Government and Organized Labor

One of the signature political issues that divide the two political parties for a long time and continuing today is the role for government in managing organized labor.  Last year, Wisconsin Governor Scott Walker faced a recall election after he took on public unions in the governmental workforce and received a huge backlash from the public sector.  More recently, Michigan governor Rick Snyder signed into law a bill making Michigan the newest "right to work" state, following in the lead of states such as Indiana by  preventing mandatory deductions from payroll to fund union activities.  Opinions on both sides are charged, so it is important to get the facts right.

First, it is important to make clear the meaning of the law on face value,  The bill does not, as the name might imply, that employees are guaranteed work in any way.  The only thing it guarantees is that individual employees at a business or organization at which a union is present will not be required to join that union as a condition for joining the workforce and are not obligated to make payments to the union.  Pro-business groups see this as allowing a more natural version of capitalism to let loose in the American economy, which will in turn loosen the regulations on corporations and create more jobs.  Opponents to reductions in the power of labor see this as an unnecessary attack on the right of workers to organize and collectively bargain.  If a company that has a union has no means to keep up the membership of the union, the union has the potential to lose members, and when it comes to organizing, the more people, the more power.

The issue of organized labor is complicated in America, since it is both a political and economic issue.  As seen below, the majority of political donations by unions goes to Democratic candidates, and the majority of business donations go to Republican candidates, setting up a constant fight as either side plays politics to their base in order to get support during election season.

There is also an economic side to organized labor.   According to the Bureau of Labor Statistics, for all major demographics, unionized workers on average earn more that non-unionized workers.  This has been taken different ways, depending on what economic view economists subscribe to.

One school of thought says that the higher pay workers are and greater job security they have guaranteed by the union, the greater purchasing power they have  and the more likely they are to spend it, since they are not as concerned about saving in the event that they loose their job.  This means that more money is being pumped into the economy as consumer spending, which is approximately 70% of the US Gross Domestic Product (World Bank). Conversely, one can take the argument that unions raise labor costs and thus lower businesses ability to make profits.

I won't debate on what economic model is the most relevant, but consider this:  Unions have had both an extremely beneficial impact in protecting individual workers, akin to protecting the American ideal of individualism, but have also expanded to have great power, which could result in not representing the interests of individual members.  However, just as in elections, not everyone gets their first choice in everything.

I encourage you to look up the range of political views for yourself to be educated on this complicated and relevant issue in American politics today.

Debt vs. Deficit

Debt and deficit.  People often confuse the two.  Republican pundits attack Democratic policies on both.

A deficit occurs when all government incomes, called receipts, are less than the amount of government expenditures, called outlays.  Revenues come from income and other forms of taxes.  Expenditures result from a variety of purchases and entitlements. Since a deficit involves only a year's receipts and outlays, it applies to just one year. If the government took in $14 trillion and spent $15 trillion, the deficit would be $1 trillion.

When the government runs a deficit for a certain year, they need to borrow money in order to pay their bills.  To do so, the Federal Reserve can print some or all of the shortfall, but this typically leads to inflation.  How much inflation occurs depends on the amount printed.  If everyone has more money, and there are the same number of products, then those products will become more expensive.

Usually, instead of printing money, the government operates in credit markets, issuing bonds, like private companies can.  A bond is a form of a loan.  when the US Treasury issues its bonds, it means it is promising to pay that money, which it needs now, in the future.  When governments issue bonds, investors buy them up, selling them on secondary markets.

Debt, on the other hand, is basically accumulated deficits.  If the government has to keep issuing bonds, borrowing money each year to pay its outlays, then the debt will continue to grow.

Debt typically grows each year.  With each successive deficit, the debt, or at least the gross debt, will continue to grow.  A misconception is that if the government takes in more than it spends, that its receipts are greater than its outlays, that there is no debt.  This just means that the government has managed to run a surplus, but all debt that was accumulated previous years is still there.

It is accepted by most economists that some debt, sometimes, is a good thing for the nation and the economy.  When in a recession, tax revenue falls because of the lack of business and personal growth.  If tax rates are slashed, the revenues will fall even more.  The government also spends more on its social  programs such as unemployment insurance/benefits, so the government should run a deficit in order to pay for all that.  Conservatives argue that deficits in bad times need to be offset by surpluses in good times.  However, this does not need to be the case, when we consider debt in relation to our nations economic productivity, the GDP.

If the debt remains at a steady percentage of our GDP, the government can sustain that level of debt, even if they run deficits forever.  Consider the following: if the government has debt of 30% of its GDP at the start of a year, and it ran a balanced budget, even though the gross debt stayed the same, the percent with respect to GDP will go down.  The GDP almost always goes up.

The more our GDP grows, the more debt we can afford to take on.  GDP is basically an equivalent of the nation's tax base.  The more growth in the country, the more profits and salaries will rise, and the more tax revenue for the government.

There are negatives to government debt.  When the government has to continually issue bonds, these bonds compete with private ones on the investor's market, pushing up interest rates.  The more money the government takes from this market, the less money there is for the private sector.

Debt does have many positives though.  Families, for example, go into debt and borrow money in order to buy a house or pay for college.  The accumulated deficit of paying for one of these lasts for many years, but people still manage to pay it off.  Debt makes the benefits of owning a house and higher education reachable for more people.  Companies operate the same way, obtaining loans in order to expand, hoping for more profit later on.  In the same way, government can go into manageable debt in order to pay for items that its citizens deem important.

GOP's Demographic Problems

Below is a chart of the demographic breakdown for the presidential election of 2012.  As one can clearly see, the Republican Party did well with white voters, but quite poorly with minority voters, a problem brought upon themselves.  In recent years, the GOP has taken a combative stance against illegal immigration and minority rights.  While some Republicans might blame the message rather than the actual policy, it has been duly noted that the Republican party is not an ardent supporter of immigrant and minority rights.  Bills have been passed in states, such as Arizona and Alabama, that would seem to encourage racial profiling to find illegal immigrants.

The results from both the 2008 and 2012 elections do not bode well for Republicans.  The demographic is shifting now, with minorities making up a larger portion of the electorate.  Now, with two strong showings, the Democrats, at least for now, have the allegiance of this critical groups.  The electoral map, therefore, has dramatically changed from previous decades, with Democrats running well in western states as well as Florida.


Here is the electoral map for the 2012 Presidential election:

And here's one for 2012:

As one can see, Obama won Colorado, Nevada, New Mexico, and Florida in both elections, all states that have gone Republican in the past and have been classified as more right leaning.  All these states have large Latino populations that are only getting larger.  In order to ensure that they can survive on a national scale, the Republican Party must moderate their position on immigration and other issues important to minorities, especially Latinos.  It is not just that they have trouble communicating their message.  They need to be leaders on the issues that matter to these groups.

There are many risers in the GOP that could help with this, though many are outside of Washington.  By adapting their policies, the Republican Party could become more centrist and appeal to many minorities, as well as independents.  By becoming more inclusive rather than exclusive, they can promote policies that will benefit all of America rather than some of America and help them become stronger politically, a win-win for Republicans.  Advocating fiscal responsibility will resonate with many people and if the party can change a bit and become more innovative when it comes to minority groups, the GOP can become much more formidable in national elections and perhaps make this country a better place. 

Bobbing and Weaving

It is unfortunate that politicians have to contort themselves in order to gain reelection.  The rigidity in our party system leads politicians to have to lean left or lean right just in order to win their primaries.  Then, come the general election, they must swing back to the center.  We would be much better off if our leaders could just run honestly, they way they actually would govern, from start to finish, instead of bobbing and weaving all over the map.

Oh Really? Part 2

In the previous post we detailed how many GOP candidates are idealistic in their promises and pursuit of the presidency.

Reasons for the failure to complete promises include inadequate will, resources, or support for the project.  The Democrats, regardless if they are in the majority or minority come January of 2013, will come out in force against the president if he is a Republican.  Therefore, the Republican nominee would do well not to be too idealistic, lest they fall down much the same road as Obama has so far.

Two Party System is Broken

The two party system is dividing America.  With both the GOP and the Democratic Party's refusal to negotiate or give up ground on key issues, the American people continue to lose.  Instead of enacting reforms that Americans need, the parties have been politicking each move, deciding that electoral security is better than a prosperous America.

We need action.

We need people in the Congress who can form consensuses with others and keep in touch with the people.  Instead of feeding more money to their districts, we need to make government more efficient.  With such streamlining, we can promote growth.    The government needs to act for the people it represents, not just the big donors that bankroll their campaigns.  Most Americans are not so far to the left or right as our representatives.  We need people who will protect and work for the people's interests.

Congressmen Must Take The Lead

Congressmen have to realize that the time for partisanship is over.  In the endless debates in congress over the payroll tax, the debt ceiling, and the budget, politicians seldom realize that it is the American people that lose because of the inaction.  Politicians are even greater procrastinators than students shoving off a huge project to the last night before it is due.  Congress chronically cannot come up with a deal until the 11th hour, and even then, the deal is a weak mix of ideas designed solely to get a jumble of votes pass.  Congress hasn't formed strong. well rounded compromises that will last beyond the election cycle.

Politicians Must Stand Up For What They Believe In

With two parties dominating congress and controlling votes, some brave congressmen must step up and break away from this system.  The American people don't always want what either of the two parties want, and many of us are tired of the bickering and inaction in our legislature.  People want to be able to live their lives with relative economic security and freedom.  The actions, or lack of actions, on the part of our congressional "leaders" is staggering.  In order to stop the politicking of every single bill, individual congressmen must take the lead and make a stand for their district and the people of this nation.  They should not always vote what their party leaders say they should vote.  They should be beholden to no one except for the people, not their political leaders.

No More Same Old, Same Old

Desperate times call for desperate action.

We need to change the way we do things in order to succeed.  Government needs to acknowledge that changes must be made.  We cannot keep operating under the same practices.  We must challenge the status quo and think for ourselves.  We cannot just sit back and eat up what the major parties tell us.  They can deceive the electorate, and this is very dangerous.  They polarize the American people, so we are really just choosing those who are good party candidates, not American candidates.

We need people in Washington and all of government to really value what the American people want.  Bickering in congress of this and that does not help anyone.  It hurts the American people.  These two sides need to learn to get along and put aside their interests groups, their big sponsors, and do what is right for the people.

Basic Finances

In order to remain fiscally responsible and free of debt, many American families and businesses adopt a simple principle: don't spend more than you take in.  It's simple finances.  School groups do it.  Lemonade stands do it. Lots of people do this.  The question remains: why doesn't the federal government do this?

The feds have been lax on what kind of debt they will allow, and both parties are to blame for this is some way or another.  Yes, Democrats traditionally win the yearly overspending contest, but Republicans insistence on only cutting spending while at the same time cutting taxes, often for the rich, wins no prize for its responsibility.  Both parties spend huge amounts on foreign wars.

It makes little sense to only cut spending or only raise taxes in order to cut the deficit.  Using only one of these methods ends up with a tougher strain on the middle class and/or Government with to little funding too effectively complete its job.  Exercising both options tempers the harshness.  Cutting taxes on the wealthiest Americans makes the most sense, since they are the ones that can afford it.  One thing that politicians must realize is that these taxes are never really going to redistribute the wealth.  When the rich are taxed more, they will still be rich.  When the middle class is taxed less, they are still in the middle class.

All this, though, does not take away the responsibility of the Federal Government to spend its money wisely.  Its our money.  Fiscal responsibility is imperative.  Cut programs that don't work and aren't effective, and reward programs that do more with less.  There are ways to do the same job with less money, and it still doesn't mean less workers.

Spending money wisely is basic economics; its about time Washington learned its lessons.

America

We are not White, or Black, Asian, or Hispanic, or even Democrats or Republicans.  Instead, we are Americans and human beings on this earth. Let us all join together in unity, for when we are truly united, we can truly call ourselves America.