wisconsin protests I thought I would veer a little into economic news that is happening in the central region of the country today. There is a massive protest in the state of Wisconsin which features the union workers against the governor of Wisconsin. The state has a $3.6 billion dollar deficit and the state is trying to cover it by asking unions to contribute to their pensions and health care plans. The battle has intensified as both parties have dug in their heels.

The Teachers Union’s Argument

Scott Walker is making them contribute to their retirement and benefits plans. This will actually decrease the income of teacher’s and result in a pay decrease. Union workers will be doing the same amount of work for less take home pay. The SEIU is also concerned about the governor trying to strip the workers of their power to collectively bargain in the future.

Unions are virtually useless without the power to bargain as a collective group. Individuals have very little power when it comes to negotiating pay and benefit increases. The power lies in the group as a whole.

The Wisconsin Governor’s Argument

The state has to use every way possible to plug its $3.6 billion dollar fiscal deficit. His proposal would save the state roughly $300 million dollars. He feels that it is only fair that unions pay into their health care and retirement plans just as other workers do in other industries.

He believes that the state is hamstrung by the union’s power to negotiate contracts with the state government. He believes that in taking this power away the state would be able to negotiate fairer deals.

My Take

Politicians always go to extremes when it comes to solving budgetary problems. They always only see one solution depending on their party. The Republican answer to everything is to cut spending and lower taxes. The Democratic answer to everything is to raise taxes and boost spending.

The easiest way to solve this stalemate is to do the following:

increase the state’s tax receipts (increase taxes)
increase the amount that unions contribute for benefits incrementally (less federal spending)
let the union keep their collective bargaining power

What is your solution to the crisis in Wisconsin?

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