Sunday, July 21, 2013

A Contract Is A Contract

Over the weekend, there was a flurry of news coming from the State of Michigan, where Governor Rick Snyder is making the first power play for the pensions of Detroit workers.

Stemming from that is this wonderful article from Dean Baker, co-director of the Center for Economic and Policy Research, which gets right to the issue:
It is striking that so many people in the media are acting as though this clause does not exist. Part of the story is undoubtedly a belief by many reporters that Detroit workers got overly generous pensions. The pensions of Detroit’s workers are almost certainly better than private sector pensions, which have been rapidly disappearing. However, research shows that most public sector workers incur a wage penalty relative to private sector workers with the same education and experience. Better pensions and other benefits essentially even the score.

But even if Detroit’s workers got a good deal with their pay and benefit package, so what? A contract is still a contract. Workers put in their time in exchange for a specific package of pay and benefits, how can the government arbitrarily change the terms of the deal after the fact.

There are businesses that end up getting very good deals from the government all the time. How often does a state or local government end up selling a parcel of land for a price that turns out to be hugely below its true value. Or they may give tax concessions to lure businesses that prove to be overly generous. It looks like the City of Chicago made a really bad deal in leasing its parking meters to Morgan Stanley for three quarters of a century. Does Chicago get to just rewrite the terms of the contract?

In these cases involving businesses, somehow a contract is a contract, end of story. The relationship is sacred and no one suggests changing the terms after the fact. However, in the case of the pensions for city workers, these are just office workers, custodians, or garbage collectors. The media would have us believe that contracts with these sorts of people aren’t real contracts. If they prove inconvenient, then they can be changed.

While that may be the view that the media is trying to push, the rest of us should insist that the law and the constitution be respected. Detroit’s city workers have as much right to have their contracts respected as the Wall Street bankers making millions and billions off contracts that are often far more questionable.

This is class war at its ugliest. The elites have to learn that they don’t get to change the rules as they go along, if they want their contracts to be respected they will have to respect contracts that protect working people as well.
And even though I shouldn't need to remind the gentle reader, don't think for one minute that Scott Walker or Chris Abele aren't already looking at doing something similar with our pensions.

1 comment:

  1. That's why I think the whole push for removing the ability for groups to file class action lawsuits, is for all these municipalities and businesses to be able to steal the pension funds and walk away unscathed.