As CNBC reported recently, large US cities are facing a huge shortfall of unfunded public pensions, to the tune of roughly $574 billion. That’s in addition to the estimated $3 trillion gap in state-funded pensions, and it comes at a time of already rapidly declining tax revenue due to a recession attributable to rapacious government spending, at all levels, in the first place. Furthermore, that recession is likely to get much worse according to eighteen leading hedge fund managers who recently published a book of essays, “The Gathering Storm”, in which they allege that the world economy is more or less — well, doomed.
One need not be particularly pessimistic to surmise that if conventional politics was capable of solving this problem, it would have done so already. Rather, it’s up to America’s organs of non-governmental civil society to see it through this public pension crisis and the larger, ongoing, Soviet-style economic meltdown. Specifically, public employee unions can take the lead in a new approach to the problem, marshaling public support for it in order to make government back down where it acts as an obstacle.
Government, at all levels, is bankrupting itself and taking the rest of the country (nay, world) with it. An equity for debt swap is relatively common in bankruptcy cases. In this case, unions can serve as advocates and midwives for a new model of worker-owned privatization that gives rank and file public employees shares of common stock in formerly public enterprises as compensation for the default on pensions that’s inevitably coming, whether they want it to or not.
Public perceptions about privatization and public employee unions mirror each other. Each is, justifiably, often seen by its opponents as an example of special interest looting of the taxpayer — by Big Business as seen from the left with privatization and by Big Labor as seen from the right with public employee unions. In order to bust through opposition from both the political left and right, it would be necessary to demonstrate that the old special interest “looter” mentality has been left behind in the interest of saving civilization.
What’s needed is not just a marriage of crony capitalist “privatization” in name only with 90’s vintage ESOP programs that don’t amount to a hill of beans for the workers. Rather, the particular needs and concerns arising from this crisis (and the political stalemates that led to it) point the way to a new type of worker-owned company we can call Free Workers Syndicates, to borrow a term from J. Neil Schulman’s novel of free market anarchist revolution, “Alongside Night”.
In order to convincingly make the case for such a radical approach, Free Workers Syndicates could not be “public-private partnerships”. They would have to be genuinely market-based entities rather than political entities. They would have to renounce tax-funding, subsidies, politically-enforced monopoly status and politically-granted privilege; embracing the prospect of fully open competition from any and all rivals and showing confidence in their own ability to satisfy the desires of individual consumers. They would have to remind the public that firefighters take risks and save lives, that garbage pickup is a job nobody likes and that lives depend on the maintenance of the existing municipal drinking water systems — in short, that rank and file public employees are productive people who deserve to be freed from the failing business model of political service provision.
Perhaps most importantly, Free Workers Syndicates ought to reject the corporate form altogether, acknowledging that corporate charters are indirect subsidies in the form of a grant of limited liability — bestowed by the same government they need to draw a line demarcating themselves from. Attendees at a series of Workers’ Congresses called by public employee unions could create such syndicates as self-proclaimed business entities by signing Operating Agreements among themselves in place of government-granted charters, then issuing stock as they see fit to their members and daring the SEC to stop them.
If public employee unions genuinely want to represent the interests of their members, they ought to be sounding the alarm to man the lifeboats and prepare to abandon the ship of state.