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June 7, 2012 - Freedomain Radio - Stefan Molyneux
01:18:51
2160 Wisconsin, Walker and the Reshaping of American Politics - Stefan Molyneux of Freedomain Radio hosts the Peter Schiff radio show!
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You make no friends in the pits and you take no prisoners.
One minute you're up half a million in soybeans and the next, boom!
Your kids don't go to college and they've repossessed your pens.
Are you with me?
The revolution starts now.
Starts now.
We have to pass the bill so that you can find out what is in it.
Turn those machines back on!
You are about to enter The Peter Schiff Show.
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This is the last stand on earth.
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855-4SHIFT. That's 855-472-4433.
I don't know when they decided that they wanted to make a virtue out of selfishness.
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The Peter Schiff Show.
Good morning, my friends.
How is everybody today?
It is so good to be back.
Thanks so much to Jeff Tucker for taking the helm yesterday, and good luck to Peter today as he testifies.
So, I am bubbling and bursting out with theories and facts and information about the Public Sector Union Showdown in Wisconsin.
I think this is some gripping front seat stuff to some pretty Powerful examples of just how American pragmatism will trump socialist idealism in the long run.
And so we're going to talk a little bit about some of the facts of the matter, some of the theory of the matter.
We've got an expert coming on just after 11.
But I want to hear from you, my friends.
Come and call in.
This is going to be a mostly call-in show.
And so if you've got thoughts about public sector unions or private sector unions, these are very important aspects of our economic life and certainly as taxpayers.
I think it's you, me, Peter and maybe three other guys who are left paying taxes in North America.
And so we've really got to talk about this stuff.
So we're going to do a little bit of facts and theory and then we're going to hopefully hear from you guys.
So please call in and agree, disagree.
Let's get it on, baby!
The American political landscape is so unbelievably warped by public sector unions that you really can't imagine it without this influence.
I mean, the essence of public sector unions is that they force taxpayers, they force taxpayers to fund lobbying to increase taxes.
It's just so horrifying.
And this really has created the modern Democrat Party.
The modern democrat party has three major constituents as I see it.
The first is people receiving government benefits.
This is not just a theory, my friends.
This is pretty much a fact.
So, for instance, if you work full time This has come from 2003 to 2007.
So if you work full-time, about half of you are pro-Democrat.
If you receive welfare, that rises to 63%.
If you receive disability benefits, it rises to 64%.
If you receive unemployment insurance, it goes to 66%.
Food stamps, 67%.
If you receive Medicaid, 74%.
If you receive public housing, 81% of you are Democrats.
And very likely not listening to this show.
But this is really, really important.
The people who receive government benefits, what do they do?
Well, they vote for, shockingly, an increase in government benefits.
This is such a wild conflict of interest that it's hard to imagine in any rational system how this could be allowed.
How, oh how, oh how can you be objective and rational and mature and wise about government spending and its Excess or contraction when you are receiving government benefits.
This is a conflict of interest that would be allowed in no other field legally, but really is the essence of the Democratic Party.
Now the second major constituent of the Democrats are the media.
And there's a number of reasons for this.
They, of course, once you get a bunch of people receiving government benefits, you have a huge market for pro-government propaganda.
And the media, of course, supplies all of that stuff.
And those of us who work for a living, they don't have quite as much time to consume the media in endless quantities.
And, of course, Hollywood is founded on these massively influential and powerful labor unions.
If you try to make an anti-labor film or an anti-union film, well, you're not going to get on very well with your unions and that's not going to happen.
But really, and perhaps most importantly, the third major foundation for the Democratic Party is public sector unions.
Ah, public sector unions.
Let me give you some facts.
Oh, too horrifying for words.
So, according to research, about 40 to 50 percent of Teachers in the public sector, public sector teachers, only about 40 to 50% of them identify as Democrats.
Republicans 25%, independents 24%.
And yet, in one recent election of the almost $60 million in campaign contributions distributed by the NEA and the AFT, more than $56 million went to Democrats.
That means that roughly 95% of the forced union dues went towards Democratic candidates despite the fact that less than half of public sector teachers are Democrats.
Do you see what a violation of freedom, of liberty, of property rights, of independence, of basic Western civilized morality this is?
It's just horrendous.
You are forcing people to pay for policies that they despise and oppose.
Let's look at some of the other facts.
More NEA members Most of them identified themselves as conservatives, 27% than liberals, 21%.
More of them voted for Ronald Reagan than Jimmy Carter and almost a third of them said they do not trust the unions.
A recent Harvard education expert research showed that only 43% of US teachers feel positive about their unions.
Just horrendous, just horrifying.
The unions claim to represent the will of the workers, the will of their constituents.
What a load of statistically violating Codswallop.
When you get legislation that releases workers from their forced union dues going to the political goals and aims and aspirations of the union leaders, what happens?
In Utah, they changed this.
The numbers of teachers participating plunged from 68% to 6.8% when you get a chance to opt out.
In Washington, it went from 82% to 6%.
Unions do not represent the will of the workers.
Unions do not represent the will of the people.
Do you know one good way to find out whether somebody represents the will of the people?
There's no gun pointed at them.
That's a pretty good way.
You know, if you're on a date with a woman, it's a date if you don't have your Han Solo laser under the table pointed at her knees.
Right?
When things do not involve violence, we tend to call them voluntary.
When things involve coercion, then we tend to call them Involuntary and violent.
People don't want government schools.
Why?
Because they have to be forced to pay for them.
Forced to pay for them.
That's how we know that people don't want them.
People don't want to be part of unions.
Why?
Because in so many states they have to be forced to join them.
Wherever there's a gun, That is exactly the opposite of what people want.
If a guy comes up to me and asks me for five bucks and I give it to him, that's called charity.
If the guy comes up with a gun, that's called robbery.
It's kind of a big difference when you put a gun in the room.
It kind of makes a big difference when there's a gun in the room.
We call them unions and in a free market, I think unions are fantastic.
People should be able to, of course, freedom of association and they should be able to get together and collect a bargain and all threaten to quit if they've got some Capitalist jerkwad for a boss?
Fantastic.
Go for it.
But don't, don't create violent monopoly cartels on essential services, hold the taxpayers hostage, sell off the unborn in debts, and call it any kind of moral.
It is a shakedown.
It is a shakedown.
You don't say, well, organized crime is associated.
With the unions.
Well, no.
In particular, in the public sector, unions.
It's not that they're associated.
It's exactly the same tactics.
It's exactly the same tactics.
You give us the money or we'll shut down the economy.
You give us the money or we're not going to pick up your garbage.
You give us the money or else.
And I don't like that.
I don't like guns pointed at me.
And I don't like guns pointed at me by people claiming to be moral and righteous and good.
We're going to get back to more of this after the break and take your calls to Van Molenie for the Peter Schiff Show.
All right.
We are going to get to your calls in just a moment.
I'm just spilling over with facts and theories that I want to share with you to put some of this stuff in context.
Look, unions claim to represent the will of the workers, but there's two aspects that are just not talked about that would actually productively and usefully benefit the workers.
The first thing, this is amazing, just think about this.
Everybody knows, fundamentally, you're paid for what you know.
The more you know, and the more of a value that information is to other people, the more you get paid.
It's kind of a simple equation.
The minimum wage in the United States, you can harvest between six and seven and eight bucks depending on where you go.
Seven bucks an hour, let's just say seven bucks an hour on average.
The minimum wage in the United States is $7 an hour.
That is $7 an hour that the government has to force employers to pay people because actually they're worth even less to the employers.
Who has had control of these people for 12 or more years.
Pretty much full-time.
If you count six hours a day in school and an hour or two of homework, it's a full-time gig for the students to be in public sector education.
You have put public sector workers in charge of creating valuable people, of imparting knowledge, of giving them stuff that makes them valuable for 12 years.
I think 15,000 hours.
Some crazy amount of education gets poured into these kids.
And when they pop out of that system, what are they worth?
Well, you've got to have guns pointed at employers to even pay them seven bucks an hour for the most part.
Can you imagine?
Longer than the time it takes to take a high school graduate to become a full-fledged neurosurgeon, these ass-clowns in the public sector cannot impart enough economic value into the precious children of this nation to have them worth More than spare change to employers.
That's wretched.
If you want to raise workers' salaries, if you want to make workers more valuable, if you want to give them leverage in their negotiations with employers, then start giving them some economically useful information and some skills in the 12 years that you have them full time as public sector workers.
Why not teach them something about entrepreneurship, something about how business works, something about how the stock market works, something about how economics works, what sales is, what marketing is.
I mean, I was an entrepreneur, I guess I still am, but I was a formal entrepreneur in the software field for about 15 years.
And I can tell you that valuable employees are incredibly valuable.
And as an employer, you're very vulnerable to people who have good skills, who are hardworking, who are intelligent, who are competent, who are willing to take on new things.
Why are people coming out of these public schools worth so little?
Well, because the unions control them.
So to the idea that the unions are somehow for the workers is deranged.
It's a monopoly cartel designed to protect the interests of those who already are rent-seekingly benefiting from the monopoly on force.
It's got nothing to do With helping the workers.
And why is this going on in Wisconsin right now?
Well, in the 90s, what happened was governments actually kind of began to run out of money to increase the salaries of public sector workers, but they didn't want any strikes.
They didn't want any strikes.
Politicians don't want strikes.
Because the media sides with the unions and the constituents get angry that their kids don't have a school to go to or their garbage isn't getting picked up or what have you.
So politicians don't want union strikes.
And they ran out of money to pay direct salary increases.
So what did they do?
Ah, the political courage of our political masters.
What they decided to do was to defer the pay through pensions.
So they said, okay, we've got no money to pay you anymore because we can't raise any taxes.
We don't sell any more bonds.
We've got no money to pay you right now.
But, you know, 20, 25 years from now, 30 years from now, you'll get huge benefits when your guys retire.
And, of course, we'll be out of office by then, so we don't care.
We'll just lob the bill And increase the bill down to generations.
Defer your paying, we'll call it a pension benefit.
Now the bill is coming due.
Now the bill is coming due.
Which is one of the reasons why Walker wants to focus on, look, we can only negotiate for salary.
Only salary.
Because it is completely unfair, it is unjust, even if you accept the democratic paradigm of the state, it is completely unfair and unjust to hit people 30 years down the road with bills who weren't around to vote and probably weren't even alive to vote when these decisions were made.
The degree to which we sacrifice children and the unborn to maintain the semblance of civilized peace among adults is shocking and grotesque in our culture.
Anyway, enough of my rants.
We have the brains of the outfit, the listeners.
I think we have John from Brooklyn.
You have comments, questions, issues, problems, praise or mad criticism.
Go ahead.
Yeah, hi.
I was reading a lot of libertarian writers and articles for a really long time, and a lot of them just think that somehow one day people are just going to wake up and figure out that government is bad.
And I pretty much hold your viewpoint in general about government.
But I'm wondering, I've never seen anyone really write about the difference between how it was in pre-revolution times as it is now, Because then, you know, everyone wasn't accustomed to so much government and now everyone's so indoctrinated.
So it would be much harder for them to just say, oh, this is unnecessary when they're used to hearing it, but it's unnecessary their whole lives.
Right, right, right.
Look, it is the greatest challenge is to get people to connect private ethics with public ethics.
You know, there's this weird brain bending divide, like this rainbow LSD brain shock curtain that people pass through when they go from private to public.
And Adam Smith said this 300 years ago, there's no fundamental difference between the economic affairs of a household and the economic affairs of a great nation.
So you and I understand that if we're heavily in debt we've got to cut our spending and we've got to cut our spending a lot because we've got to pay for our living expenses and we've got to pay for the debt and we've got to pay for the interest.
So we understand that and we all understand that if we are in economic hardship going and racking up massive amounts of debt It's going to solve our problems, to use the word very loosely, in the short run, in that we're not going to feel like we're in economic hardship, but we're just making things worse down the road.
At a personal level, anyone who doesn't understand this is unable to tie their shoes and can't get out of a door because they can't figure out the difference between Paul and Bush.
So we don't have to worry about those people in civilized discourse.
But suddenly when you jump to the state, when you jump through this rainbow LSD curtain to public affairs, up is down, black is white, gravity reverses.
Human beings can fly.
I have a thick head of hair.
It is crazy the amount of rational and moral reversals that occur once you get to the public sphere.
So the way that I approach it, and there's lots of different ways to approach it, the one I found most effective And it can be like trying to get a cat to take a pill, but what you've got to do is get people to connect private ethics with public ethics.
So I say to people, you may have heard me say it before, you wouldn't use force to get what you want in your life.
If you want a job, you don't go and kidnap the employer's children, hold them in a Windows van until you get the job.
You would not use force to get what you want.
And so, if it's wrong for you at a personal level, how is it right for the government at a social level?
Spending while in debt only makes the problem worse.
That's true for you, it's true for me, and it's true for the state.
The state is not immune from the laws of economics, reality, rationality, causality, math.
And so, if you can get people to connect private virtues with the public sphere, the problem is solved.
Sorry, go ahead.
Yeah, I'm kind of curious as to your opinion as to how things will play out.
Let's say once the government does, can't actually fulfill its obligations, you know, because people are not accustomed to no government.
So...
Well, we've got precedents for that, though, right?
I mean, the precedents are very simple, and I think, you know, maybe I'm wrong, but this is sort of my...
I'll go out on a limb and make my crazy prediction.
So we've got tons of examples of governments who've run out of money in the past because all governments run out of money.
The whole system is a corrupt maelstrom of bribery and deception and fraud.
And so what happens is the governments are dependent on the support of people who are dependent on them.
But if the people who are dependent on the government become too large, too powerful, too much of a drain on the economy as a whole, in other words if the cancer starts overwhelming the body politic, They'll just cut out the cancer.
Look what happened in Russia when they run out of money.
You got little old ladies selling photographs from their youth on street corners in the bitter cold because they're not getting any pensions.
And they do this one of two ways.
They either directly cut payments or they inflate to the point where, you know, like you'll get a pension, but so what?
And so they'll simply turn on the dependent classes.
And I mean, the dependent classes in a sense are actually turning on themselves a little bit, which is a good sign.
I think it means they're sort of waking up.
So did you know that almost 40% Of the voters for Scott Walker in Wisconsin were union members or came from union households.
So 40% of those who are quote targeted are voting to be targeted because a lot of them hate their unions anyway.
I was only in a union once when I was younger when I worked for a restaurant chain and everyone hated the union.
And they actually had worse conditions there where the union was than when I worked for a place that had no unions.
But there is a skepticism.
And the moment you start hearing about the need to tighten our belts and pull together and the storm is coming, we need to batten down the hatches, that rhetoric is going to start coming out of politicians soon.
And what that means is that they're going to get prepared to cut benefits like crazy.
They'll move to protect the productive classes because that's what they feed on.
We'll be back right after the break for more calls.
Go.
All right.
We're back, ladies and gentlemen.
We are talking about unions and the recent really interesting reaction of the Wisconsin general public.
You know, people will indulge irrational ideologies as long as it doesn't really push them to the brink of insolvency.
But no matter what your delusions you can believe that there's a bridge across the Grand Canyon but your feet will find otherwise if there isn't.
When people get close to the edge Ideology goes out the window.
By ideology, I mean false philosophy, bad philosophy.
Good philosophy is that which works with reason and evidence.
Bad philosophy is that which works counter to reason and evidence.
But people will indulge delusions, right?
So a guy who's poor and crazy is called crazy.
A guy who's rich and crazy is called eccentric because people are willing to indulge him.
And people will indulge the economic madness of having A forced monopoly on essential services with the right to strike.
I mean, this is completely crazy.
And so let's talk a little bit about the balance of power between employers and employees.
I think that's really, really important.
So in the traditional union narrative, you have a bunch of craptastic bosses who want to make as much money as possible.
And so what they do is they drive down the wages of the workers so that they can fill their Bathtubs with jello and gold flakes and bathed in their wealth.
And because the employers have all the power in the world, the unions need to get together and they need to negotiate on behalf of everyone and they need to have the right to strike and they also have the need to keep out strike breakers or scabs so that they can't go and exploit other people and so on.
And the argument for forcing everyone in the union is, look, if we're going to bargain for everyone, then everyone gets the benefits of our bargaining, so they've got to pay for that.
Otherwise, they're just a bunch of free riders.
Union bosses complaining about free riders.
Can you imagine?
We don't have to because, sadly, it's all too real.
But what unions should be trying to do, of course, if they want to actually help workers, as I mentioned, is get some economic value into the heads of kids during the almost decade and a half that you have them when they're young so that they come out and are worth a lot to employers.
You know, in the UK, in England, put out a bunch of ads saying we want people to come work at our mall.
Work at our mall.
Retail is not brain surgery.
We want people to come work at our mall.
They had a bunch of high school graduates show up.
A third of them couldn't even fill out a job application.
They actually had to give them classes on how to fill out job applications.
I mean, do you know what a staggering waste of human capital that is?
I mean, I know that sounds like a really abstract phrase, waste of human capital.
But human capital is our soul.
Human capital is our wisdom, our intelligence, our value, our perceptiveness, our self-confidence, our willingness and ability to negotiate.
It is our essence.
It is our soul.
And to wreck human capital is to wreck people's souls.
If you graduate from government schools unable to fill out a job application, you have been largely destroyed as a human being.
It is a brain mincing scene out of Pink Floyd's movie The Wall.
Kids fall into these hamburger grinders and come out as paste.
It is wretched how much it harms children and how much it harms the society as a whole to have these undereducated, overconfident kids come out into the system.
The second thing that you would do if you really cared about labor and employees is you would lower barriers to entry for every occupation you could think of.
You would try to make workers as mobile as possible.
Because the only thing that is guaranteed to raise wages for employees in the long run is for employers to need them more.
And so if you have three plastic plants in a row and one of them is paying half the wages, we all know what happens.
It doesn't require a lot of brains to figure out what happens.
What happens is the guy who's not paying as much loses his workers to the guys who are paying more.
And then he's got to up his wages or go out of business and then someone else is going to take over his factory and pay something decent.
To raise competition for workers is essential to increasing the wages of workers.
But that means lowering any barriers to labor mobility.
And so that's not, of course, what unions are all about.
Unions are all about raising barriers to labor mobility.
Oh, would you like to be a plumber?
Well, I'm sorry, you have to do a seven-year apprenticeship in some places.
And get paid nothing in return for the right to be a...
Oh, would you like to be a taxicab driver?
Oh, I'm so sorry.
You need a $150,000 license to be a taxi driver.
Oh, I'm so sorry you can't do that.
Oh, you need a license for this?
Oh, you don't want to be an electrician?
Well, you've got to join the union.
The union's got a lot of high wages to protect, so they're going to keep you out of that.
Right?
So, when you reduce labor mobility, You reduce the value of workers who aren't currently protected by that.
As Veronique de Rougie was saying in the last show I was on on Tuesday, it's all about feasting on the young to feed the aged, which is not really a very moral approach to society as a whole.
These are things that you can actually do to make workers more valuable, but you cannot give workers a monopoly in the public sector.
There should be no public sector unions.
Really argue there shouldn't be public sector at all, but you can't give people a monopoly on essential services and then allow them to strike while forcing people to pay for them.
You know, anytime you introduce coercion into human relationships, you breed corruption.
You breed corruption.
The moment that people are forced to pay for a service, quality goes down and corruption increases.
Unions have had to go and hide in the public sector because they've become so much less valuable in the free market, in the private sector, because employers are pretty enlightened now.
If you look at Henry Ford, he actually doubled workers' wages when he shifted to the assembly line in the 1920s to produce the Model T. He doubled workers' wages, creating one of the most successful companies in American history.
You want to pay workers more.
You want them to be happy where they work.
When I was an entrepreneur, We took employees whitewater rafting, we took them out to cottage weekends, we gave them dinner and movie coupons for doing great jobs and so on.
Because I would walk down the hallway and I would get hit with these little sucker sticky Nerf gun things in my rather expensive forehead.
Because you want people who are having fun and enjoying their work environment.
That is actually very productive.
So unions is really based upon a very outdated model.
Because workers have so much greater mobility now, it is much easier for them to move around and to compete for better jobs.
Do we still have Jacob on the line?
Is he there or should I keep going with something else?
He's here.
Alright.
Did you have any other questions or comments?
I didn't want to leave you entirely hanging if you had something else yearning, burning.
I wanted to ask about the fiscal cliff.
Have you heard about it?
The fiscal cliff?
I haven't heard that phrase.
But tell me what it means.
It's where the push tax cuts expire and the automatic spending cuts sit in at the same time.
I don't know when.
Yeah, I think they're set to expire fairly soon, right?
Yeah.
And did you have a comment or question about this?
Yeah, it's the fiscal clip.
I think it's going to be pretty devastating.
I mean, the taxes might be, but I'm not sure what the spending cuts are.
Yeah, look, I mean, there is no pretty way out of our situation at the moment.
I mean, all the pretty ways to get out of the situation, they probably expired about a generation ago.
And that is, that's where we are.
And it's going to take a lot of political courage, but fundamentally, I think Scott Walker obviously has...
A great deal of fortitude and willpower to go through what he's gone through.
I think he's the third governor to be recalled and the first one to survive it.
But I think that courage comes from the courage of the cornered rat.
Up against the wall, people can somehow develop a spine.
But there's no pretty way out of it.
It's going to be a default of some kind or another.
The debts are just ridiculous.
It's close to 100% of GDP. And GDP is a ridiculous measure anyway because it counts government activity as somehow contributing to the economy, which outside of a few small instances such as property protection, it really doesn't.
But there's just no pretty way out of it.
There's going to have to be a default.
There's going to be a soft default because fewer people understand economics than they do numbers.
So there's going to be a soft default where people are going to get paid much lower pensions as a result of inflation.
A combination of soft default and spending cuts.
It's the band-aid thing.
The harder the rip, the quicker it's over.
People don't understand.
Everybody knows about the 1929 crash and the resulting 14 years of depression where the government kept trying more and more exercises, greater and greater exercises of power and pumping more and more money into the economy.
It just made things worse.
It wasn't World War II that solved that problem, by the way.
It was the liberalization of the economy that occurred after World War II. But in 1920, right after the First World War, there was an economic crash that was even worse than 1929.
But it was all done in 16 to 18 months because the government didn't do anything.
Another example is when all of the workers were coming, so all of the people were coming home The soldiers were coming home from the Second World War.
Everybody thought there was going to be a huge depression because all these people were coming home.
There were no jobs for them.
What were they going to do?
The government was readying all these spending plans to deal with these people.
What happened?
The spending plans got tied up in Congress.
Nothing ever got spent.
By the time they looked up again, everybody had a job.
You had the massive boom of the 50s.
So, if the government lets things crash and gets it over with, then you can get back to a very, very swift reallocation of optimal resources very quickly.
It can be over and done in 18 months to 2 years and then clear sailing from then on.
But every time you try and make the pain worse, you simply extend the illness and that's just not the way that we want to go.
So does that make any sense relative to your question?
Yeah.
Frankly, I think that the fiscal cliff is such a staircase that Uncle Sam's going to push us down at some point.
Well, they have to find some way to blame the free market for the government decisions, right?
That's always the case.
The free market is still taking the blame for the Great Depression of the 1930s, despite the fact that it was the Federal Reserve that inflated the currency supply massively, causing a huge boom and then contracted it enormously.
By over 40% I think it was.
It contracted the money supply causing a depression.
Lawrence Reid's got a great article on this.
I've read it from my show at freedomradio.com.
Massive amounts of government intervention just extended this, extended this and extended this.
A lot of the work of misery in the industrial revolution as we talked about on Tuesday was to do with really bad government programs and the forced redistribution of income.
Once they can find a scapegoat, there will be change.
But it's up to you and I and three other guys to make sure that scapegoat is not freedom, but rather force.
We will be right back after the break.
If knowledge is power, then the Peter Schiff Show is a uranium-enriched 10,000 megawatt nuclear reactor.
Stay plugged in.
Stay brilliant.
This is the Peter Schiff Show.
Alright, we are going to bastardize a Duran Duran song.
We are talking about the union of the state, or the snake, I think as the song goes.
Not too dissimilar.
I'm looking forward to your calls.
We've got a little bit of time right now.
We've got somebody coming in at the top of the hour to talk more about this stuff.
But basically, public sector unions and employees, if you count sort of the pay plus the benefits plus the time off, they get paid about Twice what private sector workers make.
And clearly that is not even remotely sustainable.
Not even remotely sustainable.
And what that means is they get paid half more and they reduce the wages of the private sector workers.
So this is the real class warfare.
The real class warfare is not rich and poor.
It is not minorities versus non-minorities.
It is not men versus women.
It is not even public sector versus private sector.
The fundamental class division that we have to deal with as a society that is overwhelming and undermining and collapsing our entire economy is those who profit from the gun and those who pay for the gun.
Those who surrender their money under the threat of force and those who receive that blood money.
And that is not a rich or poor thing.
There are janitors making a lot more money than they would under the free market, and they are on the receiving end of blood money.
All the way up to the very pinnacles of the companies profiting from the military industrial complex, they are receiving blood money.
And you can't even keep pace with the insatiable demands for state blood money, even if you go trillions and trillions of dollars into debt.
So remember, call in 855-472-4433.
That's 855-4SHIF if you'd like to talk some more.
Until we get a caller, I'm going to switch my emotional gears just a little bit and let's talk sympathy.
Let's talk sympathy for our poor and benighted brothers and sisters in the public sector.
I mean this in all seriousness.
I mean this in all seriousness.
I only ever worked for the government once, just once, when I was a temp in high school.
No, it was just after high school.
After high school, I was a goldpanner and prospector up in Northern Ontario because who doesn't like incredible heat, mouthfuls of bugs, and leeches in your Wellington boots?
But then I did some temp work in the summers when I was in college, and I worked for the Department of Education for a couple of months, I think.
And, boy, let me tell you, if there was payment just for suffering, these people deserve even more pay than we could ever give them.
Because if you work for the government, and if you are working for the government and listen to this, call me and tell me if I'm wrong.
It sucks.
It is a craptastic work environment.
You've got paranoid, thief-hungry bosses.
You've got backstabbing, whiny co-workers.
You have completely pointless meetings that go on forever.
You have unclear objectives.
You have a growing sense of Dostoevsky and futility in your life.
Just think of how much fun it is to work for the post office at all times, surrounded by Newman's everywhere you look.
That is not a lot of fun.
And so people who've made that decision, People who've made that decision and have said, you know, oh, it sucks here.
Oh, it sucks here.
I hate getting up in the morning.
I hate going to work.
I hate coming home.
But, but, there's this pot of gold at the end of the rainbow.
I mean, I knew people in the public sector, literally knew, you know, four or five years onwards, how many work days, not how many years, how many months, how many work days they had to go In order to be able to get to their retirement.
They counted vacations, they counted their professional development days, they counted holidays.
They knew down to the day how many more of these Bataan death marches of public sector futility, resentment, control, bullying, dysfunction they had to stroll through to get to the pot of the gold.
At the end of the rainbow.
Now there is no pot of gold at the end of the rainbow.
There is no money.
It's all been blown and spent and used to bribe politicians in order to raise union dues, in order to expand government works, in order to further bribe the constituents of the unions and the unions themselves.
So look, I can appreciate the resentment.
I can appreciate the rage.
I can appreciate the frustration that you basically spent a couple of decades toiling In socialist hell for no utility, blocking the productive efforts of your fellow citizens, foregoing excitement and growth and opportunity and the challenges of truly voluntary employment.
You've spent a lot of time in the public sector gulag and now it looks like you might not even get the payoff you were hoping for.
I can sympathize with that.
I really can.
I mean, in the same way that I can sort of sympathize with a chain smoker who gets lung cancer.
Yeah, you should have quit smoking.
Man, it sucks that you have cancer.
I could feel for you.
But that is still the reality.
See, people think somehow that you can eliminate risk in this life, that you can eliminate risk in this world.
Right?
So people somehow think that, oh, if I go to the government, then it's gold-plated.
I'm done.
I'm ready.
I'm set up.
People think that if they hand their retirement money over to the social security trust fund, to the government, that somehow it's now secure.
100% guaranteed.
If you buy government bonds, 100% guaranteed.
Well, it's not.
You can take haircuts on all this stuff the way that everybody else has to.
There is no way to eliminate risk.
There is only a way to postpone and exacerbate risk, right?
So you can eliminate the risk of running out of money by going into debt, but it just postpones and exacerbates the problem.
You cannot eliminate risk by going to the public sector.
What happens is you put your eggs in one basket and that basket has no bottom.
You cannot eliminate risk by giving the government your money to plan for your retirement.
You put your money in some hedge fund, maybe that hedge fund goes belly up, maybe you lose your money.
So people think, well if I go to the government I've eliminated risk.
But risk is a natural part of human life.
I might trip going down the stairs after I do this show and dash my brains out on the linoleum.
Risk is an inherent part.
I might have an embolism forming somewhere in my body going up to blow out my brain like some scene from a Scanners movie.
Risk is natural to the human condition.
We all have a desire to reduce it and eliminate it, of course.
That gives us security, peace of mind, that's why there's insurance, that's why people diet and exercise, you know, because, you know, 70-80% of healthcare issues are choice-related.
But the reality is we cannot eliminate risk from human life.
The desire to do so is delusionary.
To look for heaven is to live in hell.
To attempt to create perfection is to ensure the greatest disasters of all.
The attempt to find something that is bulletproof will actually gun down your future.
This is something we really need to understand because if we continue to believe that the government can give us security from risk, security from want, security from disaster, all we're doing is ensuring that whatever disaster does hit in the end is going to be worse than anything we could have gotten beforehand.
So I feel for the people who bought into the lie that the government was going to protect them from the consequences of life, from the consequences of risk.
It can't.
That is a delusion.
We are going to deal with an expert who knows even more about this, not hard, than I do.
Right after the break, looking forward to your calls after that.
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And we're back, ladies and gentlemen.
We're going to be discussing is this a sea change?
The Wisconsin election that puts what some derisively call a union buster and what I would call somebody who's trying to introduce a little bit of volunteerism into a forcible relationship.
We have Ian Murray on the line who's going to talk more about this.
He's vice president of strategy.
At the Competitive Enterprise Institute, author of The Really Inconvenient Truths, he holds a BA and an MA from the University of Oxford, which I think is actually quite a good one, if I remember rightly.
Ian, are you there?
Yes, I am.
Great to be with you today.
I really appreciate your time.
So, is this the sign of a significant change in the public's relationship with public sector unions, what happened in Wisconsin recently?
I think it is.
I think the public have finally decided that they're just too tired of public sector unions rigging the game for their own benefit and asking taxpayers to pay for it.
And I think the fact that this happened in Wisconsin, which is one of the most important states when it comes to union activism, I think that's evidence that there is a sea change.
That the public around the country, no matter how red, how blue the state may be, is finally fed up of public sector unions.
Yeah, because in the late 50s, I think Wisconsin was actually the first state to allow collective bargaining.
And people don't understand what a crazy idea this seemed at the time.
I mean, Franklin Delano Roosevelt openly stated that it would be insane to allow government workers to collect the virus because they don't have The fiscal reality of a capitalist on the other side of the table.
They have the infinitely deep, or at least assumed to be infinitely deep, pockets of the state.
And so it could be completely unfair for people with a monopoly service to unionize with the infinitely deep pockets of the state.
That that would simply corrupt the entire process.
And he was a Democrat!
It was crazy!
And I think people have just taken it for granted, but I think as fiscal reality begins to set in.
That's really helping people to change their minds.
So let's talk about the public sector pensions because that is a form of deferred payment that has been around for quite some time and is, I think, one of the things that is driving this process.
What do you think?
Very much so.
The fact is that public sector pensions are a defined benefit.
So you don't contribute To a pension scheme, that pension scheme grows and then you get back something based on your contributions.
Public sector pensions are a defined benefit whereby you get a certain percentage of your final salary depending on how long you've been in service.
So this gets to the stage where, in California, For instance, there is a rule whereby you get 3% of your final salary for every year that you've been in service.
So you can retire at age 50 if you started at age 20, working for the public sector, on 90% of your final salary.
And this isn't deferred further if you get another job.
So people retire early in California, get all this money guaranteed from the state, and then go and get another job.
It's no wonder that states like California that offer these generous defined benefit pension packages are going bankrupt.
And I've heard estimates that the unfunded liabilities in the public sector of pension plans literally run into the hundreds of billions of dollars.
And this is using the calculations that they have.
So, of course, if you have a pension plan, you have a certain amount of money invested and you have a certain amount of payouts, the amount of money that they are required to have invested is much lower.
And they've assumed like crazy numbers, seven, eight percent returns on investment, which particularly since 2008 is a complete pipe dream.
But even if we take the numbers that they themselves put out, they're vastly underfunded.
If we actually were to apply the same standards that are required for private pensions, it would be even worse.
Do you have a sense of the total number of unfunded liabilities that we're facing in this area?
Well, some research by my colleague Ivan Osorio here at CEI suggests that the total amount of unfunded public sector pension liabilities around the country So federal, state, local, municipal, public sector pension is something in the order of four trillion dollars.
Not just hundreds of billions, four trillion dollars.
So this is a vast amount of money that has got to be found from somewhere.
Right.
Do you think it's going to be found from anywhere or do you think there's going to have to be adjustments?
I think there has to be reform.
Public sector pensions are at a level That really is truly unsustainable.
Unfortunately, a lot of states have passed even constitutional amendments forbidding reform, saying that what's promised must be given.
So reform is going to be a very difficult process to unpick that lock.
Yeah, it's true.
It's a fact of democracy that the only contracts, the only promises that politicians are allowed to break are to the taxpayers, never to anyone else.
All of the benefits are absolutely enshrined in stone and none of the promises get kept.
Now, it seems interesting that the people who are fighting for this recall election were claiming to represent democracy, but as far as I understand it, there was no bait and switch with Walker.
I mean, he said, this is what I'm going to do.
He was voted in with a clear majority.
And then he went and did what he was going to do.
He said what he was going to do.
He went and did it.
And then there was a recall election was defeated.
So this really is minority interest.
This really can't claim to even remotely represent the will of the majority.
Oh, that's very much the case.
There was no surprise in what Walker did.
And what Walker did was actually very, very minor when you look at it.
All he did was make sure that unions...
We could not pick the pockets of people, basically.
There was a situation whereby even if you weren't a member of a public sector union, if that union represented you, theoretically, then you have to pay dues for it.
Walker changed that.
So there was no forcible contribution to union funds.
From somebody who didn't want the union taking that money out of their pay packet.
And the other thing was he limited collective bargaining to pay.
So previously unions had had collective bargaining arrangements for all sorts of things like health insurance.
So they had their own health insurance racket really.
That was overcharging school districts.
For instance, the teachers' union was overcharging school districts for health insurance.
By removing this collective bargaining power, the school districts could go out onto the market, and the union actually reduced its rate considerably in many cases in order to make sure that they retained the contract.
So that just goes to show that the unions were really just playing in a fixed marketplace.
But that's all he did.
Just two very, very minor changes.
All right.
If you can stay on past the break, we'll talk about some of the positive effects this has had for Wisconsin, which hopefully can be replicated elsewhere.
We'll be right back after these messages.
You've heard of Karl Marx, right?
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This is The Peter Schiff Show.
All right, we are back with Ian Murray of the Competitive Enterprise Institute, So Ian, what has been the effects of Governor Walker's policies on Wisconsin since he got into power?
How are they doing?
They're doing exceptionally well.
If you look, for instance, at that reform I was talking about just before the break, Which allows the school districts to go and shop for their health insurance rather than buying it directly from the union.
That saved one school district $3.1 million from its annual budget.
Now, when you look at what that means for a school district, that means that they don't have to fire teachers anymore.
They can even hire more.
And in fact, what's happened is that there have, I believe, been more teacher hirings in Wisconsin than before.
Class sizes can be reduced, that sort of thing.
All these benefits come from just a very, very small change in the Wisconsin union laws.
Yeah, and of course one of the challenges of this and this is true of all state benefits and all rent seeking is that the people who are benefiting from state power have very concentrated benefits while the costs are kind of diffused among the population as a whole.
And this is one of the reasons why people who are benefiting have a huge amount of investment potential and it's really rational for them to invest a lot in maintaining these benefits while cutting these benefits is tough for other people.
What do you think is swinging the voters as a whole?
Do you think it's a moral case, like it's just unjust and wrong for this stuff to be going on?
Is it mere fiscal reality?
Are there other factors?
What do you think is swinging the general population against the public sector unions?
I think it's very much a feeling that since the financial crash a few years ago, everybody else has sacrificed, but public sector unions haven't.
The public sector workers in Wisconsin are still much better compensated The private sector people.
Their pensions are 4.5 times more valuable than the private sector equivalent.
Healthcare is twice as valuable.
And their average take-home pay is 22% greater than the direct comparison in the private sector.
So there's a feeling that the people who work in the public sector have not sacrificed in the way the people in the private sector have.
And I think that's one of the main driving forces behind the recognition that there is need for reform of public sector unions.
Right, yeah, we sort of feel like we're trapped under the deck of the Titanic while all the public sector unions have lifeboats.
Now, given the tour of Visiting Fellow at the Adam Smith Institute, do you think that there is a case, and imagine that grim, cold-eyed Scotsman, I think he was looking right over your shoulder, Is there a case to be made for public sector unions at all?
I mean, the way that I would approach it is no, but I'm certainly happy to hear arguments to the contrary, looking at not so much adjustment, but the sort of underlying, not only economic efficiency, but moral argument.
Where would you stand on that?
Well, I stand with Franklin Roosevelt that public sector unions aren't, they don't have the same benefits Private sector unions have some private sector unions as a clear moral case for them.
There's a free association and the workers getting together with management and owners to discuss how to share the profits of the company.
There is no such case to be made in public sector unions.
So although I strongly believe in the principle of free association, I do not see how it particularly applies in the case of the public sector.
I think it's very different from the private sector.
And yet now we're at a stage where private sector unions seem to outlive their usefulness.
Only 7% of Americans are now members of private sector unions.
Yet public sector unions have institutionalized themselves.
Through the use of laws that we've been discussing this morning, to a stage where they are now a very, very powerful special interest.
And I think that's what we have to challenge.
Alright, now you've forwarded some very interesting stats on public sector unions.
The one that I did, I mean I understand most of them, one I couldn't quite figure, I think this comes from the Canadian writer from Maclean's, Mark Stein.
He wrote, do you know that 97% of the staff of the Long Island Railroad retire on disability?
This includes all the office staff.
When they were private trains, of course, that was not the case.
Isn't that odd?
What is going on with that?
Well, this happens across the country with public sector unions because they have very, very generous terms for those who retire with a disability.
You find that a lot of people suddenly suffer a disability in the year before their retirement.
Carpal tunnel, bad backs, all the stuff which is really hard to check, is that right?
Absolutely.
Because disability is defined so broadly now that people suddenly find they have repetitive stress injuries or things like this the year before retirement.
And this normally means that their retirement, for instance, in some cases, their retirement can be tax-free and that sort of thing, or free of local taxes.
So, there is therefore a very great incentive to the public sector workers to find some sort of disability in their final year.
Right.
It is true.
These kinds of corruptions breed such unbelievable scumbagery on the pod.
I know that's not a specifically economic rigorous term, but it just sort of strikes me.
And you say 1500 New York City teachers double-dip.
They get big teacher salaries while working full time for the union.
What is it?
There's this concept of official time whereby you can be paid by the taxpayer for doing union work.
So the people are supposedly working as teachers but are in fact working as union officials for Full-time, but are still being paid by the taxpayer rather than by the union.
There's all sorts of things like this that go on.
Official time, we at CEI discovered this earlier in the year, and it's a huge problem, sorry, earlier last year.
It's a huge problem in the federal government as well that a lot of union officials Now,
I think people don't understand this too much, and I'm sure you know more about this than I do, but according to my research, The unions, they spend three times as much money on campaign ads as all corporations combined.
Because everyone looks at, oh Goldman Sachs, they spent so much money, and of course that's terrible and corrupting and so on.
But unions are an unbelievable powerhouse.
You could really argue from many angles, they're the number one most influential powerhouse in American politics.
If forced union dues are collapsed, if the forcible contribution of, I shouldn't even say forcible contribution, contradiction in terms like voluntary rape, But if the sort of money at the point of a gun that is recirculated to the Democratic Party, if that changes or is largely eliminated, and you see the numbers have gone down enormously when people have been able to opt out of this from like 80% down to 6%, how is that going to reshape the American political landscape?
Because it's not just about public sectors and the unions, and it really is, this is the lifeblood of money to the Democratic Party.
What is going to happen to US politics if this dries up?
Well, that's absolutely the case.
We've already seen that in Wisconsin, the membership of the state and local workers' union has dropped from something like 60,000 to something like 30,000 over the time since the Walker reforms were passed.
That's a lot of union dues that are no longer coming in.
And this is the reason why the unions were fighting so hard for this.
They're fighting for their political life and that's why, at least earlier in the campaign, the Democrats nationally were fully on board with this until they realized what a losing proposition it was.
This really is going to cut off a huge proportion of funding for the So-called progressive movement these days.
The union membership has been, the forced union membership has been a cash cow for that side of the political aisle for so long that they don't know how to, how to, they're going to replace this.
That's why they fought so hard.
That's why they poured $1 million dollars.
Sorry, I think one of the most damning indictments for the future of public sector unions is the fact that Obama did not go down and campaign.
I mean, he can read numbers.
The only people who were surprised by this are people on the left and the media, because the numbers were very clear going in.
The fact that Obama did not go down and stump for this stuff meant that he knew it was going to lose and he didn't want to blow any credibility on that.
Do you think that's the case or do you think there were other reasons that kept him away?
A president in an election year does not want to be associated too strongly with a losing cause.
I'm so sorry.
The music is coming up.
Ian, thank you so much for your time.
I will read off your website when we come back from the break.
I really appreciate your time.
Hope to get you back soon.
Stefan Molyneux for SHIB Radio.
We now return to The Peter Schiff Show.
Call in now.
855-4SHIFT. That's 855-472-4433.
The Peter Schiff Show.
And we're back.
Sorry I didn't give a chance for our good friend Ian to give his vital statistics, but if you want to check out the Competitive Enterprise Institute, go to cei.org.
So still, if you would like to call in, we've got some time.
I've got no other guests but you for the rest of the show.
But until we get a caller, I would like to talk about a story.
Are you sitting comfortably?
Get your hot chocolate, put your feet up on the couch, and we'll talk about the small town capitalist and the unions.
Ah, a fable as old as time.
So the argument, of course, for unionization, and we're just talking private sector or free market organization, is that capitalists want to drive down workers' wages to make all this extra money, and therefore you need collective bargaining on the part of the blah, blah, blah.
And it's true, of course, every owner of the business, the CEO, the head honcho, the big cheese, the Jabba the Hutt, he has much more power than each individual worker.
No question.
But...
Again, as an employer myself, I hired hundreds of people.
I fired a few people.
I've run a fairly large technical department in a couple of different companies, one of which I co-founded.
You really do get really dependent on competent workers.
You really need those guys.
They have a lot of clout and a lot of sway.
Of course, the best thing to do to equalize your relationship and your negotiation position with your boss is to become more valuable.
More valuable to your boss, to the company, to your to customers, to co-workers, to whatever, to increase your human capital.
That is the only form of security that has any validity.
Going for politics, going for bullying, going for lockouts, going for strikes.
You may get something in the short run, but if you're going to go for a strike rather than go to night school or do whatever it is that you can to increase your human capital, you're probably heading in the wrong direction in the long run.
But let's take the example of a factory In a small town that employs like half the people in the town.
This guy is just a ratfink supreme.
He yells at his workers, he underpays them, he blah blah blah.
Normally, worker mobility would solve this.
They just go work for someone else.
It's a small town, this guy is the major employer.
We'll set up this experiment as easily as possible to make the case as strongly as possible for unionization.
And they can't move.
It's hard for them to move.
Their friends, their family, their little league games are all in the same place.
And so they say we're angry, we're upset.
They petition.
But this guy, he's got the economic sense of a dead muskrat.
And he just doesn't understand that happy workers are productive workers and so on.
But he just grinded them down because he's got all kinds of emotional problems from whatever source.
So then the The workers, they decide to go on strike.
And that's really, really bad for the employer.
I mean, when I was a manager, I was a chief technical officer, if my coders and support staff didn't show up for work, I was kind of deep in that famous creek without much of a paddle.
And so that's really bad because you've got to go hire new workers.
Now, hiring new workers is kind of tough because, remember, it's a small town.
That's why the workers don't have mobility, which means there aren't a whole bunch of new workers for you to hire.
Plus there's a small town, so they don't want to get everyone upset at them who's on the strike by going to break the strike.
Which means you've got to bring in a whole bunch of new workers.
But if you bring in a whole bunch of new workers, they're going to find some place to live in this small town.
They're going to drive up.
They're going to drive up the cost of housing to the point where they're going to demand even more salary than the people who are already living there.
Plus, they're going to look into this place.
They're going to find out that everybody quit or they're on strike because the boss is such a jerk.
So why would they want to move to some new town To go and work for some guy and pay a lot more for housing when he's going to underpay them anyway.
It's not going to happen.
So he's going to have to adjust.
Because if you're in a big town, then the workers can go work somewhere else and the problem is solved through competition.
We're just talking about where competition is less.
Small town.
So the workers, they stay out on strike.
Guy's losing money hand over fist, got to pay For the upkeep of his factory, he's still got to pay his property taxes.
He's still got to pay for heat and light and all that kind of stuff.
And he's got to pay for guards, right?
Because he's got a lot of angry workers on his hands.
So he's got to pay for guards to patrol.
It's not good.
Now, remember, nothing occurs in economics in the free market in isolation.
Nothing occurs in isolation.
Remember, there are vultures.
And I mean this in a very positive way.
Not often associated with vultures.
There are vultures circling.
Always the economic landscape, looking for the weak, looking for the incompetent, looking for the stupid managers who are destroying their assets.
And having a happy workforce, particularly in a small town, is very important to your factory owner status, to your profits.
So these vultures are going to swoop down, talons blazing, beaks gleaming with the sharp-jawed economic efficiency they're bringing to bear.
And if this guy's got, this factory owner, this idiot, if he's got investors, his investors are going to be like, well, what do you mean all the employees quit?
What the hell are you doing?
And then the investors, these vulture funds are going to come in and say, you know, we'll just buy this guy out.
He's an idiot.
He's ruining your resource.
You know, he's alienating the only workforce you've got.
He might as well have set fire to the factory.
Actually, that would be even better.
Then you might get insurance.
So they're going to say, we're going to take this guy out.
We're going to buy this company from you and we're going to make the workers happy because this is being destroyed right now.
Ah, let's say he doesn't have any shareholders.
What if he's got investors?
They may be upset.
What if he doesn't have any investors?
Well, see what the vulture funds are going to do then, what the venture capitalists are going to do is they're going to offer to buy this guy out directly.
If he doesn't want to sell, I mean, we're talking about someone who's a complete lunatic.
He's got a brain tumor where his economic common sense should be.
But we'll push the argument to the extreme.
Let's say this guy refuses to be bought out at twice the price he paid for the factory.
Or even the same price given that it's deteriorating in value day by day.
Well, if I were the venture fund manager, what I would do is I'd go set up a meeting in the town.
And I would say, look, here's the lowdown.
Here's the skinny, my friends.
Here is the down low.
All you have to do is wait out for another couple of weeks.
This guy's going to go out of business.
Bank's going to repossess.
We'll buy it from them.
And here's what we're going to offer you to come back to work.
Just hang on in there.
Hang on in there.
We'll even pay you some money to hang on in there.
Economic efficiency is the perpetual enemy of the incompetent, which is why the incompetent tend to flee the market to the public sector as much as possible.
And so there's almost no conceivable way in which the workers are not going to get what they want.
Either the guy is going to relinquish his position, he's going to pay them more, he's going to give the better working conditions or whatever, otherwise they're going to destroy the value of his firm, or other people are going to take over his firm, or he's going to go completely into bankruptcy, he's going to leave the place, and then someone's just going to buy it up, and maybe the workers can buy it up, they can go to the fund or whatever, but then that would mean they weren't trained in public schools.
Well, you know, let's just say that's possible.
So I love the idea of unions.
I mean, there are crap-tastic bosses out there who just You know, they love power, they abuse people, they just make bad economic decisions.
Now, in the long run, the market takes care of those people because people who waste or destroy the value of assets, whether it's human capital or fixed capital, people who destroy the value of assets make those assets infinitely more purchasable by other people who will raise the value of those assets.
And those people are always circling looking for opportunities, looking for undervalued companies, looking for companies with bad management.
This is why bad managers hate vulture funds, right?
Because vulture funds come in and like that scene in Wall Street, I got 23 vice presidents, I can't even figure out what they do.
So the workers are going to get back into their jobs at A rate in working conditions that makes sense to them, that will make them happy.
Either this guy is going to change his position, someone else is going to swoop in because he can't go hire a bunch of other people because he'll have to pay them more, pay for the increased price of housing and food and all that that they have to pay by swelling the town's ranks so quickly.
Someone else is going to come in and buy him out and give the workers what they want.
The workers might pick it up for a song if this guy really drives it into the dirt.
So I agree.
Each individual boss has More economic power in negotiations than each individual employee.
But that's not really the truth about being a boss.
I'm telling you.
As an ex-entrepreneur, I guess still an entrepreneur, when you're working Saturday afternoon, you're flying out to meet some client who's disgruntled with something, you don't feel like you've got all kinds of economic power.
When you have to sign personal guarantees for loans to keep your bridge financing going to meet payroll, you don't feel like you've just got all these kinds of economic power.
When you're working 80 hours a week and your employees are working 40, you really don't feel like you have all this kind of power.
People tend to rise in organizations, in the free market, because they work hard, because they learn, because they are willing to take on new chances and new risks and new opportunities.
And there's nothing better or worse about that.
There's nothing better or worse about that at all.
People can choose to rise to management, or they can choose to have nice barbecues on weekends, and they can choose to go and see movies, and they can choose to have closer relationships with friends, family, and children.
Nothing wrong with that.
Everything equals out in the free market.
If you want to work really hard, to become CEO of a major organization is like a 20 or 30 year proposition of intense hyper-workaholism.
Jack Welch spent his entire life on a plane flying around to all of GE's facilities and figuring out how they worked and so on.
And this is after he got a PhD.
So you've got to work like the opposite of a Greek.
Sorry for all the Greek people.
I'm talking about the Greek government, not the Greek people.
But you really have to work hard.
And so it's true that you have more power as a boss than each individual worker.
Collectively, the workers have more power, particularly in a place where there's no labor mobility or little labor mobility.
But you only gain that power as a boss by making a whole bunch of sacrifices.
It's true that a thin person is usually healthier than a person who's overweight, but they're usually only thinner because they haven't eaten the cheesecakes that are a lot of fun to eat.
So you don't feel like you have a huge amount of economic power as the boss because you're actually subject to a lot more competing forces.
Demands from clients and workers and investors and other executives and the people you're renting the office from and the people you're trying to advertise with.
They're all negotiating with and trying to make your life difficult in one way or another.
And so it's a lot of work to balance all these things.
It's really hard.
And then you see your workers all leaving while you know you've got another four hours of grindingly dull paperwork to do and you don't feel like, wow, I've got the most economic power of anyone in the world.
And yeah, you take home some more coin, but you have left time to spend it.
And that's how it all balances out.
So I really like Private sector unions, I think it's great.
There are craptastic bosses out there who need to get their comeuppance from concerted action.
But that is entirely different than when you can hold the productive economic citizens of your society hostage at the point of the gun of the state in a monopoly provision in services and in particular in the education of the children or the state propagandizing of the helpless.
We will be right back for the last segment after the break.
Feel free to call in.
You're now enrolling in the Peter Schiff School of Advanced Economics.
Twice the education of a Harvard MBA. For one one hundred sixty-eight thousandth the cost.
All right.
Ben Molyneux back for our last segment.
Sorry to keep you waiting for so long.
Ed from Florida.
You are a retired public sector union employee.
You want to talk.
I am all ears, my friend.
Well, I am so pleased to speak to Stephan, the Stephan Molyneux.
The flattery will get you precisely everywhere.
What's on your mind?
I won't say I was the perfect government drone.
However, I went into the military as soon as I got out of high school and as soon as I got home to New York City.
I went scouting around for a city job and lo and behold I got one.
It was the brass ring.
It took me much longer than you To figure out, you know, just how paranoid and backstabbing, you know, the entire system is.
I would say it took about five years.
You figured it out in, what, six months as a kid?
Well, but remember, I was just passing through.
I didn't have a big career invested in it, so it was not as much of a cost for me to figure it out as it would have been for you.
Yeah, well, I mean, after having been a slave in the military for six whole years, You know, moving over into the public sector in the city of New York was...
Yeah, it feels like a step up.
Oh my God, it was paradise.
And we made great money and all of that.
And, you know, I worked my way up the ladder.
And, you know, it didn't turn into hell until I was about, I guess, 40, you know, about 40.
Is that when you sort of got into middle management?
How bad the system is.
And...
I used to tell the people around me that if the taxpayers knew how bad that they were getting ripped off by us, there would be an instant revolt.
They would just overrun this place.
So give me some examples, right?
Because you're retired, so what do you get, right?
Give me some examples of stuff that makes people's blood boil.
Oh, no.
Like you said, you hit it perfectly.
Your bosses are a bunch of panicking retards.
And your co-workers are all trying to stab you in the back.
And they feel like if they hit the time clock on time in the morning, they've done their job.
I've got to sit down, man.
That was a big, big punch card.
I've got to get back rubbed.
Get me someone Swedish in here.
Have breakfast and then discuss what they're going to have for lunch.
And I'm like, you guys weigh enough already.
Let's go out and actually do some physical work.
And, of course, I would be shunned.
Therefore, I turned into the boss.
Oh, so because you criticized your co-workers, they didn't like you, and once they didn't like you, you were like, hey, this guy would be a great boss.
Well, no, the bosses saw that I actually wanted to go out and get something done for the day and not just sit around, you know, eating, I don't know.
You understand what I'm getting at?
Well, I might have had a half a bubble more intelligence than them, but...
You know, I give that to you with a grain of salt because I was there in the first place.
But you have to understand, where I came from, this was the brass ring.
Everybody I knew, their parents were teachers and firefighters and cops.
You know, this is what you were supposed to do.
Yeah, it always struck me, you know, public servants.
As far as I understand it, you can fire servants and they don't have a gun to your head when it comes to getting their pay.
So, yeah, but there is a whole culture of public service, of public sector union membership that, you know, that's just like gravity.
That's what you do, right?
Right, sir, but I did not see the gun in the room until, you know, now that I'm retired, you know, I'm an anarcho-capitalist now, you know, but it's a little too, you know, a little too little.
Too late.
And it's very...
Well, look, first of all, my friend, I don't think enlightenment can come too late.
And the fact that you're out speaking about this stuff is really important.
I think you should take all the kudos.
Look, it took me decades to go from, like, minarchist objectivism to, you know, a full consistency with non-aggression and property rights, which is what you talk about, anarcho-capitalism.
It takes a long time, and there's a lot of countervailing propaganda.
And when you make that leap, it's not always the easiest thing for your immediate social relationships, right?
Exactly.
I can tell you from my career standpoint, even I was stunned hearing your earlier guest and talking about the California 3%.
In other words, the union I was in was plugged in gangster-ish style to the government.
And I paid the highest dues of any union guy in New York City.
But I did actually take home the highest hourly wage of any New York City employee.
You know, plus I got time and a half if I worked over and everything else.
I never abused it, but everyone around me did.
Now, having said, the only reason I could get out at 50 was that I never actually managed to get married, unfortunately.
But the rest of them can't get out at 50 because they've all got wives, kids, and everything else, and they know there's nowhere to go Right.
You know, so even though they get like this, you know, 50 and out retirement or 55, most of them are on a 55 deal.
None of them are going to leave at 55 because they've got oops kids or they're divorced and, you know, paying child support.
You know, I was one of the non-married guys.
And I'm a very small percentage of that.
Yeah, so it's a bit of a golden cage, right?
Once you get used to that kind of spending, that kind of income, those kinds of benefits, you really are kind of trapped because you just can't have the same lifestyle if you go private sector.
Exactly, and you can't step out because, like you said, the benefits, you know, what are you going to do?
I mean, I told these idiots that, look, you're leaving, you know, $65,000 on the table and you're letting the government keep it, and they all do that.
You know, whereas you go get that second job that we were all discussing.
However, I will say this.
At least in the pension system that I was in in the city of New York, I had to pay, you know, I paid 3% in.
And then to get the 50 deal, I had to throw in 7% of what I made.
So at least we did, you know, give some of our money into the system.
Well, but I mean, it's the taxpayers who are paying, right?
You know that.
And the funny thing is, let me just mention something about that.
I'm glad you gave me those numbers.
Because, you know, the average corporate profit is like three points, three percent, maybe four percent.
And people, like the unions complain that it's the corporate profits that eat into the workers' paycheck at three or four percent.
And they could double that just in union dues.
How on earth is that solving the problem of corporate profits if you'd taken by force twice of what corporate profits would take from a workers' paycheck?
Understood.
But you've got to understand, I hated my union, just like you said.
Everyone hates their union, but they were so plugged in that I think I mentioned before, I made the highest dollar per hour rate of a New York City blue-collar worker.
Wow.
Well I hope that you're out now taking your retirement money and speaking about freedom because I think that would be a good use of what you got and of course you know for most of your life you think it's a fine thing but you know the illicit and violent nature of the source of your income is you know I think you know can be somewhat redeemed by the course that you're on which I congratulate you for Thanks so much for taking the time to call in.
If I host again, which I hope to do, then maybe we can talk again.
Also, I really want to tell you, nobody says the word idiot like someone from New York.
The amount of emotional energy that is contained in New Yorkers' use of the word idiot could power the sun for about three generations.
Alright, this is Stefan Molyneux.
We're out for the show for today.
Welcome back, Peter.
Tomorrow, thanks for the opportunity.
Thanks for listening.
Thanks to the team for putting such a great show together.
Thanks to the callers.
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