The world has been watching the upheavals and protests shaking the Middle East these days, but it’s just possible that the disturbances in Madison, Wisconsin mark what will ultimately prove to be a bigger turning point in world history.
In the heart of Blue State America, we are seeing a challenge to some of the fundamental assumptions behind the progressive state, and we could conceivably be watching both the birth pangs of a new social model and the first big step in America’s transformation into a true 21st century economy. And ironically, while Democrats are not, to put it mildly, happy with Governor Walker’s anti-public union bill, in the medium term the Democratic Party (and others who want to see government taking on more responsibilities) will be one of the biggest beneficiaries of the bill.
It is too soon to tell whether Governor Walker will get his bill through the Wisconsin legislature; as long as the beer and the waitresses hold out at the Tilted Kilt, the 14 embattled Democratic state senators can delay final passage of the bill — and they may even force the Republicans to negotiate over its provisions. But with a similar bill moving towards passage in Ohio, and governors and legislators around the country looking for ways to cut state deficits, the foundations of the blue social model are shaking.
I am not exactly glad this is happening; the teachers, firefighters and ordinary state and local government workers who are going to be paying much more for their health care and earning much less generous pensions are regular Americans playing by the rules as they found them. These are middle class people and middle class families, and most of them are far from affluent. Contrasted to the bankers and the business executives who the government bailed out, America’s civil servants are less greedy and more socially productive.
Madison Teachers’ Protest (Source: Flickr User: WxMom)
Despite the terrible impression created by irresponsible teachers in Madison fraudulently calling in sick and hauling children down to protests they do not understand, and despite tactics that have further damaged the already poor image of public sector unions, these working people and their families are not wrongdoers or parasites. But they have allowed themselves to be deceived by the false promises of demagogic and irresponsible politicians and they now stand in the way of inevitable, necessary and ultimately benign changes in the way our society works.
The problem is that the way we do government in this country has to change — and it will have to change in ways that put the interests of those who don’t have government jobs ahead of those who do. The number of people employed by government is going to have to shrink; much more work will have to be done by many fewer hands — and many tasks historically done in government bureaucracies by life-tenured employees will be done by private sector workers employed by outside contractors. Nor can government workers enjoy pension plans and health benefits better than those widely available in the private sector; the days of defined benefit pensions for government workers are drawing rapidly to a close.
The Battle of Madison is part of a national struggle over the future of American society. The public sector unions and their allies believe in what I’ve called liberalism 4.0, the twentieth century’s dominant set of progressive ideas. It was the ideology of a society made up of big unions, big corporations and big government. The Big Three car companies, Big Three networks and the Big One phone company (back when AT&T had a legal monopoly on providing telephone service) were held in check by government regulation and union power rather than by free competition.
Technological change, global competition, and the rise of a more dynamic economy have wrecked the old social model, but old institutions, old habits of mind and old interest groups don’t disappear overnight. In many ways, public sector unions and government employees are the last great citadel of the Blue Social Model and what we see in Madison (as well as Ohio and Tennessee) is a way of life fighting for survival in the last ditch. We should not be surprised that the battle is fierce, the tactics ruthless, the polarization intense: this is not just a struggle between interest groups, it is a conflict over basic ideas about how the world does or should work.
Regardless of what happens in Madison this week, it is a hopeless battle. 4.0 liberalism and the Blue Social Model aren’t immoral and they helped many Americans enjoy roughly two generations of unprecedented prosperity — but they are unworkable in the contemporary world. States that don’t make the kind of changes that Wisconsin seeks will face the problems that loyally blue Illinois does now: staggering pension bills that undermine the state’s credit and cripple its ability to attract and hold business. An article in the New York Times, that bastion of blue thinking, mocks Illinois’ latest plan to pay its current pension bill with a $3.7 billion bond issue. Note reporters Mary Williams Walsh and Michael Cooper, Illinois “is essentially paying a single year’s bill by adding to its already heavy debt load. That short-term thinking is not unlike Americans taking out home equity loans to pay for cars and vacations before the housing bust.”
However much money the public sector unions fling into the maw of Democratic party politics, the old system is going down. Workers will actually do better in states that act quickly; the longer the day of reckoning is postponed, the higher the bill will be, and the more savage and draconian the cuts will have to become.
But if the blue social model and 4.0 liberalism are losing, what will take their place?
Given the realities of global economic competition and technological change, there are three basic strategies from which Americans will have to choose as we try to keep our economy humming, our wages high, our markets open and our country solvent.
What the public sector unions and their allies want would be for the country to cling to as much of the old model for as long as we can. This would protect some Americans at the expense of the majority, sacrifice the interests of the young to the old, and would probably end in something even worse than stagflation: an inflationary collapse of the economy.
We might be able to stave off collapse for a little while if we retreated to protectionism and fortress America: ban cheap imports from overseas and otherwise cut ourselves off from the global system we have done so much to build. I will save the case against this strategy for another series of posts; suffice it to say for now that it is harder to imagine a surer road to misery, poverty and global wars on an unprecedented scale than for the US to take this dangerous path. It is probably the most destructive as well as the most evil and unjust thing that we could do. The results would be devastating on a scale that could eclipse the horrors of World War Two — both for us and for all the people around the world who rely on American power and economic health to preserve what fragile stability and prosperity human beings have managed to achieve.
The second strategy would be retrenchment. This would mean reducing real wages throughout the economy: competing with the Chinese and other countries on the basis of low wages. This would involve dismantling minimum wage laws, a full scale assault on private labor unions, and an aggressive deregulation of as much of the economy as possible. The hope would be that in the long run enough investment would come into the country that we would get full employment and wages would gradually rise. This is what many good-hearted Democrats think the Tea Party wants; in my view it is the wrong course for America. We can never forget that America is about doing better: in the midst of the greatest explosion of technical knowledge and information since the dawn of time, our job is to help the world grow rich, not to tighten our belts.
Many people sincerely believe — and some disingenuously claim — that the cuts to government payrolls in states like Wisconsin are part of a greedy corporate agenda to reduce the population to serfdom while stuffing the pockets of fat cats on Wall Street and in shady foreign tax havens.
I have no doubt that many fat cats are stuffing their pockets as fast as they possibly can. But I don’t think that is what the Battle of Madison is really about.
Site of the Battle of Madison (Source: Wikimedia Commons)
What America really needs to do to escape [reader alert: classical reference ahead] the Scylla of of a blue model death spiral and the Charybdis of a global ‘race to the bottom,’ is to reduce the costs of doing business in this country and make both capital and labor more attractive by reducing the “friction” in our system. That means dramatically restructuring government, the legal system and the educational and health care systems.
The culture of bureaucratic legalism will have to disappear. Lifetime tenured jobs in the professional civil service will become rare. The wholesale credentialism that requires meaningless college degrees for every imaginable job must yield to a competence rather than credential based hiring process. Computer assisted physician assistants will have to take over more roles, and more important roles, in the health care delivery system.
To put it in a nutshell, the only way forward for the United States is to unleash the full transformational power of information technology in the knowledge and service industries even if this entails (as it surely will) the destruction of the current institutional, bureaucratic and guild-based systems on which we currently rely.
It will amount to a large scale cultural and social revolution in this country and many of the adjustments will hurt. But overall, this is the only way to allow the overwhelming majority of Americans to enjoy the rising living standards that have characterized life in this country for the past 300 years. It is the only way to make the American economy dynamic enough to support the economic and security policies necessary to keep us safe in the turbulent century ahead.
I regret the economic pain that these changes will bring to many hardworking and law abiding American citizens. But I do not think that the weakening of the public sector union movement is such a bad thing. Opponents of the Wisconsin bill are mostly relying on a rhetorical sleight of hand (see, for example, this column by Harold Meyerson in the Washington Post) that conflates an attack on unions representing government employees with an attack on unions per se.
Nevertheless, the legal and moral case for the two types of unions are very different. Private sector workers have no way to influence the management of their employers except through union movements. Public sector workers vote, and can organize and support political organizations aimed at influencing public opinion about the issues that matter to them. Currently something like 22.6 million Americans (excluding the uniformed military) work for federal, state and local government in the United States. That is a formidable voting bloc. If every public sector union in America closed its doors tomorrow, government employees could quickly form political organizations that would be a powerful force. Unlike private sector workers, government employees as citizens can effectively influence their conditions of employment by lobbying elected officials. They don’t need a second bite at the apple.
Wise politicians will move carefully and compassionately to change the terms of employment and the rates of remuneration for government employees. But move they must. It is not only to save money and balance budgets in the short run: it is to prepare the way for the reform and restructuring ahead that can give this country the government we need at a price we can afford.
For many Democrats, the weakening of the public sector union movement looks like a strategic setback to be resisted at all costs. Blue labor has contributed hundreds of millions of dollars to Democratic candidates in recent election cycles — both in direct cash contributions and in volunteer and in-kind contributions like phone banks.
But public sector union support, however attractive in the short term, is a poisoned chalice in today’s world. As long as Democrats are in hock to the teachers’ unions, the postal workers, and the various state and federal civil service unions, they are reduced to a producers’ lobby for government workers. They are tied to the 22.6 million Americans who have government jobs — and cannot respond creatively and thoughtfully to the needs of the 280 million who don’t.
The Democratic Party shouldn’t be fighting a doomed and desperate retreat to save what is left of blue model America; it needs to be developing and fighting for ideas about how a new model America can raise living standards for everyone. Public sector union support helps Democrats like an anchor helps a swimmer: they are stuck in one place and dragged to the bottom.
It is children, not teachers, who need to be at the center of education policy. It is the provision of services, not lifetime employment for providers, that ought to engage the attention of governors and legislators around the country. America needs government and it needs good government (though it doesn’t need too much government or government doing too many things). Democrats cannot advocate effectively for the things government can and should do until they free themselves from their current indenture to government employees. Government has to be affordable and efficient; otherwise we will have less of it than we need. Democrats need to get on the right side of this issue and for that to happen the influence of public employee unions in the party needs to decline.
But regardless of what happens to the Democratic Party, the struggle in Madison this week is important. The United States must reform or decline; failure is not an option.