body~politic

~~~~~~~~~> Does DEBT  become SERFDOM ?

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Thursday, March 10, 2011

Winston Churchill

"Make your minds perfectly clear that if ever you let loose upon us again a general strike, we will loose upon you"

~Winston Churchill

Unions Throw School Children Under the Bus

http://www.punditleague.us/editorials/unions-throw-school-children-under-the-bus/

Unions Throw School Children Under the Bus

Wisconsin Democrats, by fleeing the state to avoid participation in democracy, have been attempting to stall the legislative process to allow public employee union local chapters across the state to negotiate new collective bargaining agreements prior to the new law taking effect. Despite public claims that unions have come around to make concessions on health and retirement contributions as proposed by Governor Scott Walker, their action demonstrates that such claims were lies intended to mislead the media and the public.
The general public’s understanding of the collective bargaining provisions is incomplete. And union leaders want to keep it that way. Polls seem to indicate that the public supports the requirement that public employees contribute more to their health and retirement plans, but is hesitant to support restricting collective bargaining to only salary. First, it is important to understand that many of the polls included a universe with disproportionately high union membership represented in the sample. Next, poll results are skewed because Wisconsin residents don’t yet appreciate how collective bargaining by public employee unions devastates middle class taxpayers, parents and kids in Wisconsin.

The public hasn’t really had a chance to absorb and understand the need to restrict collective bargaining and the enormous fiscal ramifications across the state. Ironically, while Governor Walker and the legislature to do the heavy lifting on the budget repair bill (which brings the budget into balance for the current fiscal year which ends on June 30, 2011) before beginning the lengthy and arduous process of approving a new two-year budget, it might be useful that Democrats have delayed the process and caused the two projects to overlap because Walker’s modest collective bargaining language in the budget repair bill is intimately related to the cuts in the new budget bill.

Increasingly, Wisconsin Speaker Jeff Fitzgerald and Senate Majority Leader Scott Fitzgerald have explained why the collective bargaining restrictions are critically important from a fiscal perspective. It is in the interest of Wisconsin taxpayers, parents and kids that collective bargaining be restricted as Walker has proposed. Union organizers and President Obama’s “Organizing for America” certainly don’t want people, even union members, to understand the facts.

There are 424 school districts, 72 county governments and over 1000 municipal governments in the state of Wisconsin. The alleged claim that the unions have “agreed to concessions on health benefits and retirement” do not apply to all of those local unions who negotiate separate agreements with different government bodies.
The negotiations between school districts, counties and municipalities will not occur simultaneously. Some contracts are currently up for renewal. Others are renewing early before any new law takes effect. Others may be up in 6 months or a year from now. Without restricting collective bargaining only to salary, those local units of government will be forced to make enormous and painful cuts to programs and services, while employee salary and benefits are protected. It’s estimated that 75% of school district operating budgets can be attributed to personnel costs of salary and benefits.

The state of Wisconsin has a $3.6 billion deficit impacting their next state budget. Programs across the board will experience significant cuts. State aid to school districts across Wisconsin may be cut as much as $900 million in order to balance the state’s books. State aid to counties and cities will also be cut dramatically. School boards and other government officials that are racing to approve union budgets prior to the new provisions in Walker’s budget repair bill taking effect are doing a huge disservice to taxpayers, parents and children in their communities. That behavior borders on political malpractice and any officials so blatantly putting union coffers ahead of the interests of schools, education programs, parents and Wisconsin school children should face immediate recall campaigns and be removed from office. 

In light of the dramatic cuts coming down the pike, school districts essentially refusing to cut 75% of their budgets dedicated to employee salary and benefits are forcing draconian cuts to be borne completely by the other 25% of their budgets. School districts won’t be able to cut enough. Academic and other programs that dramatically impact kids in the classroom will be forced to experience massive cuts. The only way to trim personnel costs will be to lay off teachers in large quantities, significantly increasing class sizes. They will condense 2 classes into one. They will cancel or reduce music, foreign language, physical education and other electives. They will cancel and cut back on extra-curricular activities and athletics. Those officials will attempt to blame the Republican Governor and Republican legislature that inherited this $3.6 billion deficit from Democrats.

The bottom line is that by continuing to fight for all their collective bargaining rights in the face of these enormous budget deficits, unions in Wisconsin and other states are saying “To hell with kids, to hell with taxpayers, we want ours and we’re going to get it. Go get your money somewhere else.” Union leaders and the likes of Michael Moore and Rachel Maddow are attempting to lie to the public by claiming there are no deficits. Those radical ideologues are crushing the middle class taxpayers of Wisconsin.

Former Los Angeles Mayor Richard Riordan recently predicted that in the next five years 90 percent of states and cities will become functionally bankrupt, most much sooner rather than later. Across the globe nations are falling into financial collapse because of generous benefits enjoyed by public employees and citizens without the ability to pay for those benefits. The European Union is teetering on the brink of failure and countries like Greece, Spain, Ireland and Great Britain are recognizing that benefits must be cut. Democratic Governor of New York Andrew Cuomo is firing public employees in an effort to save the state from fiscal ruin. Democratic Governor Jerry Brown of California is proposing across the board cuts of as much as 10% in salary to public employees with more to come. And states like Wisconsin, Indiana, Ohio, Florida, Maine and others are adjusting the contribution levels of public employees to their health care plans and retirement and restricting collective bargaining. And yet Moore and Maddow are whistling through the graveyard and bringing frustrated and suffering public employee union members along with them for the deceitful ride. 

As fast as the public discovers these people are lying, they continue to change their stories. First they blamed business tax cuts approved in Wisconsin as the cause of the deficit, but don’t point out that those cuts have no fiscal impact in the current fiscal year or that Wisconsin still has the 4th highest state-local tax burden in the nation. They complain about Wall Street bailouts. But they don’t point out that Wall Street is still loaning money to cash strapped states with the knowledge that ultimately many of those funds will line the pockets of public employee unions who refuse to make concessions.

And they never admit what is increasingly revealed to middle class taxpayers, parents and school children. The simple and undeniable fact is that President Obama, public employee union leaders and their supporters are willing to crush already overburdened middle class taxpayers, parents and school children, so long as they get what they want.




Wednesday, March 9, 2011

Hayek on labor unions: economic and social consequences.

http://www.thefreelibrary.com/Hayek+on+labor+unions%3a+economic+and+social+consequences-a0178617776

Hayek on labor unions: economic and social consequences.








Abstract


While American unions have a low and declining market share, they remain very significant, especially in the political marketplace. That political influence makes it possible for unions to yield far more power in the private sector than their market share in that sector (7.5 percent) implies. All this is possible because of the substantial goodwill capital that unions still enjoy. F. A. Hayek thought that if people, including workers, understood the negative consequences of unionism, unions would lose most of that goodwill capital. Hayek wrote extensively on two categories of malign effects of unionism: those involving breach of the rule of law and those involving the economy and the free society. This paper examines his views on the latter.


I. Introduction


Many people, aware that only 7.5 percent of private sector American workers are unionized, conclude that, at least in the U.S., unions are largely irrelevant. That inference is very wrong. To begin with, 35.9 percent of government sector American workers are unionized. To a large extent collective bargaining in the government sector results in government employees imposing taxation-without-representation on the rest of us. (Wages and salaries paid to government workers are paid for out of taxes, and taxpayers don't get to vote on the provisions of collective bargaining agreements.) Moreover, despite the low, and falling, market share of private sector unions, their ability to extract forced dues from workers who want nothing to do with them gives them far too much influence in the political marketplace. This sorry state of affairs is made possible by the fact that unions enjoy far more goodwill among the public than they deserve. F. A. Hayek believed that if people, including unionized workers, came to understand the actual consequence of unionism as it emerged in Britain and the U.S., unions would lose much of their undeserved goodwill capital. He thought that to be a true friend to labor, one had to oppose coercive unionism.


The negative effects of unionism examined by F. A. Hayek fall into two broad categories: conflicts with the rule of law, and perverse economic and social effects. In a previous paper (Baird, 2007) I discussed the former. Here I turn to Hayek's views of the economic and social consequences of unionism and conclude with a brief discussion of Hayek's proposal to substitute profit sharing for collective bargaining in the determination of wage rates.


II. Economic Consequences


The damaging economic effects of coercive unionism examined by Hayek are of four types: unions disrupt and impair the coordination of economic activities through the competitive market process; they increase the extent and duration of unemployment; they cause inflation and exacerbate the business cycle; and they lower productivity, which results in lower standards of living for working people.


1. Discoordination of Economic Activities


Part II of 1980s Unemployment and the Unions ([1980] 1984), is a clear and persuasive exposition of Hayek's long-held understanding of how markets achieve coordination of the diverse economic activities of all market participants without any central direction. Relative prices and relative wages, and their profit and loss implications, are central to that coordination process. In brief, within the context of voluntary exchange, all market participants attempt to do the best they can for themselves. They formulate production and exchange plans on the basis of the bid and ask prices they expect to encounter in the market. Each person formulates his own bid prices for those goods and services (including labor) he is interested in buying and his own ask prices for those goods and services (including labor) he is interested in selling. Each person also has expectations regarding the bid and ask prices of other market participants. As people attempt to carry out their plans, they will discover the extent to which their expectations and planned actions are consistent with what others are willing to do. Buyers who expected to encounter lower ask prices than they do will decide to buy less than they had planned. Buyers who expected to encounter higher ask prices than they do will decide to try to buy more than they had planned. Sellers who expected to encounter higher bid prices than they do will decide to sell less. Sellers who expected to encounter lower bid prices than they do will decide to try to sell more. All the while, market participants will adjust their own bid and ask prices to make them more consistent with newly discovered production and exchange opportunities. Gradually, as expectations come to correspond to reality, more and more coordination of production and exchange activities is achieved. Since market conditions are almost always changing, coordination is a moving target. Nevertheless, freely determined prices and wages move markets toward coordination, a state where the plans and actions of all market participants are mutually consistent. Note that no one has to have knowledge of the underlying reasons other market participants do what they do. All that is necessary is that prices are free to convey the implications of those actions. In Hayek's words:


Each individual can rarely know the conditions which make it
desirable, for him as well as for others, to do one thing rather
than another, or to do it in one way or another. It is only through
the prices he finds in the market that he can learn what to do and
how. Only they, constantly and unmistakably, can inform him what
goods and services he ought to produce in his own interest as well
as the general interest of his community or country as a whole. The
'signal' which warns him that he must alter the direction or nature
of his effort is frequently the discovery that he can no longer
sell the fruits of his effort at prices which leave a surplus over
costs. The signaling apparatus works as much for the employed
worker as for the professional or business man. ...


For anyone earning his living in the market, which means most of
us, the most valuable contribution he can make at any time will
depend on thousands of continually changing conditions of which he
can have no direct knowledge. It is nevertheless possible for him
to make whatever decisions are most advantageous both to himself
and the community at large because the open market conveys to him,
through its prices, the information he requires to make the right
decisions and choices. The prices are thus the indispensable
signals that communicate to him the effects of events with which he
cannot himself be directly acquainted ([1980] 1984, p.28-29,
emphasis in original).






Coercive unionism cripples this coordination process. Specifically, when above-market wage rates are imposed in unionized employments by the ability of unions, through coercion, to shut out competing workers, those wages will not tell the truth about the relative scarcity of workers who are able and willing to do the job. Too few workers will enter those employments. Instead, many workers who should be employed therein, based on what they can do and the willingness of consumers to pay employers to hire them to do it, will be diverted to lower valued uses of their abilities. This will depress wages in those employments, again resulting in prices that do not send the right signals to market participants. Relative wages and relative prices will be distorted. They will tend to discoordinate the economy rather than coordinate it. Hear Hayek on union-caused discoordination in Britain when it was considered the "sick man of Europe":


The effect of the present system of wage determination in
Britain is that the country no longer has an internal price
structure to guide the economic use of resources. This is
almost entirely due to the rigidity of politically determined
wages. If it is no longer possible to know the most efficient
use of the natural talents of the British people, it is because
relative wages no longer reflect the relative scarcity of skills.
Even their relative scarcity is no longer determined by
objective facts about the real conditions of supply and
demand, but by an artificial product of the arbitrary decisions
of legally tolerated [labor] monopolies (p.54).






2. Unemployment


Hayek held that unemployment is always a pricing problem. It emerges when "there is a discrepancy between the distribution of labor (and the other factors of production) between industries (and localities) and the distribution of demand among their products" (1975, p.19). Given the pattern of consumer demands for goods and services, suppose there is an excess demand for labor where consumer demand for goods and services is strong and an excess supply of labor where consumer demand is not so strong. Ordinarily, this would result in higher wages in the former and lower wages in the latter. This pattern of relative wages would attract additional workers into the production of goods and services for which consumer demand is strong and induce some workers employed where consumer demand is less strong to leave those employments. The additional supply of workers seeking employment in the former will tend to lower wages there. The decreasing supply of labor in the latter will tend to increase wages there. The process continues until all labor is employed in accordance with the pattern of consumer demands. Higher consumer demand translates into additional production, and lower consumer demand translates into less production. Any discrepancy between the allocation of labor among employments and the pattern of consumer demands is gradually remedied by changing relative prices and wages.


The only way such a discrepancy can endure is if there is a "distortion of the system of relative prices and wages" (1975, p.19, emphasis in original). To the extent that the markets in which there is an excess demand for labor are unionized, additional workers are prevented from seeking employment there. The high wages become permanent. Thus, the high consumer demand is absorbed by the high wages rather than translated into additional production. If the markets in which there is an excess supply of labor are also unionized, the initial wage decrease will be prevented, so employers have no recourse but to lay off workers. The result: durable unemployment. If the markets with an excess supply of labor are not unionized, unemployment there can be avoided, but only by a substantial decline in wages. If declines of that magnitude are illegal because of minimum wage laws, or if, because of the welfare state, people would be paid more not to work than to work at such low wages, the result again is durable unemployment. Unions always support increases in legal minimum wages and higher unemployment benefits. In Hayek's words:


The normal cause of recurrent waves of widespread unemployment is
... a discrepancy between the way in which demand is distributed
between products and services, and the proportions in which
resources are devoted to producing them. Unemployment is the result
of divergent changes in the direction of demand and the techniques
of production. If labour is not deployed according to demand for
products, there is unemployment ([1980] 1984, p.55).


It is the continuous change of relative market prices and
particularly wages which can alone bring about that steady
adjustment of the proportions of the different efforts to the
distribution of demand, and thus a steady flow of the stream of
products. It is this incessant adaptation of relative wages to the
ever-changing magnitudes, at which in each sector demand will equal
supply, which the trade unions have set out to inhibit ((1980]
1984, p.18, emphasis in original). The reason why I believe that
the licence to use coercion conceded to unions some 70 years ago
[in Britain's 1906 Trades Disputes Act] should be withdrawn is
precisely that their actions have become the chief cause of
unemployment. [One way they do this] is the obvious one of an
increased demand for some product being absorbed by an increase of
the wages of the workers already employed in it rather than by an
influx of additional workers, leaving out in the cold those in the
industries from which demand has turned ([1978] 1984, p.62).


The chief significance of the comprehensive systems of unemployment
compensation ... is that they operate in a labor market dominated
by the coercive action of unions and that they have been designed
under strong union influence with the aim of assisting unions in
their wage policies. ... Such a system, which relieves the unions
of the responsibility for the unemployment that their policies
create and which places on the state the burden not merely of
maintaining but of keeping content those who are kept out of jobs
by them, can in the long run only make the employment problem more
acute (1960, p.302).






Hayek acknowledged another way in which union-imposed wage distortions cause unemployment. Excessive wage rates imposed by union duress will cause employers to change the capital-labor mix in ways that permit them to reduce labor costs while maintaining output. "At wages higher than those which would prevail in a free market, employers must, in order to be able to pay them, use the limited amount of capital that is available in a manner which will require fewer workers for a given output" ([1978], 1984, p.62).


3. Unions, Money, Inflation and Keynes


Hayek often cited a perverse de facto division of responsibility between monetary authorities and trade unions in Britain. The unions would arbitrarily set high money wage rates in key industries, and, because by itself this would result in extensive unemployment, the monetary authorities would inflate the money supply enough to raise money prices, which, in turn, would lower real wages sufficiently to avoid extensive unemployment.


What we have achieved is a division of responsibilities under which
one group can enforce a wage level without regard to the effects on
employment, and another agency is responsible for providing
whatever amount of money is needed to secure full employment at
that wage level. So long as this is the accepted principle, it is
true that the monetary authorities have no choice but to pursue a
policy resulting in continuous inflation, however little they may
like it. But the fact that in the existing state of opinion [the
sanctity of unions] they cannot do anything else does not alter the
fact that, as always, it is monetary policy and nothing else which
is the cause of inflation ([1959] 1967, p.282).






The U.S. also experienced this phenomenon on a limited scale, especially in the 1970s, but unions here were much less pervasive than in Britain, so it was much less of a problem. Nevertheless, we had our own discussions of the extent to which this "cost-push" process could account for U.S. inflation. Most U.S. economists concurred with Hayek (and Friedman) that cost-push could not account for inflation in the absence of ratifying monetary policy.


Keynesian economics, of course, only strengthened the link between unions and the monetary authorities in causing inflation. Keynes always understood that unemployment was a result of real wages that were too high, but he simply assumed that money wages could not be reduced because of unions and other causes of wage "rigidities." His solution to the problem of unemployment was to increase aggregate money demand through expansionary monetary policy. Of course, this "solution" is possible only to the extent that workers underestimate the resulting inflation.


The essential point is that it must be once more realized that the
employment problem is a wage problem and the Keynesian device of
lowering real wages by reducing the value of money when wages have
become too high for full employment will work only so long as the
workers let themselves be deceived by it. It was an attempt to get
round what is called the 'rigidity' of wages which could work for a
time but which in the long run has only made this obstacle to a
stable monetary system greater than it had been. What is needed is
that the responsibility for a wage level which is compatible with a
high and stable level of employment should again be squarely placed
where it belongs: with the trade unions ([1958] 1967, p.298).


The final disaster we owe mainly to Lord Keynes. His erroneous
conception that employment could be directly controlled by
regulating aggregate demand through monetary policy shifted
responsibility for employment from the trade unions to the
government. This error relieved trade unions of the responsibility
to adjust their wage demands so as to sell as much work as
possible, and misrepresented full employment entirely as a function
of government monetary policy. For 40 years it has thus made the
price mechanism ineffective in the labour market by preventing
wages from acting as a signal to workers and to employers. As a
result there is divided responsibility: the trade unions are
allowed to enforce their wage demands without regard to the effect
on employment, and government is expected to create the demand at
which the available supply of work can be sold at the prevailing
(or even higher) wages. Inevitably the consequence is continuous
and accelerating inflation ([1980] 1984, p. 57). (1)






However, Hayek did not recommend that this "disaster" be remedied by restrictive monetary policies. He thought such an effort would be far too dangerous: "A monetary policy that would break the coercive powers of the unions by producing extensive and protracted unemployment must be excluded, for it would be politically and socially fatal" (1960, p.281-2). The only solution, according to Hayek, is to remove the unions' privileges, to subject them to the rule of law. This would be difficult, but the unions would come to see that it is the least bad of their alternatives.


[I]f we do not succeed in time in curbing union power at its
source, the unions will soon be faced with a demand for
measures that will be much more distasteful to the individual
workers, if not the union leaders, than the submission of
unions to the rule of law: the clamor will soon be either for
the fixing of wages by government or for the complete
abolition of the unions (1960, p. 282).






Of course Hayek would be opposed to either government wage setting or the complete abolition of (voluntary) unions. However, I think Hayek was, at least in 1960 when he wrote these words, too optimistic about the unions' distaste for government wage fixing. American, if not British, unions supported government interference in the 1970s through "incomes policies" and explicit wage fixing. During that period the unions had a lot of confidence in their ability to manipulate public policy in their interests. And the complete abolition of coercive unions was not then, and is not now, politically possible.


Hayek thought that Keynes' notion of "aggregate demand" was meaningless but dangerous. Thinking in such aggregate terms diverts attention away from what, as we saw above, was, in Hayek's mind, really important: the distribution of individual demands relative to individual supplies and relative prices.


If the composition (or distribution) of the demand for the
various products is very different from that of their supply,
no magnitude of total demand will assure that the market is
cleared. The wider the difference between the composition of
the demand and that of the supply, the more the achievement
of a correspondence between the whole of demand and the
whole of supply can be brought about only by a change in the
relative quantities, and this, in turn, only by a change in the
relative prices of the different products and services,
including wages ([1980] 1984, p.16, emphasis in original). (2)






Moreover, trade unions exacerbate the difficulty.


Aggregate demand may well exceed the aggregate price of all
goods and services offered, yet this will not create full
employment if in the sectors in which demand exceeds supply
the already employed obstruct the entry of additional workers
by claiming all the surplus as gains for themselves ([1980]
1984, p.17).






Finally, Hayek joined his critique of unionism with his monetary theory of the business cycle. (3) The basis for that theory is the role of relative prices (including wages) and interest rates in the coordination of economic activities. The introduction of newly created money and bank credit distorts relative prices sending incorrect signals to market participants who then misallocate resources. The new money does not change the underlying real supplies and demands, but makes it appear that some supplies and demands have changed. In particular, lower interest rates send the false signal that people want to consume less now and more in the future. In response, producers produce less for current consumption and instead undertake too many investments designed to yield consumer goods in the future. In the meantime, real demand for consumer goods doesn't decrease, and the spending boom part of the cycle gets underway. Eventually, unless money inflation is accelerated to keep ahead of expectations, real supply and demand conditions will become revealed, and a correction of the misdirections of resources will get underway. This is the bust part of the cycle.


What role do unions play in this story? When discussing unions, Hayek emphasized that wages are distorted by inflation, and so they will misdirect labor. When monetary authorities resort to inflation to avoid unemployment, the new money increases particular wage rates. "The artificial demand brought about by increasing the amount of money is simply misleading: it attracts workers into employments which cannot be maintained except by accelerating inflation" ([1980] 1984, p.21). Moreover, after Hayek had developed his trade cycle theory and had turned his attention to the union problem, he came to see that unions were the principal influence leading monetary authorities to inflate.


[T]he most common cause [of unemployment] is that,
because of excessive credit expansion, over-investment has
been encouraged and too many resources have been drawn
into the production of capital goods, where they can be
employed only so long as the expansion continues or even
accelerates. And credit is expanded to appease trade unions
that fear their members will lose their jobs, even though it is
they themselves who forced wages too high to enable the
workers to find jobs at those excessive rates of pay ([1980]
1984, p.55-6).






4. Lower Productivity and Lower Standards of Living


According to Hayek, "It is a complete inversion of the truth to represent unions as improving the prospect of employment at high wages. They have become in Britain the chief cause of unemployment and the falling standard of living of the working class" ([1978] 1984, p.62). Misallocation of labor due to the unions' interference with the signaling functions of relative prices and wages reduces the productivity of the workforce by preventing labor from being allocated according to its more highly valued uses. Many workers are excluded from where they would be more productive and forced into employments where they are less productive, or they are excluded from any employment.


It is the wages maintained by the closed shops whose barriers
prevented the rest from earning as much as they might have
done which keeps the productivity of the majority of British
workers low. Once the opportunity to earn more in a
particular trade becomes the exclusive property of those
already employed there, successes of individual enterprises are
likely to be taken out by its present staff in the form of higher
wages rather than leading to additional employment ([1980]
1984, p.19).


Britain has been brought to her present plight, not because of
the lack of skill or industry of the individual worker, but
because government and labour organizations, in order to
appease groups of workers, have tried to relieve them of the
necessity for adjustments by removing the inducements (and
rewards) of changing their jobs ([1980] 1984, p.35).






High productivity in an economy requires that individual decision-makers within their respective enterprises not only attempt to allocate each resource to its most highly valued use, it also requires that as little as possible of each resource is used to produce any amount of any output.


[R]educing costs means setting free resources which could
produce more elsewhere. In any particular instance, the
primary aim must therefore always be to use as few resources
as possible for a given output. ... The secret of productivity
which makes it possible to employ many at high wages is for
each producer to do his job with the use of as few resources
as possible. ...


It has come to be thought in Britain [due to unions] that a
prime task of economic policy was the protection of existing
jobs. This fundamental reversal of the truth has developed
into a sort of anti-economics which has misrepresented the
chief social goal to be the use of as large a quantity of
resources as possible ([1980] 1984, p.34-5, emphasis in
original).






One common manifestation of this phenomenon is union-imposed workplace rules that stipulate the types and amounts of labor that must be devoted to each task. I recently gave a lecture at a convention hotel in Las Vegas. I had prepared a PowerPoint presentation, but I was tardy in requesting the organizers to provide a data projector. When I did, it was too late. I offered to bring my own projector and set it up myself. That, I was told, was impossible because in this union-impaired hotel only in-house equipment could be used, and only union workers could set it up and operate it.


Hayek discussed yet another way by which unions have lowered the overall productivity of labor: through their influence on investment and the composition of the capital stock. Hayek recognized what is today called the holdup problem. Specific capital goods, those which when once acquired and set up by employers have few, if any, alternative uses, present unions with opportunities to expropriate most of the returns from the productivity of those capital goods. The cost of acquisition of capital equipment is its purchase price minus any immediate resale value it may have. If it is specific capital it has few if any other uses, and thus its resale value will be very low. This means almost all of the purchase price is a sunk (unavoidable) cost. Under these circumstances, it is rational for an employer to continue to operate as long as after-tax revenue is any amount over variable costs, which include labor costs. If a union drives up labor costs so that only a penny is left over out of after-tax revenue after the other variable costs are covered, that penny would be the only return to capital. Specific capital has nowhere else to go, so the penny is better than nothing. Of course, employers recognize this danger. That is why most of them try to avoid unionization. Where that is not possible, employers attempt to minimize their purchases of highly specific, relative to less specific, capital equipment, or they simply reduce their investment spending in general.


It is true that any union effectively controlling all potential
workers of a firm or industry can exercise almost unlimited
pressure on the employer and that, particularly where a great
amount of capital has been invested in specialized equipment,
such a union can practically expropriate the owner and
command the whole return of his enterprise (1960, p.270). (4)


Because unions are most powerful where capital investments
are heaviest, they tend to become a deterrent to investment--at
present probably second only to taxation (1960, p.272-3).


Personally, I am convinced that this power of union
monopolies is, together with contemporary methods of
taxation, the chief deterrent to private investment in
productive equipment which we have allowed to grow up. We
must not be surprised that private investment dries up as
soon as uncertainty about the future increases after we have
created a situation in which most of the gain of a large, risky
and successful investment goes to the unions and the
government, while any loss has to be borne by the investor
([1959] 1967, p.286).






Low productivity diminishes the flow of incomes that arise from production and exchange. It decreases the average real standard of living.


It is more than doubtful ... whether in the long run these
selfish practices [of unions] have improved the real wages of
even those workers whose unions have been most successful
in driving up their relative wages--compared with what they
would have been in the absence of trade unions. It is certain,
and could not be otherwise, that the average level of
attainable real wages of British workers as a whole has
thereby been substantially lowered. Such practices have
substantially reduced the productivity potential of British
labour generally. They have turned Britain, which at one time
had the highest wages in Europe, into a relatively low-wage
economy ([1980] 1984, p.53). (5)






The logical implication of this observation is that, at least in the long run, unions don't benefit the workers they represent. They benefit only union leaders who, in effect, are paid very handsomely to make the rest of us worse off.


The myth that unions benefit the working class dies hard. Yet the evidence is quite clear. "Real wages have often risen much faster when unions were weak than when they were strong; furthermore, even the rise in particular trades or industries where labor was not organized has frequently been much faster than in highly organized and equally prosperous industries" (1960, p.271-2). The best discussion of this question is in Reynolds (1991).


III. Consequences to the Free Society


In addition to their malign economic effects, Hayek saw labor unions as a threat to the free society. In Law, Legislation and Liberty Vol. III (1979), while discussing the role of special interest groups in unlimited majoritarian democracies, Hayek pointed out that the methods commonly employed by labor unions are especially damaging.


It was a misfortune that these [special interest group]
problems became acute for the first time in connection with
labour unions when widespread sympathy with their aims led
to the toleration of methods which certainly could not be
generally permitted. ... One need merely ask what the results
would be if the same techniques were generally used for
political instead of economic purposes (as indeed they
sometimes already are) in order to see that they are
irreconcilable with the preservation of what we know as a
free society (1979, p.89).






Government employee unions have indeed carried the methods of coercion into the determination of public policy in the U.S. The principles of exclusive representation, union security and mandatory good faith bargaining (which I discussed in the earlier paper) in government employment in effect make government employee unions an unconstitutional fourth branch of government. (6)


Hayek was also concerned that the actions of labor unions were leading inexorably to the crippling of the market economy and the emergence of central economic planning.


It is scarcely an exaggeration to say that, while we still owe
our current living standards chiefly to the operation of an
increasingly mutilated market system, economic policy is
guided almost entirely by a combination of the two views
whose object is to destroy the market: the planning ambitions
of doctrinaire socialist intellectuals and the restrictionism of
trade unions and trade associations ([1980] 1984, p.40).


[Unions] are using their power in a manner which tends to
make the market system ineffective and which, at the same
time, gives them a control of the direction of economic
activity which would be dangerous in the hands of
government but is intolerable if exercised by a particular
group. ...






Unionism as it is now tends to produce that very system of overall socialist planning which few unions want and which, indeed, it is their best interest to avoid (1960, p.272-3).


IV. A Remedy?


Hayek thought that collective bargaining, as it had evolved by 1972 in Britain, created so many problems that it simply had to be replaced by some "alternative method of wage determination which, while offering the worker as a whole a better chance of material advance, at the same time restores the flexibility of the relative wages of particular groups" (1973, p.117). He came up with a specific solution:


The only solution of this problem I can conceive is that the
workers be persuaded to accept part of their remuneration,
not in the form of a fixed wage, but as a participation in the
profits of the enterprise by which they are employed.
Suppose that, instead of a fixed total, they could be induced
to accept an assured sum equal to, say, 80 percent of their
past wages plus a share in profits which in otherwise
unchanged conditions would give them on the average, their
former real income, but, in addition, a share in the growth of
output of growing industries. In such a case the market
mechanism would again be made to operate and at the same
time one of the main obstacles to the growth of social
product would be removed (1973, p.117, emphasis in
original).






He recognized that such a proposal "raises many difficult problems" (1973, p.117), but he did not discuss any specific examples. I think that union leaders, whose incomes depend on sustaining the illusion that employers and employees are natural enemies, would fight this idea every time and in every venue in which it was proposed. Given Hayek's distaste for schemes imposed by government, I doubt that he would support any legislation aimed at forcing this outcome. It would have to be adopted by willing employers and employees, one enterprise at a time. Still, given the success of several different profit sharing plans in American union-free enterprises, the idea cannot be dismissed as an impossible dream.


Hayek's profit sharing proposal must not be confused with the insidious institution, particularly popular among muddled thinkers even today, called codetermination. This idea calls for government to require that workers (and, often, other "stakeholders") be given a role equal to the role of owners and their agents in controlling most aspects of businesses. Efficiency in the allocation of resources depends crucially on decision-makers in firms being accountable to the owners of the firms and that the criterion for success is the maximization of long-term owner value through voluntary exchange. To maximize long-term owner value it is necessary for decision-makers to seek to serve the interests of customers, and this requires striving for cost minimization and timely adaptations to changing market conditions. If diverse groups of stakeholders, with diverse objectives, all have partial control over an enterprise, decision-making therein degenerates into a political process based on a strife of interests. Even if decision-making is done democratically, as advocates of "industrial democracy" would have it, choices among three or more alternatives could result in cyclical majorities--i.e., no one alternative can beat all of the others by majority vote--and this would give rise to battles of varying degrees of civility and totally unpredictable outcomes (Barry, 2002).


Hayek was clear in his condemnation of industrial democracy and codetermination. After discussing some legitimate functions for voluntary unions, he asserted that codetermination was not one of them.


An entirely different matter ... is the claim of unions to
participation in the conduct of business. Under the name of
'industrial democracy' or, more recently, under that of
'co-determination,' this has acquired considerable popularity,
especially in Germany and to a lesser degree in Britain. It
represents a curious recrudescence of the syndicalist branch of
nineteenth-century socialism, the least-thought-out and most
impractical form of that doctrine. Though these ideas have a
certain superficial appeal, they reveal inherent contradictions
when examined (1960, p.277).






V. Conclusion


The Thatcher reforms of British labor law by the Employment Acts of 1980 and 1982 and the Trade Union Act of 1984 went a long way toward removing the most egregious privileges and immunities British unions had enjoyed since the 1906 Trades Disputes Act, but there is still a way to go before British unions become truly voluntary. In the U.S., union law has changed very little since the 1959 amendments to the National Labor Relations Act (which fecklessly attempted to give rank-and-file members more control over union leaders). All the worst privileges--exclusive representation, union security, and mandatory good faith bargaining--plus court-granted immunity to prosecution for acts of violence during labor disputes remain. As Hayek said about the economic myths that sustain coercive unionism, "A departure from such a condition can come only from a truer insight into the facts, and whether this will be achieved depends on how effectively economists do their job of enlightening public opinion" (1960, p.273). Indeed, to be a true friend of labor one cannot be a friend of coercive unionism.


References


Baird, Charles W. 2007. "Hayek on Labor Unions: Coercion and the Rule of Law." Journal of Private Enterprise, 23(1): 29-50.


Barry, Norman. 2002. "The Stakeholder Concept of Corporate Control is Illogical and Impractical." The Independent Review, 6(4): 541-554.


Hayek, F. A. 1928. Repr. Monetary Theory and the Trade Cycle. New York: Augustus M. Kelley, 1966.


Hayek, F. A. 1937. "Monetary Danger of Collective Bargaining." Repr. in A Tiger by the Tail, London: The Institute of Economic Affairs, 1972: 21-22.


Hayek, F. A. 1950. "Full Employment, Planning and Inflation." Repr. in Studies in Philosophy, Politics and Economics. Chicago: University of Chicago Press, 1967: 270-279.


Hayek, F. A. 1958. "Inflation Resulting from the Downward Inflexibility of Wages." Repr. in Studies in Philosophy, Politics and Economics, Chicago: University of Chicago Press, 1967: 295-299.


Hayek, F. A. 1959. "Unions, Inflation and Profits," reprinted in Studies in Philosophy, Politics and Economics, Chicago: University of Chicago Press, 1967: 280-294.


Hayek, F. A. 1960. The Constitution of Liberty. Chicago: University of Chicago Press.


Hayek, F. A. 1973. Law, Legislation and Liberty. Vol. 1, Rules and Order. Chicago: University of Chicago Press.


Hayek, F. A. 1975. Full Employment at Any Price? London: The Institute of Economic Affairs.


Hayek, F. A. 1978. "Reform of Trade Union Privilege the Price of Salvation in the 1980s." Repr., Part V, 1980s Unemployment and the Unions, 2nd edition, London: The Institute of Economic Affairs, 1984.


Hayek, F. A. 1979. Law, Legislation and Liberty, Volume 3, The Political Order of a Free People, Chicago: University of Chicago Press.


Hayek, F. A. 1980. 1980s Unemployment and the Unions. 2nd ed. Repr. London: The Institute of Economic Affairs, 1984.


Mises von, Ludwig. 1912. The Theory of Money and Credit. London: Jonathan Cape, 1934.


Reynolds, Morgan O. 1991. "The Myth of Labor's Inequality of Bargaining Power." Journal of Labor Research 12(2): 167-183.


Summers, Robert S. 1976. Collective Bargaining and Public Benefit Conferral: A Jurisprudential Critique. Ithaca, NY: Institute of Public Employment, Cornell University.


(1) See also Hayek's "Full Employment, Planning and Inflation" ([1950] 1967, p.27-12).


(2) See also Hayek's A Tiger by the Tail (1972, p. 118).


(3) What is now called the Austrian theory of the trade cycle was first explicated by Ludwig von Mises in The Theory of Money and Credit (1912) and developed by Hayek (1928).


(4) See also Hayek's "Unions, Inflation and Profits" ([1959] 1967, p.285-6).


(5) See also The Constitution of Liberty (1960, p.271).


(6) This argument is fully developed by Robert S. Summers (1976).


Charles W. Baird


California State University, East Bay
COPYRIGHT 2008 Association of Private Enterprise Education
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2008 Gale, Cengage Learning. All rights reserved.

If the Dunce Cap Fits...

If the Dunce Cap Fits...
The young'uns among our readers may not remember, but a few years back there was this show called The West Wing, in which a president who was not only a liberal intellectual -- a Nobel Prize-winning economist at that -- but also extraordinarily eloquent, principled, and politically savvy, went about pursuing liberal goals and meeting crises with aplomb. It was a liberal fantasy, since President Bartlett was everything we wanted a president to be. And in one series of episodes, Bartlett actually went after his opponent for re-election for being a simpleton who advocated simplistic solutions to complex problems. Here's a sample:
OK, we all know that isn't how things really go. But I have to object to this article in Politico by Ben Smith, which goes after Democrats for criticizing their opponents for being simpletons who advocate simplistic solutions to complex problems. The main piece of evidence seems to be that liberals will be attending the Stewart/Colbert rally, and "in doing so, they've also brought to light some of the party’s most self-destructive tendencies, the elitism and condescension that Bill Clinton sought to purge in the 1990s."
But is that really the problem Democrats are facing this year? I think 9.6 percent unemployment might be something of a more important factor. And apart from Sarah Palin's tweets, I haven't seen a lot of Republican candidates charging their opponents with being elitists. Nor are Democratic candidates acting condescending. While there are those among us who make fun of the occasional Republican for this or that, that isn't the argument Democrats -- the ones buying the ads and running for office -- are making. For instance, Harry Reid's entire case against Sharron Angle is that she's "extreme," not that she's a dolt. She happens to also be a dolt, but you won't catch him saying that.
And we shouldn't take it for granted that if a comedian or a blogger makes fun of a candidate that the public will decide en masse that liberals are elitists and therefore vote against them. That's what comedians and (some) bloggers do: they make fun. Ridicule is a powerful weapon (it's one that Republicans have usually wielded more vigorously than Democrats). The fact that Sarah Palin -- who is, let's not forget, the most unpopular politician in America -- bitches about something not only doesn't mean it's true, it also doesn't mean her complaint is having a political impact.
Finally, we shouldn't give in to the idea that it's off-limits to point out when a candidate for office is an idiot. We shouldn't just vote for the smartest person (Richard Nixon, for instance, was extremely smart), but it also isn't too much to ask that the people who are asking us to let them write our laws have some understanding of how government works, or what the most pressing policy questions are about, or what kinds of things the Constitution does and doesn't say. The fact of the matter is that a lot of this year's Tea Party candidates know almost nothing about government, don't seem to care, and show no evidence of being particularly clever in any other way either. No one of either party believes that someone like Sharron Angle or Rand Paul or Ken Buck or Christine O'Donnell is going to come to Washington and turn into a skillful legislator capable of assembling coalitions and crafting complex legislation. They just aren't. And those of us who aren't running for office shouldn't be afraid to say it, whether it's the most politically advantageous thing or not.
-- Paul Waldman

Tuesday, March 8, 2011

A Brief History of Liberty (Brief Histories of Philosophy)

A Brief History of Liberty (Brief Histories of Philosophy)
A Brief History of Liberty (Brief Histories of Philosophy)

David Schmidtz, "A Brief History of Liberty (Brief Histories of Philosophy)"
Publisher: Wiley-Blackwell | ISBN 10: 1405170794 | 2010 | PDF | 280 pages | 10.5 MB
Through a fusion of philosophical, social scientific, and historical methods, A Brief History of Liberty provides a comprehensive, philosophically-informed portrait of the elusive nature of one of our most cherished ideals.
* Offers a succinct yet thorough survey of personal freedom
* Explores the true meaning of liberty, drawing philosophical lessons about liberty from history
* Considers the writings of key historical figures from Socrates and Erasmus to Hobbes, Locke, Marx, and Adam Smith
* Combines philosophical rigor with social scientific analysis
* Argues that liberty refers to a range of related but specific ideas rather than limiting the concept to one definition


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A dunce cap for Liberal education policy-makers

http://www.angus-reid.com/analysis/39978/a_dunce_cap_for_liberal_education_policy_makers/

(04/26/03) -

A dunce cap for Liberal education policy-makers

B.C. Education minister Christy Clark’s numerous attempts to repair the system are ignoring the real problem.
Angus Reid Vancouver Sun With the midpoint of Gordon Campbell’s four-year term less than a month away, the merry British Columbia premier and his party continue to practise their fetish for all things performance-measured and bean-counted.
Angus Reid
Vancouver Sun
With the midpoint of Gordon Campbell’s four-year term less than a month away, the merry British Columbia premier and his party continue to practise their fetish for all things performance-measured and bean-counted. This week the target was education. Education minister Christy Clark introduced yet another round of new tests. But it doesn’t matter how often she changes the gauges. It’s the engine that needs to be rebuilt.
Education is now second only to health care among the anxieties that people raise when asked what issues concern them the most. And this issue has seen the biggest increase in public concern since the Liberals took office.
According to the Ipsos polling firm, more than 30 per cent of B.C. voters now say education is the foremost issue on their minds. That’s up from 20 per cent two years ago and nearly double the worry level of a decade ago.
For me, three things are most indicative of the sorry state of education, and how the actions of the Campbell “Librocred” government are likely making matters worse.
The first concerns the ability of our public schools to promote students from Grade 12. Without strong performance in this area, the school system relegates a huge segment of B.C. society to marginal jobs, chronic unemployment and a life of limited opportunity.
In this department, B.C. has historically been weak. In 1990, only 62.5 per cent of 18-year-olds in the province were high school graduates—one of the worst records in the country. By 2000, we’d improved to 75 per cent—good progress, but still below the Canadian average of 78 per cent.
This enhancement came as a result of a decade of increased investment in education.
But now these gains are threatened by cuts to teaching positions, further alienating students most at risk of dropping out. Estimates of teachers laid off reach as high as 2,000, most of them specialists in ESL, counselling and special education.
Add to all this, the effects of 40 schools closed this past year and as many as 60 more over the next two. The consequences for kids aren’t encouraging.
The second indictment of education in B.C. is that we have one of the worst levels of participation in post-secondary education in Canada. Only a quarter of our 18-to-25-year-olds are enrolled in college or university, compared with a national average of close to 35 per cent. When it comes to university enrolment, we’re dead last.
For several decades, successive B.C. governments have failed to ensure that the number of university places keeps pace with population growth. They’ve also invested in a model considerably different than that in other provinces. It directs great numbers of high school graduates to a community college system with the implicit promise that they will be eligible to “transfer” to university after the first or second year. But this transfer system is failing increasing numbers of young people.
Work by Joanne Hespol, an analyst at Simon Fraser University, shows that about one in six college students who meets published admission standards and attempts transition to university doesn’t get in. I suspect that many more don’t even bother to apply.
We simply don’t have enough spaces in post-secondary education, especially at the university level.
Since Gordon Campbell took office, the average grade required to get into university has moved up to the 80s, and sometimes even 90s, at places like Simon Fraser University, the University of British Columbia and the University of Victoria. The elitists might see this as progress, but I see it as a step back
The third indicator of the deplorable state of education in B.C. is that school districts, colleges and universities are so desperate to find additional revenue, they are all aggressively selling our otherwise scarce educational resources on the international market. I’ve got nothing against international students, but the time has come to question how far we’re prepared to go at the expense of our own taxpayers and residents.
Last year, UBC turned away several thousand B.C. students who met its published admission criteria while at the same time expanding its international recruitment, which accounted for about 30 per cent of its growth in full-time admissions.
This fascination with international content has spread to the public schools that have come to realize the obvious potential for extra revenue, and maybe the odd trip abroad, from expanded international enrolment. Across B.C., the international student population in public districts has grown from 2,000 three years ago to more than 7,500 today.
Depending on your perspective, this development is either good business or a further drain of scarce resources that our educational system can’t afford.
But perhaps the most worrisome issue is the prospect of creating a two-tiered system throughout our educational system that gives greater attention and deference to foreign students. At the secondary level, the B.C. government gives a school district only about $4,150 U.S. for a B.C. resident while non-resident fees average $9,000 U.S.
As one teacher told me recently, “We’ve been told to make sure that these international students graduate or word will get out and future students won’t come here.”
Of course, Campbell isn’t the only one to blame. The Socreds were notorious for their lack of interest in education. Leaders all the way back to Wacky Bennett saw their mission as fostering a vibrant resources sector that would provide jobs for their sons and daughters. For skills that were in short supply in B.C., such as medicine, they counted on the appeal of Lotusland to bring graduates from other provinces to the West Coast.
The New Democrats tried in their own way to correct the situation, but freezing tuition did little to help universities expand admission or access.
But so far, from kindergarten to graduate school, all we’ve seen from the Campbell government is a new entrepreneurial ethic and the promise of enhanced local control, rewards for local initiative and freedom from collective bargaining agreements. There’s a commitment to finally expand our medical school and several new research chairs have been created, but behind the facade of progress the school system is slowly crumbling for want of the two ingredients it needs most: money and vision.
Unless it acts soon, the Campbell government will undermine not just the transition to the new “post-resources” economic era that the province so desperately needs but, even worse, the career ambitions and dreams of an entire generation.

U.S. Taxpayers on the Hook As Obama Joins a New International Renewable Energy Agency

http://www.cnsnews.com/news/article/us-taxpayers-hook-obama-joins-new-intern

Monday, March 07, 2011
UN-IRENA
IRENA Director-General Adnan Amin. (Photo: IRENA)
(CNSNews.com) – At a time when congressional Republicans are looking for ways to reduce U.S. funding to the United Nations, the Obama administration has formalized its membership in a new international body – and American taxpayers will provide more than one-fifth of its budget.
The administration on Friday deposited its instrument of acceptance to join the International Renewable Energy Agency (IRENA), State Department spokesman Philip Crowley announced.
After joining in June 2009, the U.S. now becomes the 63rd fully ratified member of IRENA, a European-inspired initiative set up in 2009 to promote renewable forms of energy such as wind and solar power.
Although IRENA is not currently a U.N. agency, becoming one is a goal for some of its proponents, and members’ contributions are calculated according to the same formula used to fund the U.N.
The U.S. therefore will provide 22 percent of IRENA’s budget.
In its fiscal 2012 budget request for international programs, the administration has asked for $5.2 million for IRENA.
When the U.S. first announced it was joining the agency in June 2009, Secretary of State Hillary Clinton called the decision to participate “an important element of the administration’s effort to support clean energy technologies and the development of low carbon economies to address global climate change.”
At an IRENA meeting last October, the U.S. representative, Assistant Secretary Kerri-Ann Jones of the Bureau of Oceans and International Environmental and Scientific Affairs, spelled out why the administration was supporting the initiative.
“Much of the world has come to understand that human-induced climate change has the potential to radically alter the planet,” she said.
“We firmly believe that the increased adoption of renewable energy technologies constitutes a crucial piece that will ultimately solve the climate change challenge, while serving as the catalyst for job creation and sound economic growth.”
Several existing U.N. bodies already carry out activity in the field of renewable energy, including the secretariat’s Department of Economic and Social Affairs, the United Nations Development Program (UNDP), United Nations Environment Program (UNEP), United Nations Industrial Development Organization (UNIDO), Food and Agriculture Organization (FAO) and United Nations Educational, Scientific and Cultural Organization (UNESCO). The U.N. also has an interagency mechanism to coordinate energy-related efforts, called U.N.-Energy.
Moreover, a non-U.N. organization working in the renewable energy field is the International Energy Agency (IEA). IEA membership is open only to the 34 members of the Organization for Economic Co-operation and Development (OECD), but it does undertake projects with non-OECD developing countries, like China and India.
Despite all this activity underway, the advocates behind IRENA cited mounting concerns about climate change and the need to find “clean” energy sources in arguing for the need for an organization focusing exclusively on renewable energy.
‘North-South tensions’
Progress in setting up the new agency has not been without hiccups.
At a “preparatory commission” meeting in Sharm el-Sheikh, Egypt, in June 2009, a developed country/developing country rift emerged over where IRENA should be based. Germany had played a leading role in the process leading up to its establishment, and pushed for hosting rights, as did Austria and Denmark.
But the United Arab Emirates (UAE) also sought to host IRENA, and Emirati officials traveled to more than 100 countries ahead of the meeting to lobby for support.
Some European activists meanwhile complained that the Gulf state was not an appropriate venue for the agency. Although it has begun to explore renewable energy, the UAE remains almost solely reliant on oil and gas, and has one of the world’s highest per-capita “carbon footprints.”
A compromise hammered out behind the scenes handed the right to host the headquarters to the UAE’s Abu Dhabi, while Germany and Austria got consolation prizes in the form of an IRENA innovation and technology center in Bonn, and an IRENA office in Vienna to liaise with the U.N. and other international organizations. The German and Austrian governments will fund the two satellite entities.
At the time of the meeting, media reports said Germany and Austria withdrew their candidacies after it became apparent that an overwhelming majority of countries supported the UAE.
But one of the classified U.S. government cables released by Wikileaks late last year revealed that the U.S. delegation at the Sharm el-Sheikh meeting played the principal role in brokering the compromise that favored the UAE.
The cable did not make clear why this was important for the administration, although there was a reference to “North-South tensions regarding the role of developed countries in promoting renewable energy in the developing world.”
On a visit to Abu Dhabi last January, Clinton highlighted the fact that IRENA “is the first truly international organization to be headquartered in the Middle East.”
UN-IRENA
Helene Pelosse, a Frenchwoman who served as the first director-general of the International Renewable Energy Agency (IRENA) until resigning abruptly last October, is pictured here with U.N. Secretary-General Ban Ki-moon in New York on September 18, 2009. (UN Photo by Paulo Filgueiras)
IRENA’s next hurdle came when its first interim director-general, Helene Pelosse of France, abruptly resign last October, just 15 months into her tenure.
No official reason was given for Pelosse’s surprise departure, but she told the French news agency AFP later that she had fallen afoul of the UAE government over payment delays and after promoting the recruitment of more women to the agency (when nominated as director-general, Pelosse pledged to aim for a 50 percent female IRENA staff).
After Pelosse resigned the post was handed temporarily to Adnan Amin, a Kenyan national with a U.N. background, pending a final decision to be taken when IRENA holds its inaugural assembly early next month.
Although IRENA is not now a U.N. agency, it says it will work closely with the U.N. and could eventually become a U.N. body.
 “Given the founders’ ambitious time goal for the founding of IRENA, it was not a realistic option for IRENA to become a new United Nations or United Nations-affiliated organization,” a question-and-answer section on the IRENA Web site states.
“Thus, it was decided that IRENA should be created as an independent organization and swiftly commence operations. In the long term however, integrating IRENA into the United Nations should be considered.”
Immediately After her appointment, Pelosse also spoke about the desire for IRENA to become “part of the U.N. family.”
Among those invited to IRENA’s inaugural assembly on April 4-5, is Libyan leader Muammar Gaddafi’s foreign minister, Musa Kusa, the Emirates News Agency WAM recently reported.

Monday, March 7, 2011

Conservative columnist Pat Buchanan

“They call it collective bargaining. It is collusive bargaining. What you’ve got, these unions put enormous amounts of money in, they get their buddy in the governor’s chair, then they get together, they cut a deal, give them a sweetheart contract and give it to the taxpayers. What this Governor, Walker, is saying, ‘Those days are over. We’ve got somebody representing the people now, and this is going to be an adversary proceeding between you folks and us.’”



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