Sclerotic TO

A great little blast here by Marcus Gee in yesterday’s Globe (“City of Toronto is falling off the same cliff as General Motors”). Among the highlights, one business study estimates that the average Toronto municipal employee earned 11.6% more than workers in comparable private sector jobs; if the full value of benefits is counted the discrepancy rises to 36%. This drives home the point that unionized public sector employees are not the exploited proletariat of yore but a closed shop aristocracy leeching off the taxpayer. Those progressive types who proudly fly the logo “Afflict the comfortable” might want to take a closer look CUPE and its role in Toronto’s imminent budget crisis.

Meanwhile the Toronto Board of Trade estimates that city labour costs have been growing at over 6% per year since 2003; if they had just kept pace with inflation at 2% the city would have an extra $1.5 billion on hand. More broadly, the city, like the storied automaker, is drifting towards insolvency, without a clue as to what comes next. To quote:
Turning around big, bureaucratic, unaccountable organizations like GM and the City of Toronto is a challenge. They have layers of hierarchy, dug-in unions and semi-independent sub-organizations that act as independent principalities – think Pontiac in GM's case, the Toronto Community Housing Corporation in ours. Toronto is further hobbled by a political system stocked by independent councillors with no party allegiance and no common platform to campaign under.

Such organizations easily lose sight of their original purpose. Instead of serving customers or taxpayers, they serve themselves. They become like a bland version of an autocratic Third World regime whose only purpose is to stay in power. Clinging to a stagnant status quo, they rot from within.
Finally, a great line (also from the Globe) where former ambassador to the US, Alan Gotlieb, cites Lester Thurow: “The greatest challenge in public policy is dealing with incremental decline.” Somebody should put up a banner in the Metro Convention Centre, or whatever temporary venue Toronto City Council chooses to hold its meetings at.

The unions we deserve

Summer at last. And summer weather at last. And, at long last, temperatures warm enough to make the city’s uncollected garbage really stink, which is what municipal workers have been waiting for. Day 5 of the garbage strike and in places the air is intermittently stinky, although much of the time it really isn’t stinky at all. Which, in a way, is too bad. It is ultimately the general public, after, which is responsible for this mess, and so it is only fair that it should feel (and smell) the consequences.

As a note, unions have really come a long way since the bad old days of the 19th century, where child labour was a fact of life, the working week meant unlimited hours at starvation wages, and you could be prosecuted for quitting your job. And not much in the way of benefits, back then. Compare that to today’s demands for bankable sick days (18 per year), lavish defined-benefit pension plans, retirement at 55 and being unfireable once you’ve got enough seniority. In the old days unions had to face off against rapacious robber barons and their strikebreaking private security forces, as well as unsympathetic courts and police. Today, with labour rights set in concrete, the demand for unions to protect the working person has melted away. In the private sector in Canada only about 20% of the work force is unionized. The only arena in which the workforce needs the extra level of protection (or “protection”) that unions can provide is the public sector, which is about 75% union. Is this because the government is so oppressive, flint-hearted and powerful that the working stiff can’t get a fair shake? If you believe that you might also be interested in buying up a few tranches of collateralized mortgage obligations, guaranteed AAA.

Public sector unions are nothing but an open conspiracy to shake down the government. Unions strike, the public gets irate, and since there is no point venting at the unions the government takes the heat. Under pressure to settle and restore peace they cave. This last part can happen in two ways. Either directly, or, if that is too embarrassing, the government can save face by declaring the service in question to be essential and ordering the strikers back to work. The dispute then goes to arbitration. Since the strikers right to strike has been taken away the arbitrator awards them compensation, which usually turns out to be most of what they were asking in the first place. A short strike and a quick and favourable settlement; the elected representatives get the monkey off their back and services are restored. It’s win-win-win. And public finances are chipped away, by, oh, so small an amount you’d hardly notice.

This strategy has been quite successful. So much so that the old social compact relative to the private sector, where government employees took lower wages in return for greater job security, has been overturned. The new trade-off is guaranteed employment in exchange for higher salaries and better benefits. This is much too fair and equitable for the unions to give up without a fight.

While some commentary has taken the view that the mayor has enough public support to stand tall should he choose to do so, in the big picture what counts is not how this particular strike plays out but how to fix a chronic problem. What the city really needs to do is privatize. Starting with trash pickup, which is already private sector in all of Etobicoke as well as for condos and businesses throughout the city, to say nothing of most other municipalities in Ontario. After that there should be a review of all other city services. Anything and everything which can practicably be contracted out should be. Until this is done Toronto will be overpaying for municipal services and further handicapping its own economic development.

Sadly, the reality is that the residents of Toronto are prepared to accept a lot more of this kind of public sector union abuse. While there are reports of public “anger” at the strike in general, and pickets blocking access to trash drop off points in particular, this is the kind of anger that leads to extended griping, not political activity. The voters have no appetite for reform, and the unions know it. Their gamble that a few weeks of very temporary public displeasure are well worth years of future benefits is quite sound. We get the unions we deserve.