31 March 2010

Public v Private & the Yoke of Unions

I had lunch today with a builder who is a client of ours. We were discussing the current state of affairs apropos the recession, healthcare and "stimulus" spending. He let me in on something I didn't know. The new health insurance reform law requires firms with more than 50 employees to offer health insurance. Bad idea, but fine, what the hell, that part I knew.
What I didn't know was that if you are a construction firm and you have more than five employees, you must offer them health insurance benefits. Which is just a terrible idea.
We were also discussing that any stimulus finds going to public works (those shovel ready jobs you've heard about), workers must be paid "prevailing wage." (See here and here). Which basically means that the work must go to union labor. Which inflates wages, slows development, reduces productivity and keeps unemployment higher than it otherwise would be if the work went through competitive bidding (not that that is apolitical or without problems, but it's better). I will post later why unemployment hasn't improved appreciably.
But the thrust of this post is the following clip I caught on reason.tv:

So while the federal, state and local government are hemorrhaging money, they are: increasing their staffs; increasing payrolls and associated expenses; increasing debt and future obligations; increasing the current and future cost of borrowing; crowding out further private investment and real economic growth. Good job, fellas.

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