09 January 2011

Unionized Bankruptcy ~ Public-Sector Leeches...

In The Battle Ahead the Economist writes about the struggle with public-sector unions, cutting their outrageous benefits, boosting their productivity dramatically, and ensuring some degree of parity with the actually productive members of society...
"Politicians have repeatedly given in, usually sneakily -- by swelling pensions, adding yet more holidays or dropping reforms, rather than by increasing pay. This time they have to fight because they are so short of money. But it is crucial that the war with the public-sector unions is won in the right way. For amid all the pain ahead sits a huge opportunity -- to redesign government. That means focusing on productivity and improving services, not just cutting costs. [...] he immediate battle will be over benefits, not pay. Here the issue is parity. Holidays are often absurdly generous, but the real issue is pensions. Too many state workers can retire in their mid-50s on close to full pay. America’s states have as much as $5 trillion in unfunded pension liabilities. Historic liabilities have to be honoured (and properly accounted for, rather than hidden off the government’s balance-sheet). But there is no excuse for continuing them. Sixty-five should be a minimum age for retirement for people who spend their lives in classrooms and offices; and new civil servants should be switched to defined-contribution pensions. Another battleground will be the unions’ legal privileges. [...] Fixing the public sector must not be allowed to degenerate into demonising it. Its health is vital to the health of society as a whole, not least because of its impact on economic growth. Bad teachers mean a lousy talent-pool for employers. Allowing a subway driver to retire at 50 on an artificially inflated pension means less to spend on infrastructure: just look at America’s highways and railways. Even if many public services are monopolies, private capital is mobile: it goes to places where government works. With ageing populations needing ever more state help, the left should have as much interest as the right in an efficient state sector (perhaps more so, as it thinks government is the way to right society’s ills). Private-sector productivity has soared in the West over the past quarter-century, even in old industries such as steel and carmaking. Companies have achieved this because they have the freedom to manage -- to experiment, to expand successful innovations, to close down bad ones, to promote talented people. Across the public sector, unions have fought all this, most cruelly in education. It can be harder to restructure government than business, but even small productivity gains can bring big savings."
Horrible. Massive privatization and breaking absurd contracts are what are needed.

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