Unions in the Public Sector

I’ve been thinking quite a bit about the prevalence of unions in the Canadian public sphere and the relative absence in the private one, something that I detailed about in previous post. My comments were unsatisfying and left me wondering if I were simply advocating the usual neoclassical economic ideals of free markets in all parts of life including labour.

See, I think that unions do lots of good in the economy. They are the only way for the majority of the workforce to extract anything from their employers. Economic theory normally gets around this by assuming that firms are owned by the same population of agents that live in the economy and so if the firms make money then it is a plus as that will be distributed via a dividend. Of course the reality is much more complex with most stock owned by the wealthy who benefit from any dividends while there are many companies that refuse to either give out all or any of their profits to their shareholders. In these cases its much more difficult to show that the general good is done by seeing the firms make higher profits by lowering the wages of their employees.

My concern is that because the private sector workers are going to be making less in both wages and benefits that they will turn against their public sector brethren. If they aren’t able to form their own unions and make their own wage increases then it becomes an entrenched two-tier system with the winners working for the government. It may seem extreme, but that route is like India where parents dream of seeing their children work for the government because it pays well and is a steady job while the private sector that has the potential to make the economy grow is starved of talent and productivity. Or a more likely scenario is where a government comes into power with the support of the private workers and a mandate to tear apart public workers like several right wing provincial governments have already done in this country.

I’m not sure the solution but it’s a problem that’s only going to get worse.

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Resources in the North

Prime Minister Harper is up in the North for his yearly visit and has been promoting the land for future resource extraction especially based on the new law his government passed that necessitates only one environmental study before any new projects. He has been detailing how new resource projects are the key to ending native unemployment in the north and bringing jobs and prosperity to the region.

It got me thinking- is resource extraction something that brings jobs to locals? While the romantic images are of thousands of men staking claims along rivers and panning for gold, or going in and out of mines with pickaxes, I’d wager that in Canada the vast majority of this work is now done by highly skilled engineers with expensive equipment. In many ways that’s great, it means that mining is much more productive and that we can create much more wealth from far fewer working hours leaving more for everyone to enjoy. This is how we moved from a society that spent all of its time farming simply to subsist to being able to diversify and enjoy the wealth that is all around.

The issue is that I doubt that many of these new jobs are actually ones that will directly bring unemployment down. There are just not enough people in the regions to produce the skilled workers need and so instead there will be a large influx of people from the outside. That’s not such a bad thing, these newcomers will need to have housing, food, supplies, and everything else that they can buy with their wages so for those not so inclined to working in the sector there will be other jobs. What I’m interesting in knowing is how much of this extra are the different communities able to capture or if the windfall comes more from the royalties paid with everything brought from the ground.

Who Should Collect the Garbage?

Just recently a part of Toronto had its garbage collecting services changed from the in-house government run and operated to a collection of different privately owned companies. There were complaints on the first few days of garbage not being collected on time, items missed, and a few other random issues which seems hardly surprising given the scale of the operation. It’s silly to base an argument on one data point- akin to saying that Global Warming doesn’t exist because it’s been a cold summer- analysis on how much better or worse things are will have to wait for time to deliver the data.

What should and shouldn’t be a government service? Sectors that already have private companies working in them and are not a natural monopoly (many different companies can coexist providing for competition) are the easiest to argue for conversion to the private sphere. The argument that services will not have the same level of quality can be addressed by setting metrics that all private companies must adhere to that would be exactly the same as with public management. As long as there are more than one service providers then it will always be easy to terminate a contract when these rules have been broken and bring in another.

The most contentious item in the debate revolves around wages and benefits and how the switch to privatization will lower them both. I see this as a part of the much larger issue of increased income disparity and loss of job security that have plagued Canada and other developed nations since the 1970’s. In 2011 (according to Stats Can) the rate of unionization in the public sector was just over 71% while only 16% in the private one. It is therefore very difficult to make an argument that the tax paying members of the private sector must pay part of their wages to keep the other part of the workforce in better conditions, making the debate “us against them.” If the city is keeping these jobs in the public sphere because it feels that the market rates of pay are too low then what is stopping it from running even more services and expanding to other areas that it currently doesn’t cover? I don’t see how this would ever be politically feasible within the current private and public disparity and so the issue of wages needs to be handled on a much broader level.

Fundamentally this is about how much people get paid for doing a job and if it should be set by supply and demand (number of jobs available and number of people able to do them) or with some other mechanism. Or, the government can change the game by instituting a form of guaranteed income paid for by taxing profits which has the possibility of making the switch from public to private a non issue in terms of wages.

Misleading Media Lines

This week on CBC Radio’s The World at Six they ran a sequence of stories about India and how it is now an “economic juggernaut” of the world (Powershift). I think that the series was okay and anything that helps people understand what is going on in other parts of this planet is welcome. However, the first day’s program was fun of example of how certain facts, while completely true, have entirely different meanings when they are placed in different contexts.

In talking about the growing middle class there was a short story about a modest house costing over a million dollars in the middle of the city. Because this story came directly off one of how more people had money it made it seem that the city was perhaps bursting at the seams of people with cash to spare. The truth, which can be found in the fantastic book Triumph of the City by Edward Glaeser, is that India’s cities have fierce laws limiting the heights of buildings which force an expansive population to live at a much lower density that others in the world. This limits the available housing close to the centers and with such a restrictive supply the demand from rich people can be much less to see the same price rises as in other places. It isn’t wrong to cite this as an example of a richer population, but it isn’t being completely honest with those who won’t understand the context.

Another “fact” that was talked about throughout the series was that the English speaking nature of so many in India was bound to be a huge benefit economically. While I have read this many times I have never seen proof that this casual thought was anything but. The Philippines have been saying this for ages and yet are poorer than many of their immediate neighbours. If it were true then how is it that Ghana is not doing better than it is with its English speaking and close proximity to Europe? It would be nice if reporters were able to question just a bit more or at least caution the listeners that these are things that are thought and are not proven facts.

Canadians aren’t much different from Americans

I realize that as Canadians we have a hard time defining ourselves anything but in oppositions to our much larger neighbour to the south. The fact that healthcare is continuously brought up as something that defines us as a nation only serves to illustrate how captivated we are by the Americans- and fail to notice that they are the ones defined by that fact (all other industrialized countries have universal healthcare, Canada is one of the pack). The world’s largest producer of seductive culture is going to be the standard as to which we are different.

However, I wish that Canadians would realize how similar we really are the the Americans and stop believing the simplistic notion that we are always apologizing for everything and simply the nicest folk around. Having traveled across the border on many occasions I can say that things are not much different north to south and if anything people are more friendly down there. Judging by the comments on this CBC site it doesn’t appear that many people are able to consider the fact that maybe there are rude Canadians.

I tend to believe that the North American continent is culturally different north and south but that it does not occur at the 49th parallel. On the west coast, for instance, the cities of Vancouver, Seattle, and Portland are all very similar and could easily find more cultural links between them than their respective brethren on the eastern seaboard (the same could be said of the interior parts of BC, Washington, and Oregon which are all much more culturally conservative and unlike both the coasts). The Southern part of the USA is very different from anything that exists in Canada but it’s no different from the northern US states which are also very different from it.

Off the Island

Recently Toronto’s mayor Rob Ford made some confusing remarks about what he wanted to see done in the wake of multiple shootings in the city. While the transcript shows how uninformed he is about laws and the constitution it is easy to understand what he wants to say:

ll I’m saying is, if you’re caught with a gun and convicted of a gun crime, I want you out of this city.

I had just finished reading a fascinating article in the magazine Maisonneuve called “Anatomy of an Occupation” which detailed the brief history of the Occupy movement in Toronto and the small settlement that set itself up in the fall of 2011. I haven’t checked but I’m sure that members of that group would find lots of issues in the article, in particular its singular focus on individual dramatic conflicts between members (reminds me of interviews with the surviving members of the Doors that said while the movie was an actuate portrayal of the band it missed completely the fun nature that Jim Morrison had most of the time) at the expensive of anything else, but what was printed is still instructive for my point. There were several occasions in which members were either too unstable or too extreme and had to be kicked out of the park and out of the group. While this seems perfectly reasonable and I’m sure was done in order to allow the movement to continue working, there was always an element of how this was an attempt at a new kind of society which makes the expulsions much more interesting.

While I’m not trying to equate the two situations, they are similar in their need to deal with people that refuse to fit in and are a physical danger to the rest of the members in the group. There is nothing new about this issue, philosophers such as Nozick have tried to fit solutions into their theories about these “independents” while groups such as the Hell’s Angels simply embraced their status as one percenters who will never fit in. The problem is that we do not have the option of simply excluding troublemakers from our society anymore. It’s not an option to send people to Australia- if Rob Ford wants people out of Toronto then where does he propose that they be moved to? Why would any other town want people who are potentially dangerous? Unless the ideas of work gangs in the north are considered (see Stalin gulags) then the logical end game of this line of thinking is to put people away in jail for life.

How is Private better than Public?

From a BBC article on the uproar currently happening in London over the security situation for the Olympic Games just weeks away:

Jennie Kesall, from Manchester, was due to start working for G4S next week but said she was still waiting for her uniform and paperwork.

“On 15 June I was offered a job in Glasgow to work in one of the venues there if I was interested, and I replied saying that I was,” she said.

“Since then I have not heard anything. Also, if I have got the job am I supposed to be going to Glasgow next Monday to start? I have no uniform, passes, contract or confirmation. I have tried contacting them asking for information but I have heard nothing.”

This all from a private company that was hired to supply security for the events. It’s a good example of a private company bumbling along, something that normally is attributed to the government. Companies have failures all the time, it’s just that normally they have competitors in the market with overlapping goods or services so one’s failure is gain for another. This all changes when the industry is a monopoly (which it seems to have been here, or at least it was structured as such) and there are no competitors waiting in the wings to smooth things over.

I would be very interested in knowing how the bid was accepted and if there were benchmarks along the way that the company had to prove they were following. Also who’s going to cover the cost of bringing in all the police and armed forces? Or do the companies just get to take in profits without the risk of losses?