destroys the esprit de corps businesses need to succeed.  And that corrosive dynamic makes no sense in my mind where an entrepreneur is staking his capital on a business that is providing jobs and promoting innovation.

Basically, amidst the daily struggle to make a business succeed, let alone facing ongoing need for large capital infusions, Ricketts was not interested in getting involved in fighting an adversarial union.  Can you blame him?

For another perspective -- otherwise known as the usual progressive talking points -- we can turn to a guy named Jake Dobkin, who was the owner of the Gothamist site before selling out to Ricketts.  A site called Splinter News points to a post written by Dobkin last year on the (then-independent) Gothamist site, with the following quote:

I would like to suggest . . . a commitment to overthrowing the tyrannical capitalist system that makes working people run ever faster to earn the same wages. Perhaps it is time for all creative comrades to stop struggling and realize they have joined the submerged working class, and to band together on that basis with other poor people to change the system which oppresses everyone.

Well, Mr. Dobkin, in your narrative, aren't you yourself the "tyrannical capitalist"?  And in the world you envision, who is supposed to fund the new higher wages of workers in a money-losing business?  The taxpayers?

You can see why unions -- or at least, unions on the adversarial Wagner Act model -- have no future in the private sector.  As to the public sector, we will have to see how the Janus case turns out in the Supreme Court.