Wall Street Journal Opinion Page July 20, 2010 “Real Wages Don’t Tell the Whole Compensation Story”

by: Geoff Ficke
Greg Tarpanian’s response to the article by Lee E. Ohanian (The Right Way to Raise Wages) is incorrect on a number of counts.

GDP growth in the 1960’s as compared to the last 2 decades was indeed higher than in the last two decades but in percentage terms only, owing to the much smaller size of the economy five decades ago.

Mr. Tarpanian’s lament that if real wages had risen at the rate of growth of GDP over the last 40 years the current annual real wage for non-supervisory workers would be around $60,000 per year, instead of the $30,000 it is today. His key descriptive, non-supervisory” is telling. The U.S. economy has evolved to a knowledge based economy that values and produces technology and is fueled by education and skills. We don’t, and won’t, make low or no-value added products here when they can be produced so much more inexpensively in second and third world countries. The non-supervisory, blue collar rote factory jobs so prevalent in the 1960’s have been devalued and replaced by the realities of our constantly evolving scientific, knowledge based economy.

Finally, Mr. Tarpanian, like so many union acolytes, ignores reality. Unions kill industries. Autos, glaziers, steelworkers, stevedores, airlines, ship building, shoes, garment and so many more once thriving trades and industries (look what the SEIU and AFSCME have done to hamstring government) have either left for greener pastures, been bankrupted or been replaced by mechanization that indeed increases productivity.

Unskilled, undereducated workers in highly industrialized countries will never be able to appreciably increase their wages as long as the world continues to desire and reward producers for providing technology advances that improve lives at reasonable costs. Unless, and until unions recognize this reality they remain obviated and there will remain a permanent divide in real wages.

Wall Street Journal Opinion Page May 22-23, 2010
by: Geoff Ficke

Frank Schuchat’s letter of May 18 excoriating Martin Feldstein’s gymnastic ability for supporting the George W. Bush tax cuts and decrying budget deficits shows a lack of understanding of basic economics.

According to OMB, Federal revenues in 2000 were 1.99 billion dollars. In 2008, after several years of the horrid, fully employed Bush tax cuts for the wealthy, Federal revenues hit a record 2.57 Billion dollars, a record. Economics 101: If you want more of an outcome (revenue in this case) penalize it (tax) less. Over and over tax cuts have been utilized to stimulate productive activities which benefit the economy and thus stimulate government revenues.

President Bush erred in not clamping down on a rapacious, wreckless Congress and putting the brakes on their spending. It is a lesson that our current President has not only not learned, but has worked mercilessly to exceed.

WSJ Opinion Page April 17/18 2010

by: Geoff Ficke

I read with great interest the opinion piece written by the Pres. of the AFL-CIO, Richard Trumka, decrying the growth of private equity funds. As leader of the country’s largest industrial union I would think he could have identified much stronger examples of hedge funds causing ” default, resulting in massive job losses and further pressure on our fragile economy”.

Each of the six specific companies Mr. Trumka cited as examples of private equity hubris and mismanagement were either retailers or retail vendors. Any observer, possessing any historical perspective can cite dozens of such companies that, because of changing tastes or demographics, enjoyed a period of success, plateaued and then declined and expired without any financial manipulations from shadow financiers (Montgomery Ward, Alexander’s, Value City, Bonwit Teller, Faberge, etc.)

Indeed, the three retailers mentioned (Linens & Things, KB Toys and Mervyn’s) by Mr. Trumka were always second banana’s in their sales channels and probably should have been put out of their misery long ago. They could not compete on price, selection and service.

I would propose that the AFL-CIO and the now unemployed workers at Simmons Bedding Company should have taken the exact path that the pirate hedge funds undertook. Put their capital, both financial and labor at risk. Pool their resources, rationalize their work rules, wages and benefits and buy the Company from bankruptcy. Certainly this would be a better use of the massive capital resources that unions control than continuing to dump millions of dollars into supporting the Democratic Party. The choice was workers or policitians. The AFL-CIO usually chooses poorly.

Wall Street Journal Opinion Page Jan 7, 2010
by: Geoff Ficke

The reason almost all government entities, federal, state and local, are strangling in debt is personnel costs (”Illinois Race Foils Bid to Balance Books,” U.S. News, Jan 4 2010). Too much headcount, too much compensation, and audacious benefit packages are choking the taxpayers and businesses that are saddled with the burden of covering profligate politicians and their pandering to public employee unions with onerous tax burdens.

Comparable private enterprise and government jobs are wildly disparate in compensation, heavily tilted in favor of government workers. No private enterprise wishing to stay in business can allow workers to retire after 25 or 30 years of service and be immediately vested in a pension, especially as life expectancy continues to increase.

A few politicians will dissemble about the “unfunded pension liabilities” that are legal obligations they must confront. Most simply continue to enhance these deals at the behest of ravenous public employee unions. Public be damned. Illinois is but a microcosm of the disaster we must confront.

It is time to confront unions with a demand to rationalize pay, work rules, benefits and pensions with private industry plans. If unions won’t enter realistic negotiations, then it is time for governments, at all levels, to pursue bankruptcy. Sure, the credit ratings and borrowing costs would take a short-term hit. In the medium term, however, when bureaucrats are paid what they are actually worth and budgets and spending are corralled, the bond market will be reassured and reward governments that are sober, prudent and proper stewards of the produce taken from taxpayers with more access to lower rates and funding.