No one thought it would be easy for state and local governments to get their budgets under control. However, by eliminating collective bargaining for most public employees, it appears that Wisconsin Gov. Scott Walker may have paved the way for other states to succeed at it. One good thing to notice is that Wisconsin turned out not to be…France. Try to imagine what would happen if a synateur were to propose raising the retirement age by a year or two, or shortening the French worker’s god-given two months of vacation by a week. You’d have a torch mob marching on Paris within hours, and the lawmaker’s effigy would be hanging from lampposts from Paris to Marseille. Windows would be smashed and cars set aflame. Not in Wisconsin, though. Labor turned out tens of thousands of angry if peaceful demonstrators, but in the end that wasn’t enough to carry the day. There wasn’t a Democrat in the chamber when the final vote came yesterday, but the result was clear enough: only police and firefighters, who put their lives on the line every day, will retain collective bargaining rights.
Few workers in the private sector will feel much sympathy for Wisconsin’s public employees, since the latter have for years enjoyed an extravagant level of health care and pension benefits that the private sector can no longer afford. Neither can taxpayers, though, and that was the point all along. The labor unions will turn out in force in every state everywhere Gov. Walker’s legislative tactic is tried, but they will be vastly outnumbered by those who would pay dearly to maintain the status quo. Moreover, so many states and municipalities are verging on either bankruptcy or truly drastic cutbacks that there will be no choice about public workers settling for less. Much less.
Next Up: Defined Pensions
“Over my dead body” was the initial response of union organizers to Gov. Walker’s proposal. Americans should breathe a sigh of relief knowing that it didn’t come to that. As for the public workers, the loss of collective bargaining rights is just the beginning of clawbacks that will level the playing field with the private sector. Taxpayers will win this war one issue at a time. Next on the agenda, for sure, will be defined pension benefits. State payouts to retired workers currently assume investment returns endlessly exceeding eight percent. How long can that go on? Answer: Not even till 2012.
Learn Rick's 'uncannily accurate' Hidden Pivot Method at our next webinar. Save $50 by 3/31. Use coupon code 7D5629\CartyStudios Corporation\WebMagnates - Auto Blogging Software\data\Mario Gregorio\Ricks picks\Hula-girls.png "Hula girls")
Long-time Rick’s Picks readers may recall that in October 2008 I made a “Hula Number” forecast for Goldman Sachs. At the time, Goldman shares had fallen to $47 from a high of $250. I forecast a further drop to an all-but-certain Hidden Pivot target of $29 and pledged to don a grass skirt and dance the hula in New York’s Times Square if it didn’t happen.
Of course, it didn’t happen, but I am a man of my word. Accordingly, next Wednesday, March 16, I will make good on my pledge to dance that hula. Alas, due to heightened security in the area, it will not be in Times Square. Rather, I’ll be dancing at what is perhaps a more apropos venue: in front of the Wall Street Bull. Joining me will be the Rick’s Picks Hula-ettes and our webmaster, Michael Johnston, who will be on hand to record the event for posterity.
We hope that those of you who live or work in New York City will consider stopping by. The spectacle will commence at 4:15 p.m. at the Wall Street Bull Structure at the north end of Bowling Green Park, Broadway near Morris Street. Subway: 4/5 to Bowling Green Station.
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