Public Employee Unions, Banks, and Bankrupt Cities: Who's to Blame? – Part One

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Just this morning, while reading about cities being broke, I realized that MetalMiner hasn’t really weighed in on the public union debate, mostly stemming from the Wisconsin / Gov. Scott Walker debacle, what with the need for spending cuts and curbing the right to collective bargaining, let alone how public employee unions factor in to the looming bankruptcies of cities and states.

So here’s my own personal take.

Consider the lead paragraph from this piece in last Sunday’s Times Magazine:

“Vallejo, a city about 25 miles north of San Francisco, offers a sneak preview of what could be the latest version of economic disaster. When the foreclosure wave hit, local tax revenue evaporated. The city managers couldn’t make their budget and eliminated financing for the local museum, the symphony and the senior center. The city begged the public-employee unions for pay cuts ” all to no avail. In May 2008, Vallejo filed for bankruptcy. The filing drew little national attention; most people were too busy watching banks fail to worry about cities. But while the banks have largely recovered, Vallejo is still in bankruptcy. The police force has shrunk from 153 officers to 92. Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. Three of the city’s firehouses were closed. Last summer, a fire ravaged a house in one of the city’s better neighborhoods; one of the firetrucks came from another town, 15 miles away. Is this America’s future?

Clearly, cities and states are screwed because they are super-short on revenue. Tax bases have eroded why? Liberals may point to Bush-era tax cuts for the wealthy, and conservatives may call out massive overspending by local, city, state and federal governments on “frivolous line items, most notably public sector unions and Social Security/Medicare/Medicaid, etc. But both groups, including those in the middle, likely agree that the dearth of well-paying jobs is not helping any citizen contribute to their respective tax bases, be they in Detroit, Harrisburg, Pa., or Vallejo, Calif.

Now, I don’t think collective bargaining is to blame for all the ills facing municipal budgets; nor are unions the be-all, end-all evil that many farther-right conservatives make them out to be. Indeed, I’m sure many hard workers exist in the public sphere, those who pull their weight for their salary and benefits. And I also concede that many middle class blue- and white-collar workers, be they in the public or private sectors, are pissed off at the Wall Street banks and hedge funds that played so carelessly with money and mortgage securities that led to the taxpayers bailing them out. It makes me livid to think that CEOs and top managers walked away with million-dollar bonuses when the economy shafted the majority of Americans (the worst offenders, in my opinion, should be sitting side by side with Bernie Madoff behind bars) and I’m not even a union worker. But it sets a terrible example for those who actually do work hard to make mid-five-figures and simply want basic benefits for their families. (The utter disparity in economic conditions between the richest and poorest in the US is another post entirely, and no matter what anyone says, the markets are not really built to close the gap they thrive on that disparity.)

But as I see it, however, there is only one long-term solution.

(Continued in Part Two.)

–Taras Berezowsky

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