Prisoner’s Dilemmas-XIX: Labor Negotiations & Strikes

Photo by Kateryna Babaieva on Pexels.com

For now, President Biden was able to pump the breaks on the railroad strikes. Biden appointed arbitrators to negotiate mutually agreeable recommended revisions to the current labor contracts. This action kept “..115,000 rail workers on the job..” and narrowly side-stepped work stoppages from occurring on Monday (July 18th). In a time of preexisting supply-chain constraints, labor disputes would only exacerbate matters (the best real example would be the situation in the UK).

The dynamics of organized labor have a long history of being contentious, and striking is their secret weapon in gaining leverage at the collective bargaining table. If a policy does not contour to union interests, the relationship between the government and the labor movement devolves into a standoff. Since both factions have competing goals, this negotiation process is a Prisoner’s Dilemma. Lawmakers tailored policies to the preferences of the majority (union members only make up 13% of the US labor force). Also, in the anti-union camp, management possesses a fiduciary responsibility to enforce policies that are advantageous for the firm. 

These sets of incentives are opposed to the interests of the unions. Organized labor aims for higher wages, better benefits, more safety measures, and other generous forms of compensating differential. These new desired measures may be more costly for the firm or adversely impact consumers with higher prices or a lower grade of customer service (inefficiency). The demands of the labor unions tend to concentrate the benefits and impose costs on the rest of the economy. Even in sectors that are only tangentially connected to the industry where the workers are on the brink of striking. When their proposals are ignored or rules they dislike come into play, they defect by halting production and picketing. 

How neither party can reach a consensus generates Pareto-inefficient outcomes; should be self-evident. Because employers and policymakers might not want to cooperate or even meet the unions in the middle, they are defecting. In turn, the unions initiate strikes which create product scarcity, production bottlenecks, and higher prices. The ripple effects of the lack of agreement will hurt every economic actor in the market.

Bootleggers & Baptists: XXXVIII- Prop. 5 (California, 1998)- Tribal Gaming

Photo by Thgusstavo Santana on Pexels.com

Proposition 5 (1998):

Most legislative proposals seeking to permit or expand state gambling have generated controversy. Proposition 5 (1998) delivered on creating a notable amount of contention in California. The referendum aimed to allow tribes to form gaming compacts with the state, allowing them to provide Class III gaming (casino-style) services to their patrons. Per the provisions laid out in the  Indian Gaming Regulatory Act (1988) (IGRA) under Sec. 2710 of the act. The more granular objectives of the proposition included:

  1. Allow tribal casinos to install or keep video-style slot machines, operate lotteries, and run card games.

2. Require the governor to approve such gambling arrangements with any tribe requesting them.

3. Require tribes with gambling operations to contribute a small percentage of their earnings to a fund benefiting statewide emergency medical care programs, communities near tribal casinos, or tribes without gaming.

4. Turn over to the tribes’ primary responsibility for overseeing the casinos. State regulation would be limited, but tribes would reimburse the state for the cost of state oversight.

https://www.sfgate.com/politics/article/STATE-PROPOSITIONS-Proposition-5-2983468.php.

The tribes had a lot to gain through the passage of Proposition 5, but in contrast, non-tribal gaming venues and adjacent industries had the potential to be big losers. This tension resulted in the Prop. 5 campaign engendering record-setting election spending in California. Per an October 1998 report, surpassing the spending on insurance reform bills in 1988, amassing a gargantuan $84 million in campaign expenditures. The rivalrous campaigning of tribal and non-tribal interest groups lays down the substrate for Bootlegger and Baptists’ (1983) coalition dynamics. The union of business and moralistic factions are most salient on the side that opposed the referendum. Since gambling is associated with crime and moral decay, attracting Baptists to act as moralizing agents is like shooting-fish-in-a-barrel. Once a curious individual dives deeper into it, the invested interests of the opposition become a web of predictable and unlikely Bootleggers begins to emerge.

The Baptists:

The most conspicuous moralistic voice in the anti-Prop 5 campaign was Stand Up for California, a grassroots political action organization with conservative leanings. Since 1996, the organization has been a vocal opponent of expanding tribal gaming. The organization even acted as a consortium of moral anti-Prop 5 arguments, publishing articles ranging from trade associations, law enforcement organizations, and even the California Council on Alcohol Problems expounding upon the ills of tribal gaming. It is even suggested (on the California voter Information Guide not by Stand Up) that environmental protection issues; resulting from tribal gaming establishments being exempt from California environmental regulations (p.23). The implication is that environmentalists would object to the measure. The 1998 Voter Guide indicates a diverse array of moralistic arguments against Prop. 5. Including but not limited to the potential for crime, violation of state labor laws, the lack of bargaining power on the part of local citizens/governments, the lack of taxation, and even arguing that the revenue gained from gambling proceeds only helps a minority of tribally affiliated Indians (p.21-23).

The Bootleggers:

The organization Stand Up reduced its political activity during this campaign to avoid cooperating with “…Nevada gambling interests…”.; demonstrating the organization’s commitment to moralistic communitarian causes. Regardless of whether they wanted an alliance with gaming interests, simply by taking a passionate position on the issue, they formed a tacit coalition. However, the relationships between the various varieties of Bootleggers are far more intricate than the networks of Baptists. It is open to debate whether some of these actors are BootleggersBaptistsDual-Role Actors, or even if they are Covert Bootlegger (p.190).

The Bootleggers with the most linear relationship to the anti-referendum campaign are those with overt ties to the gaming industry. Several in-state interest groups donated money to shutdown Prop. 5. The involvement of gaming interests in the appurtenant state of Arizona and nearby Nevada is attention-grabbing. It is easy to surmise that many of these firms feared a loss in revenue from California residents having more local casinos. One notable gaming firm that contributed to the campaign was Aztar, the now-defunct gaming and hospitality management firm previously headquartered in Phoenix, Arizona (p.3-4). The list of luminaries included donors such as Caesars Las Vegas, the Rio, and Hilton Hotels (p.4). A careful observer may find it puzzling that a construction company based out of Framingham, Massachusetts (p.4) donated to the Prop. 5 counter-campaign. That is because the Perini Building Company built many of the famous casinos in Las Vegas, including Luxor and the northern expansion of Caesars Palace (p.5).

Another group backing the opposition was the labor unions. Many readers may question what organized labor would have to gain through blocking tribal gaming? The unions had two main objectives in the opposition campaign. First, the unions operated under the political action organization COPE (Los Angeles County Council on Public Education) since “…Indian casinos are not required to apply the National Labor Relations Act guidelines as other private employers are..” (p.24). The second reason why the tribes created such a powerful enemy was by the fact that “… many tribes refused to bargain with unions…” (p.24). Keeping in mind the doctrine of tribal sovereignty, they were well within their rights to refuse such negotiations; but they engendered a Prisoner’s Dilemma. Through working against the unions, the tribes incentivized organized labor to defect by working against their interest in an uncharacteristic (p.24) amount of activism devoted to defeating a tribal gaming bill.

Conclusion:

Despite the best effects of the opposition campaign, Prop. 5 still passed in November 1998. The measure achieved victory by winning 62.38% of the vote, leaving the opposition at 37.62%. This demonstrates that even calculated and strategic counter-campaigns cannot assure success in the political arena. It also should be noted that the tribes did overall spend more on Prop. 5 advocacy than their opponents did refute it. While it is shrewd to avoid any social justice justifications for permitting tribal gaming, but for many tribes, it is crucial for their economic development. Native Americans, as of 2020, have the highest rates of poverty among any ethnic group living within the United States. Loosening regulations constraining tribal gaming is a tenable solution to help improve the economic circumstances of native peoples. Versus relying on handouts or ill-fate government programs that could only exacerbate their current economic struggles, we are allowing indigenous people to help themselves by getting out of their way. It is also worth noting that tribal casinos are not “for-profit” in the traditional sense. They might not overtly operate as charities. The casinos are “state-owned” since the establishments are owned by the tribal government. The proceeds function like tax revenue, funding infrastructure, programs, and other tribal initiatives (p.2).

Privatizing The Police Could Help The Poor

Photo by Alou00efs Moubax on Pexels.com

Among the common arguments against privatizing policing services, one common repudiation is that it would leave the poor under-protected. A security and protection service based on direct billing or a subscription service would exclude individuals of meager means. Raising concerns that a two-tiered system of justice would arise (Benson,1990, p.309)[1]. Under a publicly funded criminal justice system, a “two-tiered” system already exists. Historically, poor neighborhoods have been either under policed or provide an inferior quality of policing services. After years of receiving a low-quality service, the natural consequence is that the residents of these lower-income communities will grow to distrust the police. Justifying the provision of state policing services does not stand up to closer scrutiny. If anything suffers from many of the market failures that critics theoretically attribute to a privatized system.

Many of the over warmed arguments that a for-profit system only stands to skew incentives. The assumption being that firms will desire to keep the costs of production down to increase profits. This notion conjures images of the inadequately trained, middle-aged, and overweight mall security guards making just over minimum wage(Benson, 1990, p.301) [2]. However, few people realize that in light of the growth of the private security industry over the years specialization has created a diverse continuum of security services. Even over thirty years ago there was a vast range of salaries in the field of private security. Some agents even earning $100,000 annual at managerial positions (Benson, 1990, p. 303) [3]. Different types of security would require various levels of credentials and training. Meaning that to a certain degree that a private security detail with armed guards and the security agent at the local mall provides two distinctly different services. Hence, the differential in compensation. It would also be overkill to put the highly trained and combat seasoned armed guard in the security detail for a mall. As the mall has invested in a multi-million dollar security system and cameras (Benson, 1990, p.302) [4]. Reducing the need for such high caliber human capital. If anything does not demonstrate underinvestment in security services, but a high degree of investment in technology. Having a state-of-the-art security system and an experienced arm guard would be enough more than a misallocation of resources. In other words, the firm would be wasting money. Especially when the aptitude of an armed robbery is much lower in a strip mall when compared to a bank.

State-funded policing services are insensitive to the profit-loss mechanism, misaligning the incentives of operations away from efficiency. From a public choice standpoint, the institutional incentives for policing services have been profoundly perverted. Government-funded departments are constantly in competition with other adjacent bureaus for budgetary allocations. Creating the need to demonstrate a demand for the services provided by the agency (Benson, 1990, p. 94-95) [5]. Those in law enforcement keep the demand for their services high through advocating and influencing policy (Benson, 1990, p.109) [6]. Police unions operate as muscular lobbying organizations. For example, police unions funding anti-marijuana campaigns to thwart legalization attempts. Why? Because keeping the sale and consumption of cannabis criminalized (one of the most commonly used illegal drugs) will help solidify job security. Budgets are determined based on need. The publicly funded police respond to crime on a first-come first-service basis leaving many incidences of crime unaddressed until it is too late (Benson, 1990, p.137) [7]. This method while not wholly intentional does help facilitate larger budgets towards various local policing bureaus. A more reactive approach towards crime versus a preventive approach tends to reward the local agency. This is because budgets are predicated on crime statistics (Benson. 1990) [8]. All of these concerns make it kind of ironic that there is so much distrust of private enterprise in handling policing. The claims that private firms will cut corners and “fabricate” offenses to increase profits (Benson, 1990, p.303) [9], when much of this behavior seems to model what is done by state police agencies.

The postulation that a for-profit policing system would benefit the rich, does not take into account that the poor take on most of the costs of the current system. It goes beyond just the misaligned incentives of the public police agencies. A woman living below the poverty line is significantly more likely to be raped (Benson, 1990, p.310) [10]. While this fact may not prove causation is qualitatively indicative of a lack of protection under the current system. Due to higher tax rates in affluent neighborhoods, there are more resources for patrols and crime investigations (Benson, 1990, p.309) [11]. Demonstrating a disparity between the quality of service between poor citizens and rich ones. In a private arrangement, the state would not hold a monopoly on the production and policing services. Allowing less affluent citizens the ability to form their firms and organizations to provide policing for their community (Benson, 1990, p.308-309) [12]. If firms do not provide affordable services the economically disadvantaged can form their institutions. Something that would not be an option for government-provided policing due to political opposition. A prime example of this was measures taken against the Black Panthers’ neighborhood patrols back in the 1960s.

Many pundits could respond by mentioning the difficulty for disaffected communities lacks the organization to form their institutions. However, if we truly treat policing and law enforcement services as a purchasable commodity this collective action problem may soon dissipate. Charitable foundations can be formed to provide communities or individuals with free private security and protection services. Security services can also be gifted on an individual basis through gift cards for private security services. The idea of transferring security services to another person either as a gift or through charity was influenced by an adjacent concept practice in medieval Iceland. In this medieval society like most during the “dark ages” there was no central government. Most adjudication took place within the context of customary law. Meaning that most infractions were resolved through restitution, mimicking modern-day Tort law. If a poor man could not afford to pay his restitution for an offense, a wealthy member of the community could pay it on his behalf. Treating this obligation as a transferrable right (Benson, 1990, p.307) [13]. If historically, the obligation to pay restitution can be transferrable, why cannot policing services also be transferrable? Beyond being able to give such services charitably or as a gift, couldn’t individuals also sell, less, or otherwise transfer unused services? We could even set up private voucher programs for poor communities to receive funds to patronize any security firm of their choosing. All of these possibilities from a prima facie standpoint, appear to be better than the present system.

Bootleggers & Baptists Part VI: Unlikely Foes of Universal Medicine

woman in white medical robe
Photo by Jeff Denlea on Pexels.com

 

 

 

 

 

Introduction:

 

I have just recently started reading Matthew Miller’s book The 2% SolutionThe book aims to provide solutions to social problems that both Democrats and Republicans could compromise on. As Miller put it “using conservative means for liberal social ends”. The work in this book is slightly dated due to being published in 2003. Despite the references to the bygone era of the Bush administration many of the problems detailed today still have not been solved. Reforms in the arenas of health care and education are to this day hotly contested issues.  Maybe if more people had read this modern political treatise written by a self-proclaimed “radical centrist” perhaps we would have more clarity on these issues today? Then again, this might be wishful thinking. It is highly likely that the apparatus of the state is too marred with vested interests to adequately administer educational and medical services. Regardless, it is a thought-provoking read.

I would have to agree with The Hill’s 2003 review of the book. One of the most notable chapters so far was Chapter 5: Universal  Coverage, American Style. Why? Because it details a rare instance of bipartisan compromise on the emotionally charged topic of healthcare. The chapter focuses on a discussion that Miller had with than members of the Ways and Means Committee Jim McCrery (R) and Jim Mc Dermott (D) back in the early 2000s. Diving into intricacies such as the utilization of vouchers, tax write-offs, and even a cash-out system for employees who receive insurance from a private enterprise (p.104).  Even entertaining the notion of allowing participants to choose between several state-approved health insurance carriers with their allocation of funds allocated for healthcare (p. 98-99). Kind of riff on the School Choice voucher system, only for health care.

 

These intriguing suggestions are not what I found to be the most surprising. Nor was it the civil and serious tone of the discourse. It was a comment made by McCrery about potential opposition to this proposal:

” The Union boss will not like it because we are essentially taking away one of the goodies that they claim to provide to their members” (p.107).

 

Pardon my ignorance, I wasn’t aware that the traditionally Democratic-leaning labor unions opposed government-funded healthcare! The majority of polled Democratic voters tend to perceive the decline in union membership as being negative. It is interesting to see that certain segments of the labor movement are not in lock-step with the DNC’s platform. I was thinking that the democratic-union coalition was impenetrable. However, this counter-initiative political position by unions is quite rational.  One of the largest labor unions in the state of Nevada is the Culinary Workers Union of Nevada, UNITE HERE Local 226. Many of the members present have excellent healthcare. Fear that if they were mandated to take a government healthcare plan they would experience a decline in the quality of care.  Putting aside my issues with the labor movement, I have to admit that is a valid concern. Union members even heckled Sen. Sanders ( a labor-friendly politician) demonstrating their concern with a universal system.

 

Bootleggers: 

 

Labor Unions that oppose government health care (E.g. Local 226 of Nevada)

 

Baptists: 

Organizations  (coalitions, think tanks) that advocate for fiscal responsibility ( E.g. National Taxpayers Union)

 

The Unlikely Bedfellows:

 

The concept of the Bootleggers and Baptists troupe is derived from a 1983 paper written by economist Bruce Yandle. Yandle observed that often you have seemingly opposing interests coming together on a certain issue. One group providing a “moral” justification for their policy position and the other side is mainly concerned with self-interest. The National Taxpayer’s Union is advocates of limited government and fiscal conservatism. They have been longstanding opponents of any kind of government involvement in health care. The organization even is willing to praise incremental alterations to the healthcare system to veer towards a more free-market approach. Typically all in the name of consumer choice and fiscal virtue signaling. Then again, if you were to look at America’s present deficit, NTU certainly has a point. The fact that they assume the moral highroad of proper economic stewardship, the organization falls into the category of the Baptists.

 

In terms of addressing the labor unions on this topic, it prudent not to paint with a broad brush. Not all unions oppose universal medicine. Particularly nursing unions and teacher’s unions generally support universal medicine initiatives. For the unions that do not endorse such measures, their rationale is quite salient. They are concerned about receiving healthcare that is inferior to their current plan. This is a valid concern. One that many individuals employed in private industries shares in common when faced with the prospect of handing over this service to the state. There is good reason to suspect that there is potential for the level of care to decline. There are countless examples of government mismanaging healthcare. For example, the Phoenix VA hospital controversy. Citing such examples is far from a conclusive indictment, but enough to raise reasonable concerns. Labeling union workshops such as local 226 the proverbial “bootleggers” is not a value judgment.  Rather, they fall into this category due to their justification being based on the benefit of the union members. Versus striding for a moralistic argument, like  NTU.

 

The irony is certainly rich. It is mind-boggling that unions and the conservative National Taxpayers Union could ever come together on an issue. Health care happens to be the quirky impetus for this usual alignment of political interests.