Saturday, April 23, 2005

Binding Arbitration - a Surpise?

A feel-good idea that doesn't work. In Hawaii the state budget is being thrown far out of balance to the benefit of the state bureaucrats. The tool - binding arbitration as described in an editorial in the Honolulu Star Bulletin. Binding arbitration sounds like a good idea. If the negotiating parties can't reach agreement, then give it to an independent third party. And let the arbitrator make the final decision. But Hawaii's legislature foolishly gave up its responsibility to set state employee pay. They did this because the employee unions told - I mean asked - them to. The Republican Governor Linda Lingle vetoed it, but her veto was overridden. So in a time of tight budgets the white-collar employees are getting 5% increases - far above inflation. The employees union pulls the simplest trick on the arbitrator: they decide the raise they want, then double it. The arbitrator after much talking, research and anguish (OK, I'm projecting here) and a hand-wringing decision decides to cut the employee request in half. So they ask for a 10% increase - how do they do that with a straight face? And they get 5%. Politicians like to avoid taking heat. But they should get a double temperature for pushing off their responsibility. Oh, they are saying "It's out of our hands.... We didn't know this would happen." How do they say that with straight faces? A group of seventh graders could have figured that out. We call this a "perfectly predictable surprise." (I am trying to recall the source of this phrase.) I am watching this because Washington's recently enacted collective bargaining for state employees has some similar features. (BTW: the reason for tight budgets in Hawaii during this time of economic growth: Hawaii has the most bloated state government on a per capita basis. There is no second place.)

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