Wisconsin, Ohio : Isn´t the Right "Right" ??

The seizure of a Parliament by street protesters seems to be a terrific news item, but for some strange reason the events taking place in the heart of America do not get the appropiate mediatic attention they should (at least here abroad) . So as a courtesy I will begin the blog with a short introduction.

The story goes like that : Wisconsin Governor S. Walker has put forward a plan to end collective bargaining for most state workers. That has transformed Wisconsin into an ideological battleground between trade union activists and small-government conservatives. The State Capitol in Madison has become the focus for daily mass protests. And if this was not sufficient, today ( March 3rd 2011) Ohio's Senate voted to prohibit public employees from striking and to restrict certain collective bargaining rights, including negotiations on pensions and health care.

The fight in Wisconsin is being labeled by many commenters as THE major social battlefield; some even define it as a “Class War”. It that context it was interesting to read some comments which regard the Governor´s proposals not only as a serious step to fight the huge State´s deficit (under US Laws any State is obliged to operate under a balanced budget), BUT an opportunity to cut public employees´ “privileges” such as collective bargaining, health benefits or job security. Other see the opportunity to introduce “private sector” norms into the public sector and turning it more competitive ( to what exactly?) . Sounds as a war indeed….

The assertion “Simple working people are once again being forced to pay the price for an economic crisis caused by others….” it´s triviality. We don´t need Madison or Ohio to know that fact of life. Moreover, I would be surprised if this was not the response of a conservative establishment ( and the anemic US President) to the growing and mounting debts (which serve other interests… but that is for another blog). Therefore I would prefer to focus on other aspect of the events.

My claim is that Conservatives are correct in their observation. For example lets take the Collective Bargaining issue . In the US only app. 11% of the working force is unionized, an astonishing figure if compared even to the same US 30 years ago (20.8% in 1980). In some important corporations unions are banned and whoever tries to get organized can be fired at once. So the Newspeak that regards the right to maintain collective agreements a “privilege” of just a few is correct.

Or the health care “privilege”, which is indeed the correct definition for that basic service in a country where the right to enjoy a health insurance (for commoners) without being tied to a working place or falling into bankruptcy is not less than a “privilege”.

That’s exactly the point: The transformation of basic right into “privileges” reflects the short sight view of the American Unions. In many countries Unions have become the silent partners of the system securing their own “privileges” forgoing solidarity with the weakest. History can tell us that such strategy is dangerous : About 80 years ago German unions and the country as a whole paid a very high price for not paying too much attention to the “Lumpen ploretariat” the abandoned working class that became one or the main support of the Nazis. The similar sectorial approach dominates the American labor landscape where Unions are among the biggest supporters of the Democratic Party. As such they got their share in the actual state of affairs, they are the establishment.

So, if we might prefer to adopt the conservatives’ logic rather than a sectorial demand but with a twist: Want a “competitive” public sector? OK, raise the minimum salary in the private sector! ? Want to get rid of privileges? Guarantee that the right of free association in each and every workplace so it ceases to be a privilege …. And so on and so on. A solidary response is the proper reaction to the conservative avalanche emerging from the heart of America. However, if solidarity remains as a mean to achieve sectarian privileges than the lost battlefield of Wisconsin,, Ohio and others are just around the corner.

And Stress for All

Public institutions tend to emphasize the importance of financial stability. It is not just a matter of intentions but a regular use of huge public resources to guarantee the stability of the system. And since the “markets” are considered as the main reflection of the true state of financial business, the stabilization of the financial markets became a top priority of policy makers.

A few examples can show the magnitude of that policy: Ultra light interest policy rates, modified accounting rules to prevent a full disclosure of the real situation of the financial system, purchase of financial assets (“QE2”) above their market prices, design and financing of bailout deals etc. etc. We are told that the reason behind such deep intervention is that the financial markets are the blood stream of the economy as the main transfer mechanism of resources between individuals and companies. As such, they need stability in order to permit their normal functioning and to guarantee that investors willingness to take risks.

As a matter of fact, the stability is just anther good deal for the finance markets since in such mechanism they share the risk with the rest of the citizens but enjoying the benefits of profits.Well, if that privilege was conceded to any citizen I wouldn´t comment about it. However, the way the other production factor “labour”, is being treated in a 180 degrees opposed way to the above stability: Stress.. Stress and more Stress. You can hear about it all over the world: In Wisconsin (US) the administration is engaged in cutting social right and benefits, a measure applauded by “pundits” as the first step to install private sector norms in the public service( i.e. less union and less rights). Or the ECB Chairman ( and who handles Billions of Euros per moths to bankrupt banks) declaring that wage increase in Europe would be “madness”… or Spain´s labour reform aimed to reduce social rights,…. Or UK budget cuts and massive layoffs.

With just a few examples we´ve seen that there is a basic dichotomy in the way Capital and Labour are treated by the institutions, although there is no real apparent reason for that different treatment, at least not from Economic theory point of view. Moreover, a different treatment create distortions that tend to reinforce themselves up to a point that they are not sustainable anymore. What is the reason for the different treatment? Since the the basic foundation of any fair social system is equality, that very important question should be rendered to a second place. If the first step toward justice and equality is “Stress for all”… so be it.