Margaret Wente

In Madison, the reactionaries are in the streets

The Globe and Mail

Everyone in Canada has been transfixed by the popular uprisings in Tunisia, Egypt and Libya. Too bad we've ignored the tens of thousands of protesters converging across the border in Wisconsin. The drama playing out there is likely to have a far bigger impact on our lives, far sooner.

In Madison, unlike Cairo's Tahrir Square, it's the reactionaries, not the reformers, who are in the streets. It's the labour groups and old-line Democrats who are relentlessly agitating for the status quo. The reformers are in the statehouse. And, as usual, the reactionaries are the last to know their time is up.

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The showdown in Madison is only partly ideological. States and cities are buried in a mountain of debt. They have inherited reckless promises to public-sector workers that simply can't be kept. Wisconsin (a small and traditionally liberal state) faces a $3.6-billion deficit over the next two years. According to the Pew Center on the States, there's a $1-trillion gap between what the states have promised in pensions and benefits for their retirees and what they have on hand to pay for them. As one Cincinnati Democrat told The Washington Post, "I believe in what unions do, but as an elected official I represent the taxpayers."

The dynamic between public-sector unions and government is completely different from the one between private-sector unions and business. In one, workers are fighting shareholders and managers for a piece of the profits, and there's a limit to what the market will bear. Public-sector unions, by contrast, are fighting the taxpayers. Politicians have no incentive to bargain hard, since they won't be the ones to lose out, and every incentive to keep the workers happy and get re-elected. But now that private-sector workers have been hammered by brutal competition, technological change, layoffs and wage freezes, they think it's not unreasonable for teachers and garbage collectors to share the pain.

In Ontario, where the debt (but not the weather) is California-like, our nice-guy Premier Dalton McGuinty thought he could fix things by asking the unions to play nice. Sadly, life isn't an all-day kindergarten, so they ignored him. In any event, they can simply take their cases to arbitration, secure in the knowledge that arbitrators aren't bound by the ability of the state to pay. In one recent settlement, the Ontario Provincial Police won a one-year payment of 5.075 per cent, followed by a two-year freeze and a guarantee that the OPP will continue to be the highest paid force in the province. These deals aren't sustainable, and everyone but the unions knows it.

Canada isn't the U.S., of course. Their fiscal problems are catastrophic, while ours are merely dire. We don't have a mountain of unfunded pension liabilities. But we do have proportionately far more people in government unions. In the U.S., only 35 per cent of public workers are unionized. In Canada, it's 71 per cent - and public-sector workers are 18 per cent of the total work force. The result is a two-tier work force. One tier has lifetime job security, generous pensions and a workplace where seniority matters more than merit and almost no one is let go for poor performance. The other tier has none of this good stuff. You've got to wonder how much longer private-sector workers will be willing to keep shelling out for perks they themselves no longer get.

In the U.S., the new folk heroes are governors such as Mitch Daniels of Indiana and Chris Christie of New Jersey - down-to-earth, common-sense types determined to protect the people from the ravages of the unions and make government affordable again. They are the Democrats' worst nightmare, and they're incredibly popular with the electorate. Smart Canadian politicians should be taking notes.

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