Daily Archives: 15 September 2015

Walker and Unions

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Governor Scott Walker has some plans for unions, if he’s elected President. Walker says he would

eliminate the National Labor Relations Board, prohibit federal employee unions; institute right-to-work laws nationwide; and repeal the Davis-Bacon Act of 1931, which requires the payment of local prevailing wages to workers on federal construction projects, often boosting pay and project costs.

There’s much to like here. All of these boost competition and lower costs to American consumers, which in turn will be highly stimulative of our economy.

The only one I disagree with is the elimination of federal employee unions. Unions greatly simplify contract negotiations, and that can lower costs, even for a government employer. However. The right-to-work position applied to federal unions, and as Walker applied to Wisconsin government unions, is a good move. What Walker did in Wisconsin was to take away the unions’ privilege of collecting union dues from non-union members as a condition of working at all. He also took away the privilege of state government unions to direct a portion of member dues to political purposes unless the member agreed to the diversion. He also took away the privilege of state unions to strike. These all are worthy of application at the Federal level.

On his right-to-work proposal as a Federal law: it’s not a blanket right; Walker fully respects the 10th Amendment. Accordingly his proposal is structured to make right-to-work the baseline, but individual states can vote themselves as union shops if they wish.

Of course, if these proposals look like they’re taking off, we can expect very vociferous misbehavior by unions and their Democratic Party pets as they try to intimidate the proposals into defeat. It’s only necessary to review union and Democrats’ thuggery in Wisconsin as Walker worked his will there a few short years ago. Here, for instance. And here. And here.

Most of these are sound ideas, regardless of union fireworks and threats and actions, and they should be supported by whomever gets the Republican nomination for President, and they should be pressed for in Congress should that candidate be elected. That President, too, should go over Congress’ heads to their—and his—boss, us American citizens if Congress hesitates. That President should identify, clearly and by name, those Representatives and Senators who remain in union pockets.

The Fed, Everybody Else, and Interest Rates

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Will the Fed start raising benchmark interest rates this week? Lots of folks, including folks in the Fed are getting wobbly. I’ve written before about being wobbly in an economy.

Harriet Torry and Jon Hilsenrath, in a Wall Street Journal piece, were careful to point out that central banks raising rates doesn’t work very well:

In the seven years since the world’s central banks responded to the financial crisis by slashing interest rates, more than a dozen banks in the advanced world have tried to raise them again. All have been forced to retreat.

No, they weren’t. They all chose to retreat. That’s the minor point, though. The larger point is a big so what? Those economies named by Torry and Hilsenrath (generally European, Asian, and Australia) aren’t ours. They’re not as large, they’re not structured the way ours is, and none of them have the same imperatives ours does. Their economies, too, are largely influenced by our economy; ours is that large and globally dominant.

That other central banks do this or don’t do that is wholly irrelevant to what our central bank does or doesn’t do. There’s no symmetry here; it really is a one-way street.

Independently of all of that, the Fed has for a number of sound reasons set 2% as its inflation goal, and our economy hasn’t approached that rate in years. If the Fed wants 2%, it’s going to have to let interest rates rise to levels consistent with that inflation rate.

The Fed needs to start raising its rates this week as more or less scheduled. No waffling. No wobbling. No timing the thing. Just do it. Full stop.