I recently read a blog entry by Paul Krugman, a famous liberal op-ed columnist for the NY Times, in which he lists his reason as to why free markets cannot cure our health care problems. Mr. Krugman is an accomplished economist and is also a professor of Economics and International Affairs at Princeton University. His credentials are impressive, and the fact he has these credentials makes me even more confused when I consider his point of view. In short, Mr. Krugman postulates free markets are unable to help correct our health care challenges because:
1) You never know when you'll need health care and the costs are extremely high. The high costs create a need for insurance companies and since they operate for profit, your medical costs are their loss. This reality encourages companies to deny payment or insurance whenever possible.
2) You can't comparatively shop for health care, like you would a TV.
These points are valid, in a sense. However, I'm baffled as to why Mr. Krugman doesn't address the heart of the health care problem: costs are out of control. I've never understood why when considering health care, so many people, especially those with a pro-government solution point of view, do not ask why health care is so expensive (the rising cost of college is another example). Those who support a free market solution to addressing health care are putting costs front and center and believe the patient, not the insurance company or government officials, should be making health care decisions --- and yes, cost should be a factor when determining the next steps.
Insurance companies and medicare/medicaid provide near guaranteed sources of payment to those in the health care industry. As a result, companies will often produce new expensivee drugs and equipment with only marginal incremental benefits. Since patients have a reduced role in the decision process, the cost/benefit analysis between drug or equipment A vs. B has been diminished. This creates an environment where the most expensive "solutions" are being delivered to the patients too often.
The intent of the free market solution is to increase competition in pharmaceuticals and equipment which will ultimately encourage those in the health care industry to provide these products in the most efficient manner. Just like TVs, automobiles, and other products, companies will want to be able to provide their product to the most people to improve their bottom line. In order to do so, they will need to develop ways to produce their product in the most cost effective manner which will allow allow them to be profitable at lower price-points; and just as the decreased prices for TVs and automobiles allowed more people to obtain these items, increased competition will drive down prices for drugs and equipment which will allow more people to be able to afford them.
Secondly, Mr. Krugman's comments about comparative shopping are absurd. Yes, when you have a heart attack, you're not going to shop around for the best hospital while you're on a guerney. However, in a free market, the "shopping around" would have already taken place prior to the emergency. People will be aware of the best hospitals for a given service prior to their emergency, and they will choose to go to the best known hospital in their time of need. Again, the fact that Krugman even lists this as a reason why markets can't help our health care problems makes me wonder if he is really this silly or just disingenuous. Both of which are rather concerning given his impressive credentials.
Maybe one day we as a society will learn that our current practices and regulations around health care are key drivers in the rising health care costs. I would suggest Mr. Krugman read articles from one of his employers, the NY Times, as well as another left leaning site, MSNBC. These articles list similar reasons for rising costs, as do others. The majority of the reasons all have a similar theme: rising costs are the result of increased government intervention. Until we adopt remedies which recognize government involvement as a key driver in rising costs, more and more people are going to be unable to afford the health care they need.
Finally, I'll end with a direct quote from F.A. Hayek which was in his book, The Road to Serfdom. His comments, I think, can be applied to how increased government involvement through regulation and medicare in our health care has actually made things worse vs. better:
"...the present state of the world may be the result of genuine error on our own part and that the pursuit of some of our most cherished ideals has apparently produced results utterly different from those which we expected."
Saturday, October 22, 2011
Sunday, October 16, 2011
European Debt Crisis and Greece
Anyone paying even partial attention to the news the past year has heard about the European Debt Crisis. A few weeks ago, a friend of mine asked me what it was all about and I realized I wasn't really sure. All I knew was Greece had some serious debt issues and the entire crisis has the potential to being even bigger than the US crisis in 2008. As a result, I decided to dig a little deeper into the issue. What will follow is a basic summary of what I understand to be the problem, specifically with Greece.
Greece has received a lot of attention due to concerns it will default on its debt. Greece joined the monetary EU in 2001 and from 2001-2007 enjoyed significant economic growth due to the low interest rates which came with their adoption of the euro. These low interest rates allowed the Greek government to run large deficits to fund social benefits and increasing public sector wages and benefits. Wages and benefits continued to rise well beyond any increase in production which further ballooned the nation's debt as a percentage of GDP, which now sits at 140%+.
The problem is Greece already had too much debt prior to 2001, but was able to conceal its debt level through legal "swap" products, or derivatives, provided by Goldman Sachs. In order to join the monetary union, a member state has to meet certain criterion and if their true debt levels would have been known, they may have never been permitted into the EU. Unfortunately, they were and now the EU, along with the rest of world, are at risk.
In 2009, Greece's true debt levels were revealed and ratings agencies immediately downgraded the Greek debt. As a result, bondholders started selling which caused interest rates on Greek bonds to rise all the way up to the mid 20%'s in mid 2011. This compounds the problem because since Greece is already saddled with debt, it can't afford to pay bond holders at those rates. The 140%+ debt as a % of GDP, rising interest rates on bonds, and unsustainable budget deficits caused Moody's to conclude Greece's chances of default are near 100%.
Why should such a small country's debt problems have such an impact on the world? Greece owes an estimated $300B to other nations and banks. If they default, it would have a sizable impact which would put other nations at risk and jeopardize the financial stability and economic growth of the EU. Greece isn't the only EU member with debt concerns. Spain, Ireland, Italy, and Portugal are facing their own debt and deficit issues. A Greece default could be a falling domino which these nations would be unable to avoid. Since the US relies on the purchasing power of the EU member states, this would certainly impact US growth through a reduction in exports. Additionally, American financial institutions hold EU assets and it is estimated nearly half of money-market funds include EU assets. Since the US economy is barely growing at just above 1%, a Greek default would be a significant blow to US hopes to avoid a double-dip recession..
Greece has received a lot of attention due to concerns it will default on its debt. Greece joined the monetary EU in 2001 and from 2001-2007 enjoyed significant economic growth due to the low interest rates which came with their adoption of the euro. These low interest rates allowed the Greek government to run large deficits to fund social benefits and increasing public sector wages and benefits. Wages and benefits continued to rise well beyond any increase in production which further ballooned the nation's debt as a percentage of GDP, which now sits at 140%+.
The problem is Greece already had too much debt prior to 2001, but was able to conceal its debt level through legal "swap" products, or derivatives, provided by Goldman Sachs. In order to join the monetary union, a member state has to meet certain criterion and if their true debt levels would have been known, they may have never been permitted into the EU. Unfortunately, they were and now the EU, along with the rest of world, are at risk.
In 2009, Greece's true debt levels were revealed and ratings agencies immediately downgraded the Greek debt. As a result, bondholders started selling which caused interest rates on Greek bonds to rise all the way up to the mid 20%'s in mid 2011. This compounds the problem because since Greece is already saddled with debt, it can't afford to pay bond holders at those rates. The 140%+ debt as a % of GDP, rising interest rates on bonds, and unsustainable budget deficits caused Moody's to conclude Greece's chances of default are near 100%.
Why should such a small country's debt problems have such an impact on the world? Greece owes an estimated $300B to other nations and banks. If they default, it would have a sizable impact which would put other nations at risk and jeopardize the financial stability and economic growth of the EU. Greece isn't the only EU member with debt concerns. Spain, Ireland, Italy, and Portugal are facing their own debt and deficit issues. A Greece default could be a falling domino which these nations would be unable to avoid. Since the US relies on the purchasing power of the EU member states, this would certainly impact US growth through a reduction in exports. Additionally, American financial institutions hold EU assets and it is estimated nearly half of money-market funds include EU assets. Since the US economy is barely growing at just above 1%, a Greek default would be a significant blow to US hopes to avoid a double-dip recession..
Thursday, October 13, 2011
Fractional Reserve Banking, Central Banking, and The Federal Reserve
A topic of great interest to me lately has been central banking and the US Federal Reserve. I won't pretend to understand all of the nuances of central banking strategies or those employed by our Federal Reserve, but the entire concept is certainly counter-intuitive. As with any economic theory, there are pros and cons, but the question I'm still seeking an answer to is: are fractional reserve and central banking the monetary foundations of a truly free society?
To understand central banking and our Federal Reserve, one must understand fractional reserve banking. Under this type of banking, banks are legally obligated to retain only a fraction of their customers' deposits. The fraction is regulated by the Federal Reserve and is currently set at 10% for banks where their net transaction accounts are greater than $58.8MM. For institutions with less than $58.8MM, the fraction is even less. Obviously, to understand what this means, a definition of "net transaction accounts (NTAs)" is needed. NTAs is the sum of the dollar amount of the bank's customer deposits and accounts receivable (loans). This means if you go down to your bank and deposit $10K, your bank can turn around and loan up to $100K to other customers or businesses. Pretty sweet deal for your bank, eh? As a result, under this type of banking, banks are not warehouses or safes for your money, they are essentially vehicles to mobilize your savings so their drivers can turn a profit.
This type of banking can only survive with a central bank. Imagine this scenario: You deposit $10K in your bank (for the sake of simplicity, we'll pretend your $10K is the only deposit). Your bank promptly turns and loans $100K to Joe Schmoe to open a business. Joe goes to his bank with the $100K check and tries to open a new checking account with the $100K as his initial deposit. Joe's bank accepts the check and sends a request for the $100K from your bank. Problem...right? Your bank only has $10K! Without a central bank, your bank would be prosecuted for embezzlement.
So where does the extra $90K come from? The Federal Reserve - our central bank. Since your bank is a member of the Federal Reserve system, it has deposited your $10K with the Federal Reserve, which operates as your banker's bank. Where does the Federal Reserve get the $90K? It simply creates it out of thin air. Without the Federal Reserve, your bank could only have lent out $9K. Assuming a 5% interest rate, your bank would have had the opportunity to earn only $450 off of your money. Instead, through the magic of central banking and the printing press, your bank now has the opportunity to earn $4,500. Amazing, right?
This example is on an extremely small scale. Consider the multiplicative effect when consumers are depositing billions of dollars with their banks. It's then easy to to understand how banking is the industry which churns out the most wealthy people in the world. When you also consider the fact that this multiplicative effect is backed by governments throughout the world, you can see how the cards are stacked heavily in favor of the banking industry. After all, when your employer pays you $50K annually, there is no government backed program which allows you to invest $500K in the stock market. That would be absurd, right?!
This privilege to turn each $1 deposited or loaned into $10 of interest earning assets is reserved only for the banks. Backed by their friends at the Federal Reserve, our banks enjoy tremendous benefits. After all, what happens when they over leverage and run the risk of actually losing money? The Federal Reserve prints money to bail them out and then turns and places those newly printed funds on the back of the taxpayers....Incredible.
So what's my point? Now that we understand fractional reserve and central banking, we can see the true purpose of the Federal Reserve: it exists not for the American people, but for the banking industry. It exists, just as Ron Paul and others say, to privatize banking profits and to socialize banking losses. Consider the notion of "too big to fail." How did these institutions' balance sheets get to be so large? ---> Fractional reserve and central banking. These types of banking perpetuate an economy which thrives only through the issuance of credit, inflation, and people being willing to over leverage; as opposed to an economy which encourages the distribution of wealth through the most efficient and responsible use of capital.
Finally, I'm back to my original question: are fractional reserve and central banking the monetary foundations of a truly free society? A society in which government favors no group or special interest over another...I think not.
To understand central banking and our Federal Reserve, one must understand fractional reserve banking. Under this type of banking, banks are legally obligated to retain only a fraction of their customers' deposits. The fraction is regulated by the Federal Reserve and is currently set at 10% for banks where their net transaction accounts are greater than $58.8MM. For institutions with less than $58.8MM, the fraction is even less. Obviously, to understand what this means, a definition of "net transaction accounts (NTAs)" is needed. NTAs is the sum of the dollar amount of the bank's customer deposits and accounts receivable (loans). This means if you go down to your bank and deposit $10K, your bank can turn around and loan up to $100K to other customers or businesses. Pretty sweet deal for your bank, eh? As a result, under this type of banking, banks are not warehouses or safes for your money, they are essentially vehicles to mobilize your savings so their drivers can turn a profit.
This type of banking can only survive with a central bank. Imagine this scenario: You deposit $10K in your bank (for the sake of simplicity, we'll pretend your $10K is the only deposit). Your bank promptly turns and loans $100K to Joe Schmoe to open a business. Joe goes to his bank with the $100K check and tries to open a new checking account with the $100K as his initial deposit. Joe's bank accepts the check and sends a request for the $100K from your bank. Problem...right? Your bank only has $10K! Without a central bank, your bank would be prosecuted for embezzlement.
So where does the extra $90K come from? The Federal Reserve - our central bank. Since your bank is a member of the Federal Reserve system, it has deposited your $10K with the Federal Reserve, which operates as your banker's bank. Where does the Federal Reserve get the $90K? It simply creates it out of thin air. Without the Federal Reserve, your bank could only have lent out $9K. Assuming a 5% interest rate, your bank would have had the opportunity to earn only $450 off of your money. Instead, through the magic of central banking and the printing press, your bank now has the opportunity to earn $4,500. Amazing, right?
This example is on an extremely small scale. Consider the multiplicative effect when consumers are depositing billions of dollars with their banks. It's then easy to to understand how banking is the industry which churns out the most wealthy people in the world. When you also consider the fact that this multiplicative effect is backed by governments throughout the world, you can see how the cards are stacked heavily in favor of the banking industry. After all, when your employer pays you $50K annually, there is no government backed program which allows you to invest $500K in the stock market. That would be absurd, right?!
This privilege to turn each $1 deposited or loaned into $10 of interest earning assets is reserved only for the banks. Backed by their friends at the Federal Reserve, our banks enjoy tremendous benefits. After all, what happens when they over leverage and run the risk of actually losing money? The Federal Reserve prints money to bail them out and then turns and places those newly printed funds on the back of the taxpayers....Incredible.
So what's my point? Now that we understand fractional reserve and central banking, we can see the true purpose of the Federal Reserve: it exists not for the American people, but for the banking industry. It exists, just as Ron Paul and others say, to privatize banking profits and to socialize banking losses. Consider the notion of "too big to fail." How did these institutions' balance sheets get to be so large? ---> Fractional reserve and central banking. These types of banking perpetuate an economy which thrives only through the issuance of credit, inflation, and people being willing to over leverage; as opposed to an economy which encourages the distribution of wealth through the most efficient and responsible use of capital.
Finally, I'm back to my original question: are fractional reserve and central banking the monetary foundations of a truly free society? A society in which government favors no group or special interest over another...I think not.
Saturday, October 8, 2011
War on Drugs and Incarceration Rate
In a few posts, I've commented on the War on Drugs and called it a waste of tax payer money. Today, I'd like to conduct a little deeper of a dive into the subject...
The statistics around incarceration rates in the US are rather impressive. The percentage of Americans in our prison systems has been rising exponentially since the 1980's, which coincides with the start of the War on Drugs, specifically the Anti-Drug Abuse Act of 1986 (see chart below). Even more depressing, the US incarcerates more people than any other nation in the world weighing in at 2.4MM inmates. To put this into perspective, China's population is nearly 4x ours and their prisons hold 1.6MM.
There are a couple major drivers in this incarceration rate increase. First, the US has longer sentencing periods than other nations, which drives up the rate. Second, the Anti-Drug Abuse Act of 1986 included mandatory minimum sentencing for drug related offenses. As a result US prisons went from holding 40,000 inmates due to drug related crimes in 1980 to approximately 500,000 in 2011.
A 2008 study shows the US spends $44B annually on law enforcement for the War on Drugs plus an annual cost of $11B to imprison offenders. On top of this, the US provides other countries funding to fight drug totaling in the hundreds of millions. Obviously, there are significant resources being deployed in this effort. The question is, is it worth it?
The good news is, immediately following the passing of the Anti-Drug Abuse Act, there was a modest decline in the recurring use of narcotics (see below or follow this link). Unfortunately, the use has been trending upwards, although just slightly. A review of the numbers shows the relative drug use pre and post passing of the Act to be about 2MM people. The number of people who become addicted and subsequently ruin their lives is only a fraction of the 2MM.
Again, is $55B+ annually worth it? To put it another way, the current US population is 307MM. Does it make sense to force the remaining 305MM (99.3%) to pay $55B, in a deficit spending fashion, on a venture which may keep 0.7% from engaging in recreational drug use??? For me, the response is an emphatic NO.
So far, I've focused only on the economic impact of the War on Drugs. A much more emotional argument could be made for the cost in lives lost due to the drug cartels created by our laws. The legalization of drugs would almost immediately undermine the power of drug dealers/cartels, not to mention potentially infuse the US economy with an estimated $30B+ in tax revenues. Those revenues plus the reduction in tax payer liabilities would be an excellent start to reduce our deficit and, more importantly, would be a step closer to a truly free society.
In summary, the War on Drugs is a poor investment of resources. It is modern day prohibition, and just like prohibition in the 1920's, it is a futile and violent effort. Individuals in a free society should have the right to engage in whatever activity they so choose, as long as it does not infringe on other peoples' life and property (especially in their own homes). The data shows this policy does not make our country more safe and the cost associated certainly does not make us more prosperous. It is government over-reach of the worst kind: it infringes on our lives, liberty, and prosperity.
The statistics around incarceration rates in the US are rather impressive. The percentage of Americans in our prison systems has been rising exponentially since the 1980's, which coincides with the start of the War on Drugs, specifically the Anti-Drug Abuse Act of 1986 (see chart below). Even more depressing, the US incarcerates more people than any other nation in the world weighing in at 2.4MM inmates. To put this into perspective, China's population is nearly 4x ours and their prisons hold 1.6MM.
There are a couple major drivers in this incarceration rate increase. First, the US has longer sentencing periods than other nations, which drives up the rate. Second, the Anti-Drug Abuse Act of 1986 included mandatory minimum sentencing for drug related offenses. As a result US prisons went from holding 40,000 inmates due to drug related crimes in 1980 to approximately 500,000 in 2011.
A 2008 study shows the US spends $44B annually on law enforcement for the War on Drugs plus an annual cost of $11B to imprison offenders. On top of this, the US provides other countries funding to fight drug totaling in the hundreds of millions. Obviously, there are significant resources being deployed in this effort. The question is, is it worth it?
The good news is, immediately following the passing of the Anti-Drug Abuse Act, there was a modest decline in the recurring use of narcotics (see below or follow this link). Unfortunately, the use has been trending upwards, although just slightly. A review of the numbers shows the relative drug use pre and post passing of the Act to be about 2MM people. The number of people who become addicted and subsequently ruin their lives is only a fraction of the 2MM.
Again, is $55B+ annually worth it? To put it another way, the current US population is 307MM. Does it make sense to force the remaining 305MM (99.3%) to pay $55B, in a deficit spending fashion, on a venture which may keep 0.7% from engaging in recreational drug use??? For me, the response is an emphatic NO.
So far, I've focused only on the economic impact of the War on Drugs. A much more emotional argument could be made for the cost in lives lost due to the drug cartels created by our laws. The legalization of drugs would almost immediately undermine the power of drug dealers/cartels, not to mention potentially infuse the US economy with an estimated $30B+ in tax revenues. Those revenues plus the reduction in tax payer liabilities would be an excellent start to reduce our deficit and, more importantly, would be a step closer to a truly free society.
In summary, the War on Drugs is a poor investment of resources. It is modern day prohibition, and just like prohibition in the 1920's, it is a futile and violent effort. Individuals in a free society should have the right to engage in whatever activity they so choose, as long as it does not infringe on other peoples' life and property (especially in their own homes). The data shows this policy does not make our country more safe and the cost associated certainly does not make us more prosperous. It is government over-reach of the worst kind: it infringes on our lives, liberty, and prosperity.
Tuesday, October 4, 2011
Liberals, Conservatives, and Libertarians
I find it interesting the political viewpoints we all have and our reasoning behind our views. I've learned over the years, by and large, people are genuine with their beliefs; they truly feel their political views are in the best interest of most everyone involved and they're not looking to coerce people into unfortunate situations. That being said, I think we often overlook some basic truths and are often very inconsistent with our opinions.
For example, people often referred to as leftists or liberals are often anti-war, support freedom of personal choice (i.e. legalization of marijuana), tolerance, and diversity. All of which I also support and find to be foundations to any truly free society. However, these same individuals do not favor economic freedom of choice. Individuals in this general category are advocates of a progressive tax, welfare programs, and other public subsidies. This viewpoint tends to ignore the simple fact that government does not have any wealth of its own to redistribute and finds it perfectly acceptable to use government force to fund certain programs. As I mentioned before, I do not question the motives of individuals with this viewpoint. The intent is to help those in need and this is not at all what I question. I simply suggest the means do not justify the end and have a hard time reconciling how one can be an advocate of social freedom but not economic freedom.
On the other side of the American spectrum, we have those on the right - the conservatives. The general stated viewpoint is government should be small, people should be given economic freedom, and government should stay out of the way of the people. Again, these are also what I view to be key components to a free society. However, people with this viewpoint tend to want to use the government to prevent gay marriage and support the War on Drugs. Again, this seems to be a conflicting set of principals to me.
My opinion is if we want a truly free society, we have to be equally committed to social and economic freedom. I find when I say this to many people, the response I get leads me to believe they are interpreting "free society" as anarchy, and that is not what I view a free society to be. In a previous post, I mentioned what I view to be the fundamental role of government. The top two reasons for government should be 1) defend individual property rights and 2) defend the individuals right to life and to freedom to pursue happiness. With these top two functions in mind, a government in a free society still prosecutes murderers, thieves, and those committing acts of fraud and it still provides a military for the common defense. A free society is not anarchy.
Unfortunately, both mainstream parties have views which I see as rather glaring inconsistencies with a free society. This is why I tend to find myself agreeing more and more with Libertarians. Libertarians are opposed to legislation on same sex marriage, see the War on Drugs as a massive waste of tax payer money and an attack on personal freedom, and they also are against using government force to fund social welfare programs. Yes, advocating a free society means acknowledging that individuals have a right to behave as they wish, even irresponsibly, as long as it does not infringe on another individual's life or property. It also means that people should be given the freedom to spend their money as they wish and to help those they choose to help. If people were truly allowed to do so, without any government regulation favoring one group vs. another, I believe this would lead to a peaceful and economically sound society.
For example, people often referred to as leftists or liberals are often anti-war, support freedom of personal choice (i.e. legalization of marijuana), tolerance, and diversity. All of which I also support and find to be foundations to any truly free society. However, these same individuals do not favor economic freedom of choice. Individuals in this general category are advocates of a progressive tax, welfare programs, and other public subsidies. This viewpoint tends to ignore the simple fact that government does not have any wealth of its own to redistribute and finds it perfectly acceptable to use government force to fund certain programs. As I mentioned before, I do not question the motives of individuals with this viewpoint. The intent is to help those in need and this is not at all what I question. I simply suggest the means do not justify the end and have a hard time reconciling how one can be an advocate of social freedom but not economic freedom.
On the other side of the American spectrum, we have those on the right - the conservatives. The general stated viewpoint is government should be small, people should be given economic freedom, and government should stay out of the way of the people. Again, these are also what I view to be key components to a free society. However, people with this viewpoint tend to want to use the government to prevent gay marriage and support the War on Drugs. Again, this seems to be a conflicting set of principals to me.
My opinion is if we want a truly free society, we have to be equally committed to social and economic freedom. I find when I say this to many people, the response I get leads me to believe they are interpreting "free society" as anarchy, and that is not what I view a free society to be. In a previous post, I mentioned what I view to be the fundamental role of government. The top two reasons for government should be 1) defend individual property rights and 2) defend the individuals right to life and to freedom to pursue happiness. With these top two functions in mind, a government in a free society still prosecutes murderers, thieves, and those committing acts of fraud and it still provides a military for the common defense. A free society is not anarchy.
Unfortunately, both mainstream parties have views which I see as rather glaring inconsistencies with a free society. This is why I tend to find myself agreeing more and more with Libertarians. Libertarians are opposed to legislation on same sex marriage, see the War on Drugs as a massive waste of tax payer money and an attack on personal freedom, and they also are against using government force to fund social welfare programs. Yes, advocating a free society means acknowledging that individuals have a right to behave as they wish, even irresponsibly, as long as it does not infringe on another individual's life or property. It also means that people should be given the freedom to spend their money as they wish and to help those they choose to help. If people were truly allowed to do so, without any government regulation favoring one group vs. another, I believe this would lead to a peaceful and economically sound society.
Saturday, October 1, 2011
Collective Bargaining and Ohio Senate Bill 5
Ohio's controversial Senate Bill 5 is a political lightning rod. When I think about this bill and how I may vote this November, I believe I have to a) consider the fundamental role of government and b) consider the constitutional rights of American citizens to participate in collective bargaining. For what I see as a fair summary of the bill's impact to labor union's in the public sector,please see this article.
There are certainly several topics to discuss concerning the bill. My perception is the Republicans would like to focus on requiring public sector employees to receive pay increases based on merit and pushing more of the health care costs back onto the employees to be more in line with the private sector. Democrats would like us to focus on provisions in the bill which forbid police officers and fire fighters from negotiating on what they consider to be safety issues. These are certainly fair topics to discuss but I can't help but notice a two basic realities which make me uncomfortable with this entire issue.
The first issue I have with the bill is I believe limiting the rights of individuals to collectively bargain on any issue to be unconstitutional. The first amendment is clear in saying: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." The provision of the bill which essentially makes it a criminal offense for public sector employees to strike, punishable by heavy fines, is especially concerning. I think these implications alone are enough to vote against this bill, and if it weren't for my second concern with this issue, I would vote 'No' on issue 2 without any reservation.
My hesitation is due to the second reality which makes me uncomfortable with this issue: forced union dues. Ohio teachers, police offers, fire fighters and others are required to pay union dues for their "privilege" to work and earn a wage. I also find this to be unconstitutional. The ninth amendment states: "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people." Meaning, the right to collectively bargain does not give the labor unions the power to require all individuals who wish to be a teacher, police officer, fire fighter, etc. to join their union. As a result, I have a very difficult time supporting the rights of a union which I believe has core practices which are unconstitutional.
What I would like to see is a state law or a federal ruling banning forced dues. People have a right to collectively bargain voluntarily and employers (government and private) should be given the choice as to whether or not they wish to negotiate with the union. I know there are public sector workers which would gladly negotiate with their employer on their own. Labor unions have every right to exist and to bargain on behalf of their members; they do not have the right to a forced monopoly of their labor market.
The sad reality is Ohio voters are being forced to choose between a government which infringes on the rights of its citizens or a union which infringes on the rights of its members. It's a classic case of the lesser of two evils. All that being said, I have several friends and family members which are impacted by this bill. While I vehemently disagree with several of their respective union's practices (i.e., raises, layoffs, etc. based on seniority instead of merit), I recognize and support their right to collectively bargain. The members who are forced to join their union are already having their rights violated by their union; I will not support a law which will add the additional injustice of their government violating their freedom of association.
Yes, it is fair to say the labor unions potentially drive up costs on the taxpayers. However, the response or remedy cannot include the violation of any individual's first amendment rights.
There are certainly several topics to discuss concerning the bill. My perception is the Republicans would like to focus on requiring public sector employees to receive pay increases based on merit and pushing more of the health care costs back onto the employees to be more in line with the private sector. Democrats would like us to focus on provisions in the bill which forbid police officers and fire fighters from negotiating on what they consider to be safety issues. These are certainly fair topics to discuss but I can't help but notice a two basic realities which make me uncomfortable with this entire issue.
The first issue I have with the bill is I believe limiting the rights of individuals to collectively bargain on any issue to be unconstitutional. The first amendment is clear in saying: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances." The provision of the bill which essentially makes it a criminal offense for public sector employees to strike, punishable by heavy fines, is especially concerning. I think these implications alone are enough to vote against this bill, and if it weren't for my second concern with this issue, I would vote 'No' on issue 2 without any reservation.
My hesitation is due to the second reality which makes me uncomfortable with this issue: forced union dues. Ohio teachers, police offers, fire fighters and others are required to pay union dues for their "privilege" to work and earn a wage. I also find this to be unconstitutional. The ninth amendment states: "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people." Meaning, the right to collectively bargain does not give the labor unions the power to require all individuals who wish to be a teacher, police officer, fire fighter, etc. to join their union. As a result, I have a very difficult time supporting the rights of a union which I believe has core practices which are unconstitutional.
What I would like to see is a state law or a federal ruling banning forced dues. People have a right to collectively bargain voluntarily and employers (government and private) should be given the choice as to whether or not they wish to negotiate with the union. I know there are public sector workers which would gladly negotiate with their employer on their own. Labor unions have every right to exist and to bargain on behalf of their members; they do not have the right to a forced monopoly of their labor market.
The sad reality is Ohio voters are being forced to choose between a government which infringes on the rights of its citizens or a union which infringes on the rights of its members. It's a classic case of the lesser of two evils. All that being said, I have several friends and family members which are impacted by this bill. While I vehemently disagree with several of their respective union's practices (i.e., raises, layoffs, etc. based on seniority instead of merit), I recognize and support their right to collectively bargain. The members who are forced to join their union are already having their rights violated by their union; I will not support a law which will add the additional injustice of their government violating their freedom of association.
Yes, it is fair to say the labor unions potentially drive up costs on the taxpayers. However, the response or remedy cannot include the violation of any individual's first amendment rights.
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