Striking Philadelphians – a Problem with Public Transit

Why are Philadelphia transit workers striking?  The answer is simple, and the same reason that anyone ever strikes: they want a bigger piece of the pie.  In 2005, the transit workers went on strike because they didn’t want to have to contribute to their health care plans; according to the Philadelphia Inquirer, the disagreement this time is over wage and pension increases.  Simply put, the workers want more, more, more, and the management wants less, less, less.

The same is true of every industry, but the transit system suffers strikes and others do not for two reasons: 1) public support; 2) monopoly.  Public support comes in the form of taxpayer funds that prop up SEPTA, the Philadelphia transit system.  Monopoly is the overwhelming domination of the Philadelphia regional transit market by SEPTA.  Public support and monopoly interact with each other to create problems like the 2005 and 2009 transit workers strikes. Let’s see how.

Public support means that SEPTA cannot go bankrupt.  The reason is that it is subsidized.  SEPTA only operates at a profit – if it operates at a profit at all – because the government is pouring money into its coffers.  Because of this lifeline, SEPTA can always afford to be just a little more inefficient, provide a little less service to its passengers, a little more money to its workers.  This last point is key: SEPTA workers, in strike negotiations, operate in a position of strength because they know that ultimately, SEPTA draws on an unlimited source of funds, the public purse.  SEPTA workers can go on asking for more money until they own every penny in Pennsylvania.  This is the meaning of public support: SEPTA can always afford a little bit more.

Monopoly means that SEPTA has the ability to inflict serious pain on Philadelphia.  In its quest for the funds that public support entitles it to, it has a negotiating beatstick with the power of a nuclear bomb.  If SEPTA goes on strike, to whom will Philadelphians turn in their quest to get from Point A to Point B?  SEPTA performs an essential non-redundant service, which means that it can ask for any amount of money that it wants.  If SEPTA is legally required to provide that service, this simply means that SEPTA management has to accomodate any demands that its employees make in order to keep it operational.  Therefore, if SEPTA can ask for any amount of money that it wants, its employees can also ask for any amount of money that they want, as long as they threaten to strike.

The situation bears some resemblance to the recent debacle in the automobile industry.  In both cases, workers possessed sufficient technical skill that they could not be rapidly replaced; add to this unionization, and the result was constantly escalating wages, benefits, and pensions.  Unionization is not per se a bad thing, but sometimes, it can destroy its benefactors, the employers.  A large part of the reason for Detroit’s decline is that its workers imposed a major competitive disadvantage on their companies by asking for too much compensation.  In just the same way, SEPTA’s woes are in part because of the generous compensation packages that transit employees across the nation enjoy.  The difference is that unlike the automobile industry, SEPTA has always been a ward of the state.  SEPTA is on permanent government bailout; whenever financial conditions get to be too bad, it just goes back to the government for more money.

Citizens of Philadelphia, let them strike.  Move to Jersey, and use PATCO.  At least its farebox recovery ratio is better.

Website Review – Lifeforliberty.org

Those visiting Lifeforliberty.org will want to start from the rear, where the breadth and organization of the website is at once visible, although in fairness to its authors, it was meant to be read from the front in a linear fashion; I will suggest quickly clicking through each page to reach the table of contents.

Lifeforliberty.org is a call to action for the implementation of several core libertarian desiderata.  It advocates non-violent protest as a means to achieve these desiderata, providing a brief sketch of how non-violent protest works, what it can hope to achieve, and what level of activism will be necessary to achieve a national impact.  The conclusion is that roughly 250 protesters, over 25 metropolitan areas, could cause sufficient disruption to garner national media attention.  This is predicated on the assumption that only one major highway need by blockaded in each area to create a sufficient disruption.  I am no expert on civil disobedience, so I will note evaluate this.  It is simply Lifeforliberty.org’s goal.

Being a thinker, my interest in Lifeforliberty.org is analytical.  What do these people want, why do they want it, and why have they chosen the means of non-violence as  their means of achieving it?

Lifeforliberty.org wishes its protesters to continue their actions until five demands are met: disassembly of the Federal Reserve, substitution of a national sales tax for a national income tax, enactment of a Constitutional amendment requiring a balanced budget, enactment of a states’ sovereignty amendment, and enactment of a campaign finance amendment.  Though it will add significantly to the length of this review, I feel it necessary to deal with these demands one by one.

1) The dissolution of the Federal Reserve is an interesting idea.  This has been a pet project of Ron Paul, and many others, for some time.  On a principled level, I am not sure that the Federal Reserve is unconstitutional.  Congress’s old excuse for everything, the interstate commerce clause, appears to justify an organization whose function is to provide stability to the federal economy.  On a practical level, I think that this stability is a desirable thing.  I resent the recent incursions of the Federal Reserve into morally questionable territory, but I do not think it clear that these incursions were a necessary result of the nature of the beast.  After all, these actions were unprecedented, and perhaps with some legal tweaking, they will also be unrepeated.  For those unconvinced of the Federal Reserve’s importance, this link explains its basic functions, while a brief but rigorous excursion into macroeconomics, such as the one provided by Olivier Blanchard, should provide an understanding of why these functions are important.

2) The demand for the repeal of the income tax, and its replacement with a sales tax, makes me hang my head in shame for all libertarians.  While the income tax has become an unconstitutional infringement on the rights of citizens, this is again not the nature of the beast, but a result of Congress’s addiction to social engineering through taxation, and the Supreme Court’s unwillingness to stand up to Congress.  Furthermore, the idea that a national sales tax would not quickly be plagued by every single one of the problems that currently plagues the income tax is naive beyond expression.

3) The enactment of a balanced budget amendment to the Constitution is perhaps Lifeforliberty.org’s most intellectually persuasive idea.  While macroeconomists, including the excellent Paul Krugman, often strongly make the case for the critical importance of expansionary fiscal policy – usually entailing massive budget deficits – I think that historically, it remains to be seen that such policy will not ultimately poison every nation that embraces it.  It is not easy for a democracy to elect a leader who promises higher taxes and lower spending, particularly with the old Republican canard – still obsessing the popular imagination – that promises higher revenues through lower taxes.  The macroeconomists appear to have the weight of current history on their side, because even with recent events, public debt as a percentage of GDP has remained relatively stable (look at the graphs on the right).  But it will not necessarily always be so, and some form of legal straitjacket, even if it is less restrictive than the one envisioned by Lifeforliberty.org, is an intriguing idea.  Public debt cannot rise above 100% of GDP anyone?

4) Enactment of states’ sovereignty amendment… I had hope to provide a link for the further explication of this idea, but it does not appear to have much backing in the libertarian, or even states’ rights communities.  Most people are simply in favor of a return to the Tenth Amendment.  Ignoring this minor philosophical difference, I will make a few remarks.  First, it seems to be the opinion of many legal scholars, as exemplified by a recent Harvard panel discussion, that the Constitution, while a very good thing, is not necessarily the pinnacle of good governance.  In particular, a government strictly constructed according to the Constitution may not be able to provide the level of stability and safety that it is necessary for a modern nation to have to survive.  Nonetheless, I personally think that it ought to be considered desirable to have our federal government on a firmer legal footing than the one it is currently on; if the Constitution becomes nothing more than a scrap of paper with antiquated ideas, then the limitations on the powers of our government essentially disappear.  Perhaps amendments to the Constitution are the way to do this, but that a states’ sovereignty amendment will be a panacea is not at all clear to me.

5)  The idea for a campaign finance reform amendment is as naive as the national sales tax, and merits no discussion.  Campaign finance reform itself, of course, merits a serious national discussion.

In short, Lifeforliberty.org makes a variety of demands, some more coherent and interesting than others, but many, at various levels, hopelessly naive.  While I do not wish to spend too much time kicking naive thinkers while they’re down, I must note that occasionally, Lifeforliberty.org’s rhetoric gets the best of it: “None could claim that the implementation of any of these five measure [sic] would bring irreparable harm to our beloved nation, while it has become undeniable that not acting upon these issues has led us upon a [sic] inexorable road to ruin.”  In the first place, I just did deny that we’re on the aforementioned road to ruin, and I’m hardly the most hostile audience these people will encounter.  In the second place, if this statement is true, then this movement should meet with virtually no resistance at all.  Should I start buying canned goods now?

Lifeforliberty.org does contain a couple of interesting ideas.  First, “We shall not cease until ALL of our demands, every last one, has been legally instituted in the full spirit of their intent!”  In short, the composers of Lifeforliberty.org have proposed to gather a group of 250 like-minded people, use these people to lay a stranglehold on our nation, and not to remove their grip until their demands are met.  While they characterize their movement as non-violent, from this perspective, it appears that they are proposing to take the rest of us hostage.  Either they believe their message is totally self-evident and will meet with universal embrace – which is evidently not the case – or they wish to impose their idea of good governance on others by what amounts to force.

The use of such force is the hallmark of a radical ideology.  In a previous post, I discussed that for a radical ideology to be logically coherent, it had to meet three criteria: it had to be of critical importance to the national dialogue, it had to be of immediate importance to the national dialogue, and it had to be obvious to the vast majority immediately upon hearing.  While Lifeforliberty.org effortlessly passes the first criterion, believing their message to be of the utmost importance to the survival of freedom, they present little argument that action is needed tomorrow, next week, or next year – indeed they present no timeline for the expected decay of our great nation – and it seems clear that their message is not manifest to everyone (unless I am exceptionally dense).

What I have advocated here is further discussion, rather than the immediate action that Lifeforliberty.org proposes.  Interestingly, Lifeforliberty.org has an answer for this too: “At this juncture, to hold on to the hope that situations will significantly change within the existing state of affairs goes beyond mere foolish denial and flies into the realm of flagrant irresponsibility.  One must have the courage to relinquish empty hope before one can rightly consider an alternative course of action.”

I found this statement fascinating.  It often does appear to me that our national dialogue is hopelessly corrupt.  The major news organizations appear to cater to twelve-year-olds, the most-listened-to talking heads are irrational bombasts, and good ideas seem to get little circulation.  Am I just wrong?  Is it my evaluation that is skewed, and my dialogue that is corrupt, or is Lifeforliberty.org correct?  Perhaps it is in fact true that mere talking will never solve anything, that the right voices will never be the loudest and most-listen-to.

What is the reason for optimism?  Oddly enough, I think China is the reason for optimism.  In China, the citizens of the free world have the opportunity to witness a brutal, repressive regime, a nation utterly repugnant to all lovers of freedom and humanity, but also a nation of rising power, of economic prestige, and soon, of prosperity and happiness.  In short, China gives the free world the perfect antithesis of all that we hope to be.  In this way, in a dramatic history of peoples more powerful than any voice, perhaps we will discover who we truly wish to be.