Wednesday, July 22, 2009

Alberta Federation of Labour vs pension reform

Although MIT economist Jonathan Gruber told Congress
It is clear to me... that one source of financing dominates the others: reducing the expensive, regressive, and inefficient subsidization of employer-sponsored insurance. Financing coverage expansions by scaling back the exclusion would be highly progressive and would reduce a major driver of overinsurance and excessive health spending in the U.S. This is truly a win-win solution...
as I noted in my last post, unions south of the border are pushing back, threatening to strangle healthcare reform in its crib:
Douglas Elmendorf, head of the Congressional Budget Office, told Congress last week that "the cost curve was being raised." ... Elmendorf favored limiting tax-free employer-provided health benefits, but organized labor remains strongly opposed.

A limit on tax subsidies for the costliest health insurance plans would give households and employers a reason to become smarter shoppers but unions are opposed. It can always be demagogued as a Republican idea, as Ezra Klein notes:
Republicans ... have made unwinding the employer-based market core to many of their proposals. It was in John McCain's proposal and Tom Coburn's proposal and every other GOP draft I've seen. It's also central to the Wyden-Bennett plan that has attracted a number of Republican cosponsors.
While unions are thus busy blocking attempts to raise the necessary taxes to fund US healthcare reform (apart from soaking the rich, a move that is far more inefficient and too sharp a left turn to get through Congress), north of the border readers of today's Calgary Herald would learn that
[Alberta Finance Minister Iris] Evans said if agreement on a national program can't be reached, the province is willing to continue working with B.C. on a supplemental pension plan which would allow the self-employed and workers to sign on. ...
But Bill McGowan, president of the Alberta Federation of Labour, [is opposed]....

The parallels to the US healthcare debate should be clear here. The fact that millions of (non-union) Americans do not have adequate healthcare is something of a national embarassment in terms of social justice, as is the fact that millions of (non-union) Canadians do not have adequate retirement savings. Yet the union lobby has no interest in solving either of these problems because these are not problems they face. Note the argument of AFL-CIO President Sweeney:
the ... claim that the the current tax exclusion favors those with coverage at the expense of those without -- even if it were true -- is completely inapplicable when everyone is covered -- an essential goal of reform.
This is simply false. Soaking the rich with high marginal rates on their investment income may indeed pay for covering everyone (at significant cost to investment levels and, ultimately, total output). But that does not change the fact that the tax measure at issue favours one group over another without any justification on either efficiency or social justice grounds.

In Alberta, within coming months union interests are likely to argue for enriching CPP and OAS payments. Never mind that unionized worked don't need this; in the interests of "equity", the unions will argue that everyone should benefit from any new social programs. When it comes to the advantages that unions secure for their members via their monopoly power, this is supposed to be "inapplicable" to both social justice and efficiency considerations. In the debate about whether the free market distributes fairly enough and who should give up more, we are thus supposed to ignore the distortions created by union power.

The Herald goes on to say that Jack Mintz has been appointed to study the issue. Mintz was previously appointed to study the issue of Alberta's lack of savings (a problem that goes directly to the topic of supporting the province's seniors in the future) and his report was at first suppressed and then ignored. Rather than stay home and listen to Mintz, Finance Minister Evans spent $24 500 on transport alone on a January junket to Europe "to study savings strategies, pension management and economic development."

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