Things We Read Today (43), Tuesday

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How Rhode Island Government Works (Why We’re Where We Are)

So, Rhode Island Superior Court Judge Sarah Taft-Carter — whose immediate family has three generations currently in the state pension system, including herself — has ordered the state to enter “mediation” with the public-sector labor unions that sued it over pension reform.  What that means, in practical effect, is that the state has to negotiate with the unions to determine if there’s some amount of 2011’s nation-wowing pension reform that they can undo in order to make the lawsuits go away.

That’s after the year-long discussion and negotiation (in which the unions participated) prior to the reform’s passage.

The initial question that might puzzle folks who pay enough attention to be puzzled is how the state’s lawyers, serving the executive branch, can negotiate modification of a statute passed into law through the legislature and the full due process by which laws are created.  My guess is that it would look something like the process by which the state wound up bailing out the Central Falls pension system to some extent:  The city receiver and the executive branch promised, in the agreement, to advocate for the state to make up the better part of retirees’ pension loss, and the legislature duly complied and moved the money through the budget process.

A skeptic might say that such a process proves as farce the appearance of an elected legislature that votes on laws on behalf of the people it represents.  It’s very unlikely that the retirees would have agreed to move forward without a strong suggestion that the leadership of the General Assembly would ensure that the measure would pass.  But it would look bad for two of the 113 legislators (each elected by a relatively small number of residents in a relatively small area of the state) to sign a legal agreement promising that a bill would become law.

In this case, the letter of the settlement would probably call on the governor and the general treasurer to submit and promote legislation.  The reality would be that the speaker of the House and the Senate president had pledged passage.

On Anchor Rising, Andrew Morse has pointed out that the state retirement system should, in theory, be even more insulated from this back-room process:

Rhode Island law is explicit that state employee retirement shall not be an object of collective bargaining. The exact language is “Any and all matters relating to the employees’ retirement system of the state of Rhode Island are excluded as negotiable items in the collective bargaining process”. Despite the plain wording of the law, in place long before 2011, the unions are demanding that their retirement benefits be negotiated through collective bargaining. Rhode Island law also states that municipal employee and teacher contracts (though not those of state employees) are limited to three years, while the union lawsuit is premised on the idea that post-retirement benefit raises are guaranteed by “implied” contracts that can literally last a lifetime. Lifetimes are longer than three years.

In short, pension benefits for life can’t possibly represent an “implied contract,” and the unions can’t, by law, have standing to negotiate them, anyway.  True to form, Governor Chafee offers the best statement of why all of these laws are so many technicalities:

Throughout my time in public office, I have believed in coming together to find common ground and common solutions. Again and again, I have seen the success that can come from a cooperative approach …

Spend any time following the intersection of Rhode Island public policy and Rhode Island law, and you’ll observe that the law doesn’t mean what it says, in the Ocean State.  The State of Rhode Island General Laws aren’t a rulebook to how the state operates as a civic entity.  They’re a guidebook for people in the ruling class to consider as they do the things that “just make sense.”   (I quote a general sentiment, not a particular person.)

That’s a big part of what it really means to be statist, and a central example that Rhode Island illustrates for the nation.  It’s not so much that the government explicitly controls everything; it’s that rules don’t really apply to government officials as they make decisions for a public that they feel is much too selfish and ignorant to trust with the really important decisions about how our society should operate.

That attitude, more than anything, may be behind the long decline of the state and the regular exodus of citizens who want to make something of their lives.

Rhode Island, the Picture of Unhealth

It’s taken me awhile to believe that not everybody shares my affection for charts.  Nonetheless, all Rhode Islanders should spend some time absorbing page 43 of RBC Capital Markets’ first semiannual edition of its Economic Chartbook.  That page gives a quick synopsis of Rhode Island’s economic performance through the first half of 2012 (for most stats), including the state’s credit rating, a half-dozen bullet points, and seven charts.

The top-level impression is that Rhode Island’s economy isn’t doing very well, at all.  The second-level impression is that whatever recovery had been building up steam in 2011 went away in 2012.  One of the bullet points is that the Ocean State’s economy “outperformed US in 2009 but has significantly underperformed since.”

That bullet specifically cites employment and income, but the full picture is worse.  Export gains in the middle of the year evaporated.  Housing values and mortgage delinquencies are still discouraging.  Building permits are still as low as they’ve ever been, since the collapse.  And the state’s increase in business bankruptcies puts it among the top 3 in the country.  Personal bankruptcies are down, but it could be that people are choosing to move out of state rather than go bankrupt.

Whenever a local official says anything about negotiating pension reforms or moving same-sex marriage through the legislature this session, the appropriate response is, “Yeah, what about the economy?”

How ’bout a Little Disclosure?

I’ve been meaning to offer a quick comment on the unsigned pro-union editorial in the Providence Journal, titled “The right to be paid less“:

But private-sector unions are quite a different creature! These unions have to live in the “real” economic world. In bargaining for wages and benefits, they must always try to avoid killing the enterprises that employ them; indeed, a well-run private-sector union does everything it can to make the employer prosperous. These unions must deal with the implications of working in a highly competitive setting, in which companies can threaten to leave or close.

Unions have done a lot for America — improving working conditions, pressing for such reforms as food and drug inspections, backing the creation of Medicare, Medicaid and Social Security, promoting civil rights and helping to create and protect the middle class. (The American weekend was partly invented by unions.) Union clout, by raising wages at unionized enterprises, tends to raise other wages in a region, too.

Once again, readers may wonder whether it would be appropriate for Providence Journal writers to disclose that they are members of the AFL-CIO as part of their employment.  Readers of both the news and commentary sections might find such information relevant while weighing the facts and opinions contained therein.

Me, I find myself thinking of an oral report I wrote for an eighth- or ninth-grade class.  I think it was English, and I think the teacher was Mrs. Murphy. The assignment required me to write in opposition to casino gambling, and I slipped in the “fact” that the slot machines were surely rigged.  Critiquing me before I returned to my seat, Mrs. Murphy instructed the class never to assert something — especially something intended to taint a person or organization — without supporting evidence.

That lesson is relevant, here, because of this sentence from the editorial:

Some anti-union activists (usually backed by business groups) complain about the involuntary nature of the dues.

Sure, the sentence is vague enough (“some” activists, “usually backed”) that the editorial writer could slither out from under a Mrs. Murphy–like correction.  (That, in itself, ought to have been justification for a rewrite.)  But readers should demand more of the ostensible professionals who make up the unionized segment of Rhode Island’s news corps.

Green Energy Produces Free Money from the Sky

The title of this section is what a reader might think when coming across articles about “investments” in renewable energy.  Here’s one by Paul Grimaldi:

National Grid, the state’s dominant utility, will give the money ($4.25 million) to the state’s Renewable Energy Fund because the company did not reach its goals for purchasing electricity from renewable sources.

The state will set aside $1.5 million of that money for small-scale solar projects, $1 million for technology and market development, $1 million for equipment installations and $750,000 for feasibility studies tied to renewable energy projects.

Does National Grid have a working relationship with the Federal Reserve that allows the company to print money in order to pay such fines?  Or do the executives and employees’ union forfeit a portion of their pay in order to cover the cost?  Probably not.  More likely, investments in our energy infrastructure aren’t made, as National Grid reallocates funds to fees, and the rates that every business and resident of Rhode Island pays go up.

This is a money transfer from energy users to special interests in the green biz, plain and simple.  National Grid didn’t manage to find enough ways to raise its rates to pay for expensive “renewable” energy, so it has to raise its rates to give the bureaucrats of Rhode Island more money to play with.



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