Issues, Labor Unions

Everything You Ever Wanted to Know about Bureaucracy and Government

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by Dan Mitchell

I’ve used the “everything you ever wanted to know” hook on many occasions, dealing with diverse issues such as demographics, entitlements, fiscal policyFrance, Greece, corporate inversions, supply-side economics, income inequality, the Ryan budget, Social Security reform, comparative economic systems, and healthcare economics.

I even once made the grandiose claim that one of my speeches revealed everything you ever wanted to know about economic policy.

Needless to say, I was exaggerating in every instance. All I’m really doing is sharing things that are very useful in making a broader point about various public policy issues.

And that’s what I’m going to do today by sharing something that will tell you “everything you need to know” about bureaucracy and government.

It’s based on this column, authored by Professor Fred McChesney, about ever-expanding fire departments in the Washington Post.

Let’s start with some unambiguously good news.

…being a firefighter these days doesn’t involve a lot of fighting fire. Rapid improvements in fire safety have caused a dramatic drop in the number of blazes, according to the National Fire Protection Association. Buildings are constructed with fire-resistant materials; clothing and curtains are made of flame-retardant fabrics; and municipal laws mandate sprinkler systems and smoke detectors. The striking results: On highways, vehicle fires declined 64 percent from 1980 to 2013. Building fires fell 54 percent during that time. When they break out, sprinkler systems almost always extinguish the flames before firefighters can turn on a hose.

But here’s the part that tells us a lot about government and bureaucracy.

…as the number of fires has dropped, the ranks of firefighters have continued to grow — significantly. There are half as many fires as there were 30 years ago, but about 50 percent more people are paid to fight them.

And that means a lot of time doing nothing. At a very high cost (especially in California).

Firefighters responded to 487,500 structure fires across the United States in 2013, which means each of the nation’s 30,000 fire departments saw just one every 22 days, on average. And yet, taxpayers are paying more people to staff these departments 24-7. As a result, the amount of money shelled out for local fire services more than doubled from 1987 to 2011, to $44.8 billion, accounting for inflation. …Firefighters earned a median salary of $45,250 in 2012,according to the U.S. Bureau of Labor Statistics, but overtime can more than double that. In Los Angeles, for example, the average firefighter was paid more than $142,000 in 2013, including overtime and bonuses, the Los Angeles Times reported.

This doesn’t make sense. Why spend so much to achieve so little?

The answer is that politicians are scared of powerful unions (labor bosses, for instance, have targeted – and defeated – tough-on-crime lawmakers for being in favor of criminals simply because of disagreements about fringe benefits).

…firefighter unions have fought hard to grow their ranks as fires decline. …union-negotiated minimum-staffing levels that often mandate four firefighters per engine be on duty at all times, regardless of the cost or workload. …the International Association of Fire Fighters has an annual budget of nearly $60 million, most of it derived from its 278,000 members. IAFF calls itself “one of the most active lobbying organizations in Washington,”… Its political action committee, FIREPAC, spent nearly $6.4 million in 2014.

So what’s the solution?

Professor McChesney suggests that volunteer firefighters are part of the solution.

…cities and towns should consider throwing out the very concept of the career firefighter and return to the tradition of volunteers. …Municipalities that have stuck with the volunteer model got it right — and that is most of them. About 69 percent of all firefighters in the country are volunteers.

To be sure, volunteer firefighters often exist in small communities, but McChesney points out that medium-sized cities also can be very successful (and frugal) by using volunteer fire departments.

Protecting a sizable city with a volunteer force is possible. Since 1930, the city of Pasadena, Tex., has used 200 active and 50 semi-active volunteer firefighters to protect its now more than 150,000 residents. If all towns up to that size moved to all-volunteer forces, the national payroll of career firefighters would be reduced by more than half. Using the median firefighter salary, municipalities would save more than $8.8 billion a year in base pay.

Another option, of course, is to contract with private companies, which is another approach that is very successful.

But no reform will be possible without ending special union privileges.

And to understand why union bosses will fight reform, just keep in mind that they want to protect a system that gives them wages and benefits far above what they would receive in the absence of government coercion.

To cite one example of above-average compensation, here are some excerpts from a report in a California newspaper.

When Peter Nowicki retired in 2009, the then-50-year-old chief of the tiny Moraga Orinda Fire District made national news by trading his $194,000 salary for a starting pension of $241,000 a year.

I suppose taxpayers should count themselves as being lucky since Nowicki’s salary was a mere pittance compared to the $516,000-per-year deputy police chief in San Francisco. Or the $800,000-plus received by a state-employed psychiatrist.

That being said, what enabled this guy to get a pension that was almost $50,000 higher than his salary?

The answer is that he manipulated the system, perhaps in an illegal fashion.

Nowicki, aided by fire district directors, grossly spiked his pension. …The fire board approved two Nowicki contract amendments in that last year, increasing his salary and benefits without proper public transparency, in violation of the state’s open-meeting laws, and retroactively, in apparent violation of the state Constitution… Three days after the second contract amendment, and after 26 years of work, Nowicki announced to his staff that he was retiring because his pension would exceed his paycheck.

Interestingly, he was aware that the system is a scam, and maybe even felt guilty about ravaging taxpayers.

…after 26 years of work, Nowicki announced to his staff that he was retiring because his pension would exceed his paycheck. “I’m very fortunate to be a part of such a lucrative system, yet I philosophically find it to be very troubling at the same time,” he wrote. ” … Nonetheless, I’ve reached the financial plateau and it’s no longer economically feasible to continue in my current capacity.”

But even though he found the system “very troubling,” that didn’t stop him from deliberately screwing over taxpayers.

Then-Director Pete Wilson said that the board deliberately approved the changes to help Nowicki increase his pension and that the chief presented them calculations documenting the effect.

The point isn’t to demonize Mr. Nowicki.

Instead, think about the fact that we have a corrupt system where politicians reward unions with fat contracts and unions reward politicians with campaign cash and election-year support.

As illustrated by this superb cartoon by Michael Ramirez.

That’s a great deal…assuming you’re not a taxpayer.

But for those of us who work, produce, and pay tax, it’s very discouraging that so many bureaucrats have figured out how to become part of the top 1 percent. And it’s doubly discouraging when you consider how excessive pay and benefits are threatening the fiscal viability of state and local governments.

Now let’s get to the bottom line. This issue perfectly captures how government endlessly expands even when the ostensible purpose for a government activity shrinks. And the reason for that endless expansion is that insiders figure out how to rig the system for their advantage.

P.S. To close with some humor, here’s a very snarky video about overpaid firefighters.

And at the bottom of this post, you’ll find an amusing joke about firefighting that pokes fun at libertarians.

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