This country has made a lot of terrible financial blunders. Easily among the top ten would be the decision to allow public employees to form unions and engage in collective bargaining. Only a little more than 50 years old, that mistake has done prodigious harm to us both economically and politically – and the worst is yet to come.
In the summer of 2015, the former mayor of San Jose, California, Chuck Reed, launched a ballot initiative. Several California cities have already gone bankrupt and more are teetering on the brink, causing Reed to take a step that’s meant to stop the fiscal bleeding that results from the state’s excessively generous pension system.
Key provisions in the measure would require local governments to obtain voter approval if they want to continue giving new employees defined-benefit pensions after 2019 and to require voter approval for increases in existing pensions. Further, the initiative is designed to prevent the state’s gigantic public employee pension system, CalPERS, from undermining its impact, something it has been known to do.
It’s important to note that Mr. Reed is a Democrat. As mayor, he struggled with the budgetary troubles caused by the tremendous and growing cost of public pensions.
And it’s also important that CalPERS is working behind the scenes to block Reed’s initiative. A union-friendly member of the State Assembly requested a legal opinion about the effects the initiative would have if it passed from CalPERS, which duly produced an alarmist “analysis.” The Wall Street Journalopined in August that this “appears to be a test-run for the political attacks unions are likely to wage should Mr. Reed’s initiative qualify for the ballot.”
All of that is pertinent to Daniel Di Salvo’s illuminating book Government Against Itself.