Oct. 12, 2011 – Moneyball author Michael Lewis, in an article in Vanity Fair, blames the municipal and state financial shortfalls in California on public-safety workers, specifically police officers and firefighters. As Toronto's police and fire services struggle to trim their budgets, Peter Sells examines Lewis's thesis.
October 12, 2011
By Peter Sells
Oct. 11, 2011 – One of the hottest movies this fall is Moneyball, which relates how Billy Beane, the general manager of the Oakland Athletics baseball franchise, used the relatively new analysis methods of sabermetrics to get the maximum performance value on the field out of the A’s relatively modest budget for players’ salaries in the late 1990s. The movie is based on a 2003 book by Michael Lewis, an American non-fiction author and financial journalist.
As a result of Lewis’s high profile in the wake of the successful opening of the movie, he has been prominently featured in recent financial and business media. One overriding theme lately is what is wrong with the economy, how did we get into this mess and how can we get out of it? In his November 2011 column for Vanity Fair, Lewis places the cause for the municipal and state financial shortfalls in California squarely on the shoulders of public-safety workers, specifically police officers and firefighters. Using the city of San Jose as an example, Lewis feels that the city had repeatedly caved to the demands of its public-safety unions over the past decade. Each police or fire contract used the previous award as a starting point for moving upward. Regionally, neighbouring cities’ union locals benchmarked off of each other. According to Lewis, “The effect was to make the sweetest deal cut by public-safety workers with any city in Northern California the starting point for the next round of negotiations for every other city.” Lewis quoted San Jose mayor Chuck Reed, saying, “When did we go from giving people sick leave to letting them accumulate it and cash it in for hundreds of thousands of dollars when they are done working? There’s a corruption here. It’s not just a financial corruption. It’s a corruption of the attitude of public service.”
So there you have it, boys and girls. Forget Lehman Brothers, the auto companies, Dubai World, Fanny Mae, Freddy Mac, Wall Street executive largesse or the governments of Iceland, Ireland, Greece or Portugal. Look in the mirror because apparently we are responsible for the whole darn mess ourselves.
James Coones, editor of the Ontario Professional Fire Fighters Association magazine Intrepid, wrote in the 2011 summer issue, “Never before have I felt or seen the anti-public sector sentiment that is currently sweeping across not only Ontario, but across much of North America as well.”
Coones needs to look no further than Toronto, where police Chief Bill Blair is in a standoff with the Police Services Board over compliance with Mayor Rob Ford’s directive to reduce the 2012 budget by 10 per cent. Ford was elected with a popular mandate to reduce spending and a promise to not cut services. Apparently there are many thousands of voters in Toronto who believed that such a paradoxical combination would be possible. Regardless of campaign bravado or voter naiveté, Blair is between a rock and a hard place. If he complies, then hundreds of officers may be laid off. If he doesn’t, then it may be his own job on the line. Next up – Toronto Fire Services. And it’s all coming soon to a town near you.
Says Coones: “There is something afoot much worse than using us as scapegoats for the financial crises that so many others have been responsible for creating. We are witnessing unbelievable acts of ignorance and abuses of power in places like Wisconsin, Michigan and Ohio, with the intent to strip away the rights of workers that unions have fought to secure and that have been in place for well over a half-century or more, for good reason.”
The Midwestern states Coones mentions have all been hammered by the housing industry, automobile industry and financial collapses south of the border, and frankly are hurting badly. So badly, in fact, that there are political factions that would prefer to adopt the right-to-work labour model that prevails in the southern and western states. Right-to-work laws prohibit agreements between unions and employers that require the workplace to be a closed shop. Any agreement that would make membership or payment of dues a condition of employment would be considered illegal in a right-to-work state. The philosophy is that workers have the right to work without being forced into joining or paying for a union. As a result, unions are less common and workers have the right to work for less, no voice in the workplace and the right to unsafe work.
Rolling back several generations of workers’ rights in the name of short-term fiscal responsibility is exactly as stupid an idea, politically and financially, as it appears to be at first glance. This is not a Moneyball idea, since sabermetrics has maximal performance as its goal. The only goal evident in blindly cutting back on public-safety payrolls is financial savings, with safety and effectiveness being damned in the process.
Still the GM of the A’s, Beane also makes a healthy income from corporate speaking engagements. He speaks about how he was able to identify players who were likely to perform well beyond their current market value. Another way of looking at his strategy is that he was able to identify players who, because of prevailing market conditions, he could underpay with the expectation of still receiving average or above average performance. So what lessons are the corporate audiences supposed to take away from Beane’s presentations? How can I encourage and exploit conditions that will allow me to pay my workforce less without a decrease in output? Is there a class or category of workers that is currently overpaid with respect to their value, or can I create that impression in the eyes of the shareholders or taxpayers?
The best and most productive labour/management relationships are built on mutual interest and achieving the best possible levels of public service. In times of extreme financial pressure, such a relationship gives way to a more confrontational, zero-sum negotiating environment, ripe for the application of Moneyball tactics.
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