DCEA Impasse Debacle: Heads Should Roll

Owen-David

The notion that the city could solve its employee compensation through the use of impasse and an imposition of last, best, and final offer finally comes crashing to the ground in the wake of the Pubilc Employee Relations Board tentative ruling.

And, let us be honest, the ruling is not going to change when the city files its protest within the twenty-day period.  The city screwed up.  They imposed impasse before they had exhausted other remedies.  And frankly, they used impasse at the wrong time, with the wrong bargaining group.  They should have used it with the firefighters at the start of the process, rather than the rank and file at the end, to simply bring them up to the inadequate contract that the rest had.

How much will this hurt the process, going forward?  It is difficult to know.  One thing that is clear is that the Davis City Employee’s Association and the rest of the bargaining groups are now emboldened.

The cost is not trivial, by any sense of the imagination.  As Paul Navazio told the Vanguard, “The City’s estimate of the All Funds savings of the terms imposed by the City was around $500,000 over a twelve-month period.”

The PERB Board is ordering back pay, plus 7%.  So we are looking at least at 18 months of back pay, which would appear to be around $750,000 plus 7%.  That works out to just over an $800,000 all-funds deficit.

Said the finance director, “If the final PERB decision looks anything like the remedy outlined in this tentative ruling, I do not have any reason to expect the cost to be significantly different from what we had estimated the ‘savings’ to be.”

Clearly, this is a mess of the last council, but let us be fair to council.  They pay staff and the city attorney to advise them how to proceed in such technical matters.  At least one councilmember from that time questioned the advice they got from staff.

The staff report advised council, back in May 2010, “The City has made three months of good faith efforts to comply with the final step of impasse resolution procedures in the Employee/Employer Relations Ordinance 1303 without success, and staff believes the prerequisites to unilateral implementation set forth in section 3505.4 have been met.”

The PERB board disagreed, ruling, “It has been found that the City violated MMBA sections 3503, 3505, 3506, and 3509(b) and PERB Regulation 32603(a), (b), (c), and (g) when it passed Resolution 10-070 on May 25, 2010, before exhausting the fact-finding process set forth in its local rules.

They continued: “It is therefore appropriate to order the City to cease and desist from such activities in the future. Additionally, if the City wants to proceed through its impasse procedures, it must provide adequate time to complete the fact-finding process as set forth in its local rules.”

The city’s staff report was written by Bill Emlen, then the city manager, Paul Navazio and Melissa Chaney, the HR Director for the city.  Clearly, overseeing this operation was City Attorney Harriet Steiner, who would have been asked to overlook the city’s legal interpretation.

The Vanguard sent emails to Paul Navazio, Melissa Chaney and Harriet Steiner, asking what went wrong with this process.  Mr. Navazio was the only one to respond thus far, but he dodged the second question and addressed only the issue of cost.  In fairness, it was a Friday and perhaps we will receive a response on Monday.

From our standpoint, we believe that the city jumped the gun, declaring impasse.  It was likely a political cover move, with the city and council increasingly under fire for being weak on the negotiations.

However, given that impasse merely implemented the insufficient contracts that neither Lamar Heystek or Sue Greenwald supported, except on PASEA (Program, Administrative and Support Employees Association), it seems like the city should have been more patient.

Now they have burned their capital, embarrassed themselves and emboldened city employee groups to resist harder, knowing it is much less likely that the city will impose impasse in the near future.

But more importantly, it becomes another questionable decision by city staff, upon whom the council has to rely for technical advice on such matters.

This is a new council, and only two members of the council were around when the last council voted to impose the city’s LBFO (last, best and final offer) to DCEA.  They must right the ship.

We need to find out what went wrong, who is responsible for it going wrong, and there should be consequences.

When was the last time a blunder by council led to a loss of a job?  The closest we can remember was Katherine Hess’ demotion, following the debacle of the NewPath cell towers.  Her demotion was nominal and minimal.

And yet, everyone reading this can think of countless examples of very serious blunders, with no consequences at all.

As one person told me, in the private sector someone should lose their job over this.

That is not the job of the city council, who only gets to hire the city manager and city attorney.

Therefore, this moves quickly into Mr. Pinkerton’s realm.  He needs to make sure that the council is getting sound advice and not getting led down the wrong path.  Moreover, he needs to set the new tone, that mistakes of this severity will not be tolerated.

Will he have the fortitude to make the change?  We tend to doubt it.

Council needs to take this issue head on, and tell the city that this is a very serious setback which will necessarily result in the loss of additional city services and possible personnel, as they will now have to close up an over three-quarters of a million dollar error that not only hurts the city with regard to finances, but also damages credibility in moving forward to the next round of collective bargaining.

Heads need to roll.  If they do, we will know this really is a new day and a new city administration.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

Related posts

40 Comments

  1. Neutral

    [i]Clearly, this is a mess of the last council[/i]

    Correct, but there is no reason to give them a pass. It was their arrogance in how they dealt with the employees, and ignorance of labor law that delayed (and *still* delays) their hiring of professional negotiators. And what would that cost? A heckuva lot less than eight-hundred thousand bux.

  2. biddlin

    “Heads need to roll.” Yes, that solves the situation . The Vanguard has been management’s mouthpiece in this debate, consistently demonizing employee groups and extolling a get tough policy by the city . This commentary seems like the guy who supplied the whiskey telling us to blame the fellas who supplied the rope and the tree for the lynching ! Souza, Saylor, Greenwald, Krovoza, Swanson and Navazio should be held accountable, but their rush to stumble was fueled by anti-labor sentiment, so often expressed by you .

  3. David M. Greenwald

    “Souza, Saylor, Greenwald, Krovoza, Swanson and Navazio should be held accountable” – Krovoza and Swanson were not on the council at that time.

    “but their rush to stumble was fueled by anti-labor sentiment, so often expressed by you” – obviously I disagree with you. If you consider going after people who make 150,000 in total comp, anti-labor, then we have little to discuss on this issue. The fact is we are not management’s mouthpiece because management has not been with us for the most part.

  4. Mr.Toad

    Yes, numerous posts have advocated for impasse and then imposition of a contract as if it would be simple to do so. Now we see you and expect other such advocates as well to blame those they pushed as if that advocacy didn’t help light the fuse.

    I’m not sure if heads rolling for this is the answer. Clearly this is complex law formed over many years dealing with labor contracts with similar longevity and evolved complexity. Your Red Queen expectation fails to take into account that blaming people for being assigned a task they are not equipped to do is not the fault of the employees. What is clear is that if they had worked harder and reached a settlement none of this would have happened.

    It also shows that if the council wants to go to war with its employees it is ill equipped to do so and needs to bring in the labor law thugs. The ultimate irony is that the new city manager is coincidentally named Pinkerton.

  5. hpierce

    There is, perhaps, a causal link between what happened, but it apparently did not directly affect the PERB action. The record shows that Sue Greenwald (and perhaps others?) talked publicly of going to impasse and imposition (I&I?) even as negotiation sessions were in their very initial stages. The Council can dismiss the CM at any time with a 3-2 vote. The same is true of the City Attorney. The City Manager can dismiss “at-will” employees (I believe both Navazio and Chaney “at will” employees). Ms Greenwald’s documented comments/opinions were specifically [u][b]dismissed[/b][/u] as [u][b]’hearsay'[/b][/u] in the PERB opinion. We will probably never know what forces were truly in play when the City’s negotiating team took/failed to take the actions they did.

  6. David M. Greenwald

    “Yes, numerous posts have advocated for impasse and then imposition of a contract as if it would be simple to do so.”

    And I’ve always questioned that, particularly as a strategy.

  7. David M. Greenwald

    “Ms Greenwald’s documented comments/opinions were specifically [u][b]dismissed[/b][/u] as [u][b]’hearsay'[/b][/u] in the PERB opinion.”

    The problem is that she clearly wanted steeper cuts than were received, so it’s not very apparent from the record that her comments were reflective of the council’s thinking.

  8. hpierce

    [quote]so it’s not very apparent from the record that her comments were reflective of the council’s thinking.[/quote]

    That is why PERB dismissed them, David… that was one of my points. There may have been other ‘forces’ at work that will never appear in ANY record. There may be that it was as ‘transparent’ as the record now shows. I doubt we will ever know.
    However, have you thought of asking Emlen for comment? Like Steiner, Navazio, Chaney, he was ‘intimate’ to the process. It would appear that he is in the “safest” place to be able to candidly share “what happened?” (of why some things didn’t happen, which should have).

  9. E Roberts Musser

    [quote]Will he have the fortitude to make the change? We tend to doubt it.[/quote]

    Let’s give the man a chance before faulting him…

    [quote]We will probably never know what forces were truly in play when the City’s negotiating team took/failed to take the actions they did.[/quote]

    What we do know is the city/city staff should have gotten it right and didn’t. It is not clear to me who is at fault, as you say. However, moving forward, let’s hope there is more clarity/accuracy…

  10. biddlin

    You are quite correct,regarding the culprits and my apologies to Joe and Rochelle .
    “And while other bargaining groups accepted concessions, most of which the Vanguard has argued fell well short of what was needed to have occurred, our understanding of DCEA is that their last, best, and final offer to the city fell well short of even those.”
    “You see, the Davis City Employees Association 9DCEA) is fighting to the core on the last Memorandum of Understanding. Yes, the MOU that did not go nearly far enough was too much for DCEA. And that is the largest bargaining group in the city.”
    I’m sure city employees thank you for your support .

  11. Rifkin

    [i]”The city’s staff report was written by Bill Emlen, then the city manager, Paul Navazio and Melissa Chaney, the HR Director for the city. Clearly, [b]overseeing this operation was City Attorney Harriet Steiner[/b], who would have been asked to overlook the city’s legal interpretation.”[/i]

    It seems to me that, unless the others sidestepped Harriet, or ignored her advice, that she is the one to blame. Her primary job as the city’s attorney is to make sure that the processes the council and other staff follow in matters such as this meet the letter of the law. In this case it appears* that they did not, and again, unless the others ignored what Harriet was telling them, she should be blamed, and perhaps worse, fired.

    *There is, I suppose, another possible explanation: that the PERB decision is unreasonable and biased. Perhaps its membership is like so many state policy boards: of, by and for the public employee unions.

  12. Rifkin

    [i]”Yes, numerous posts have advocated for impasse and then imposition of a contract as if it would be simple to do so.”[/i]

    I strongly believe our only hope as a City is to impose terms. There is no such thing as collective bargaining. It has always been a sham, designed to favor the employee side. It is starting to destroy our city as a corporation. It is starting to make it pointless to have a city as a corporation when that city can no longer repair roads or fund the police department.

    Yet with Ord. 1303–and now the even worse AB 646–in place, imposing last, best and final offer is going to take longer and cost a lot of money. But there is absolutely no other choice, if we are going to retain services in Davis. There simply is not a rational other choice from the perspective of the people of Davis.

  13. Mr.Toad

    “It seems to me that, unless the others sidestepped Harriet, or ignored her advice, that she is the one to blame.”

    Maybe, depends on whether labor law is part of her job description.

  14. Mr.Toad

    “I strongly believe our only hope as a City is to impose terms. There is no such thing as collective bargaining. It has always been a sham, designed to favor the employee side.”

    Extreme view, don’t you think, one about to be rejected in Ohio.

  15. Rifkin

    [i]”Extreme view, don’t you think, one about to be rejected in Ohio.”[/i]

    My view is shaped entirely by the results. Call that extreme if you like.

    In fact, because I am not a labor negotiator and have never in any sense at all been involved in a collective bargaining process on either side of the table, I don’t know enough to say if the the means themselves are good or bad*. But the ends clearly are bad. They are destroying Davis, destroying Yolo County and to a lesser extent destroying our state. The ends (that is, the results of this process) do not work for the people; they work for the workers (save those who will be laid off as the well runs dry).

    There is an initiative in the early stages being floated by Economics lecturer Larry Ebenstein of UC Santa Barbara–I should note that I have one of my bachelor’s degrees in economics from UCSB, but I don’t know Prof. Ebenstein–which would get rid of collective bargaining with public employees in our state ([url]http://blogs.sacbee.com/the_state_worker/2011/07/california-bid-to-end-collective-bargaini.html[/url]). Given the irrationality of voters in California**, I don’t think it will pass.

  16. Rifkin

    *Not that it really makes a whit of difference, but I have, of course been involved in uncollective bargaining. I have bargained with a number of my employers over the years, including for my current contract, which operates on a year-over-year basis in which not much usually changes (other than my medical plan gets worse).

    I also was a principal for a few years in a real estate development company. We bought old, somewhat large industrial buildings; rehabbed them into light-industrial spaces for smaller users and we also built live-work lofts (one of which I owned in Oakland where I witnessed quite a lot of street crime, once where the cops were the criminals); and we managed them as the landlords. In that capacity, I had the experience of bargaining with contractors who built projects for us and with other contractors who provided services (like janitorial) for us. I never hired or fired anyone; and so I never sat in on anyone else’s labor negotiations or offered input on them.

    **Voters are irrational? Yes. On initiatives, the voters of California have made numerous bad choices which hamstring the legislature and the governor, and then the voters blame the people who they elected for the bad outcomes. The voters voted for Three Strikes; and the result has been a doubling of the percentage of our population behind bars. But when we lack the money for such bad policies, the voters blame the politicians, not themselves. The voters approved stupid, costly measures for high speed rail and for state-funded stem cell research. And now that we have no money for those expensive programs, the voters don’t blame themselves. The list goes on and on as to bad votes by the voters of California. I have no reason to think the voters will suddenly get smart when it comes to getting rid of collective bargaining. It is truly in the interest of the citizens. But the citizens are so often too stupid to understand that.

  17. Rifkin

    [i]” being floated by Economics lecturer Larry Ebenstein of UC Santa Barbara …”[/i]

    Correction: ” being floated by Economics lecturer [s]Larry[/s] [b]Lanny[/b] Ebenstein of UC Santa Barbara …”

  18. roger bockrath

    Rich,
    “I have no reason to think the voters will suddenly get smart when it comes to getting rid of collective bargaining”.

    Couldn’t agree with you more that the initiative process is overused and has produced some stupendously bad legislation in California. But Davis’ collective bargaining problems stem from bad negotiating skills and poor legal advice, not just the fact that public employees in California have the right to bargain collectively.
    I don’t agree that we should end collective bargaining for public employees. I just think that the City needs to dump a bunch of managers and professional staff who have clearly been promoted way beyond their level of competence. If you are going to negotiate with professional negotiators you need to employ professional negotiators!

  19. Rifkin

    [i]”I don’t agree that we should end collective bargaining for public employees.”[/i]

    Your opinion may well be better informed than mine. I would be happy if you could make the case to change my mind. Do you know of good examples in California where the outcome of collective bargaining has proved itself beneficial to the public at large?

    It is interesting to me that at the national/federal level, we don’t have any collective bargaining. And we don’t see many members of Congress–even the Dems whose jobs depend on the support of the unions–calling for a change to the CB system used in most states and local governments. The results I see are that the federal system works better. It’s not as if the result is that the public employees who work for the feds are getting shafted.

    [i]”I just think that the City needs to dump a bunch of managers and professional staff who have clearly been promoted way beyond their level of competence.”[/i]

    I have had a lot of interactions with the city staff in Davis (though I have not yet gotten around to speaking with Steve Pinkerton). I don’t know if my problem is that I don’t know other cities in our area where perhaps there top level managers are better, but my perception is that our professional staff is generally hard working, responsive, friendly and competent (though this particular issue with regard to “fact-finding” makes me wonder about the professional legal advice employed in this case).

    [i]”If you are going to negotiate with professional negotiators you need to employ professional negotiators!”[/i]

    I think you are right. Melissa Chaney, our HR director, told me maybe 6 years ago that she thought we should have an outside professional negotiator for the labor contracts. It was the Saylor council which preferred to have staff negotiate the deals; and I think anyone who is objective could see the problems with that.

    My view, even with the one pro negotiator we now have on the job, is that the real problem lies with the type of people we elect to the city council–generally people who like to be liked too much–and the incentive structure inherent in pitting a council of the type we tend to elect against avaricious labor groups.

    If we elected five Sue Greenwalds to the Council, we would not have this problem, even with collective bargaining. Sue has enough self-respect and a forceful enough personality to not be too concerned if the people on the other side of the bargaining table don’t like her.

    But most people who get elected are desperate to be popular, to be liked. If they try to drive a hard bargain with labor, they will not be popular with the people who work for the city, the people who they have to interact with all the time. But if they give in, if they are endlessly sympathetic to the workers, if they agree that the staff should get 4 months of paid time off every year and get to retire at 90% salary at age 50 and get paid to sleep on the job and they and their children and their wives get $20,000 medical plans every year for life, regardless of the costs, those members of the council will be popular with staff, they will be loved.

    Even though a large percentage of the community does not like the woeful and unsustainable and indefensible labor deals which come out of collective bargaining, most people are busy with thousands of other priorities before they ever get around to thinking about how this mismanagement affects them. And even if they don’t like it, they will vote for a Saylor because they knew him and liked him on the PTA or on the school board or he worked to fix the broken light on their street corner.

    If you ever want to read just one book on why a small group with a narrow interest will always dominate a far larger group with a broad public interest, read Mancur Olson’s classic work, “The Logic of Collective Action: Public Goods and the Theory of Groups.” It will make it clear why collective bargaining cannot work in the public’s interest.

    Due to the “I want to be loved” nature of most people, and certainly most people we elect to the Davis City Council, the instructions the council has always given to our staff–and likewise would have given to a pro negotiator–would never produce a good outcome for the people of Davis. The logic of collective action would not allow it.

    We are in a very serious long-term crisis which has nothing to do with the bad economy. We have at least four people now on the council who say they are willing to do the right thing. But until they do it, I have my doubts. Mancur Olson lives.

    Oh, and by the way: the school board is exactly the same in this respect. They all prefer to be loved by the teachers and other employees. They too never do the right thing from the perspective of the public which is paying the bills.

  20. Rifkin

    [i]”But most people who get elected are desperate to be popular, to be liked. If they try to drive a hard bargain with labor, they will not be popular with the people who work for the city, the people who they have to interact with all the time.”[/i]

    For what it is worth, I have heard similar criticisms of corporate boards of directors. They endlessly fail to drive a hard bargain with the top managers of companies, because the members of the board so badly want to be liked by those managers. Warren Buffett has said this many times. T Boone Pickens and Carl Icahn have said it, as well. It seems to take a rare chairman of the board to get a reasoable outcome. Most would rather give away the store than crack the whip. If they are nice to the CEOs, the members of the board will be rewarded, often, with seats on more boards and with golf club memberships and vacations at expensive resorts down the road. If they are tough with the CEOs, they get headaches.

  21. Mr.Toad

    “Do you know of good examples in California where the outcome of collective bargaining has proved itself beneficial to the public at large? “

    There are lots of places where there has been little acrimony and much fiscal responsibility. Look no further than Woodland schools. Few layoffs and no shortened school year. Why? Years of responsible collective bargaining.

  22. hpierce

    [quote]If you are going to negotiate with professional negotiators you need to employ professional negotiators! [/quote]
    @ Roger B.. in your opinion, who are the “professional negotiators” for any of the 5 employee groups? [DCEA, PASEA, Fire, Police, Management (other than Dept Heads)] Individual Department Heads used to have one contract.. now, as I understand it, they have a “personal” contract…

  23. hpierce

    [quote]If you are going to negotiate with professional negotiators you need to employ professional negotiators! [/quote]
    @ Roger B.. in your opinion, who are the “professional negotiators” for any of the 5 employee groups? [DCEA, PASEA, Fire, Police, Management (other than Dept Heads)] Individual Department Heads used to have one contract.. now, as I understand it, they have a “personal” contract…

  24. Mr.Toad

    “For what it is worth, I have heard similar criticisms of corporate boards of directors. They endlessly fail to drive a hard bargain with the top managers of companies, because the members of the board so badly want to be liked by those managers.”

    Don’t you mean they have interlocking directorships. They all appoint each other and vastly overcompensate each other often for under performance. Of course taxing the rich more could alleviate some of the deficits and contraction of the public sector.

  25. Rifkin

    [i]”Look no further than Woodland schools. Few layoffs and no shortened school year.”[/i]

    I’ll take your word for it that is the outcome they achieved. That makes it obviously different than in the DJUSD, where the teachers agreed to a furlough only by shortening the school year (a move which, in my opinion harms the students who need help the most. I favor a much longer school year for children who need more time to keep up with grade level reading, writing and math. If good teachers want professional level salaries, then it should be no problem that they work all year round.).

    That raises the question: what or who in the Woodland district made the difference, if the CB process itself is the same? Was it the leadership of the Woodland teachers? Was it the elected board of their school district? Was it thier superintendent? Or the parents? I’m curious to know why they got a better outcome.

    As to city governments, almost all of our comparable cities* in our region have gotten themselves into similar circumstances through collective bargaining, where they are deeply in debt to their employees and have future obligations they lack the revenues to cover. Some have made very serious reforms. Davis has not yet made most of the changes it needs to make; and we have a workforce which I am reliably told (by many employees from every department) feels put upon already, before the real reforms have been put in place. The morale of the city’s workers seems to be low; and it will only get worse when deep cuts are made in staff or when we actually make some real reforms.

    *Yolo County is far worse off than the City of Davis. They seem to have no idea what they need to do to change; and I don’t see the leadership there. I expect that someone as smart and decent as Matt Rexroad would be raising hell. Maybe he is behind the scenes. But on the surface, it appears Yolo County under Don Saylor is just like the City of Davis was under Don Saylor. It’s on the road to perdition. … And I should note one more thing for the liberal readers of this blog: one of the County’s main jobs is to provide services for the poor, especially with regard to healthcare, prenatal services, home assistance, public health (like vaccinations), mental health programs, food assistance and so on. The real victims of our county’s labor mismanagement are our most helpless citizens, many of whom are elderly and desperate. And it is only going to get worse and worse with the county’s unsustainable labor practices.

  26. David M. Greenwald

    “Look no further than Woodland schools. Few layoffs and no shortened school year. Why? Years of responsible collective bargaining. “

    Actually:

    “When legislation is rushed to passage without public debate, the result too often is dysfunctional. Such is the case with a law that was added at the last minute to the state budget package, requiring school districts to maintain this year’s level of teachers and programs in the 2011-12 school year.

    The new law also restricts fiscal oversight of school district budgets by county offices of education, an authority they have had for a couple of decades. “

    “However, the bill also requires school districts to negotiate with teachers’ unions to reduce their pay if the school year is shortened.

    With layoffs removed from the table, teachers’ unions will have a huge advantage in negotiating with school administrators on how to deal with revenue shortfalls.”

    From the Daily Democrat July 14, 2011.

    And from June 25, 2011:

    “The Woodland Education Association and the school district have been unable to reach an agreement on salary and benefits, leading to state mediation.

    The WEA is the bargaining unit for certificated staff, including teachers.

    “It is with sadness that I report the Woodland Joint Unified School District and Woodland Education Association have declared ‘impasse’ in their negotiations and will seek assistance from the Public Employment Relations Board,” said Superintendent Debra LaVoi in a statement Thursday.”

    Care to retract Mr. Toad?

  27. Rifkin

    [i]”Don’t you mean they have interlocking directorships. They all appoint each other and vastly overcompensate each other often for under performance.”[/i]

    That is the result of how corporate boards, most boards anyhow, deal with their managers. It’s not the other way around. It is not the case that they have interlocking directorships and that causes them to vastly overcompensate the top 10 or so executives.

    I should note that there are vast exceptions in corporate America: those companies which are run by mavericks like Warren Buffett; and those companies whose stock in still concentrated in the hands of the founders or the children of the founders. So with a Wal-Mart or most of the better Silicon Valley companies, you don’t find the same sort of gilded stock deals given to CEOs that you find in older American stock companies which have publicly traded stocks. (I should note that Buffett is highly critical of companies like MicroSoft and most computer companies that give out too many stock shares* to their managers as compensation.)

    *The way these deals usually work is they offer some tens of millions of dollars in stock options to their CEO or other top officer when the person comes on board, and attached to those options is a very low price, always far lower than the market price. Then if the new person is successful in increasing the stock’s price, he or she will buy up all the stock options (from treasury stock) at the low price and sell it all for a huge gain at the new, current market price which is much higher. The reason this does not sit well with Buffett is because very often the gains to any one stock are gains achieved by every company in the same sector that company is in. Or they are due to the company making the most of R&D achievements which began long before the new CEO was hired. Or they are simply due to a strong period of GDP growth which drove up the entire market. Buffett’s point is that you don’t want to pay people for huge gains which were not really of their own doing. He is especially critical when these kind of stock-options programs are given to executives who are not the top person, but were along for the ride. What Buffett says is a far smarter plan is to reward good managers for their good performances with big cash bonuses. That is how most private equity firms pay their top managers. … Also, in corporate America there is almost always a moral hazard problem in publicly traded stock companies (one which does not exist when the companies are privately traded). The top managers have good reason to take on big risks which might harm the long-term prospects of their companies. That is what happened with so many of the big banks in the financial crisis of 2008. It was not such a big deal that Bush and then Obama bailed out those market losers. I disagreed with the bailouts, though. The bigger problem is the incentive structure to these managers. They gain tens or even hundreds of millions of dollars if the risks they take pay off big for their companies. But they have very little or no personal downside costs if the risks turn out to be bad. In other words, they are gambling with shareholders’ money, not their own. So in the financial crisis, what we saw was that all the Wall Street investment houses which went bankrupt or would have gone bankrupt but for the bailout were all publicly traded stock companies. Yet in total capitalization, most Wall Street companies are private equity firms. Not one of those took on the subprime risks; and not one of those needed a bail-out. The difference is those Wall Street companies have real downside risk. And so they manage their risks much better.

  28. Rifkin

    [i]”Care to retract Mr. Toad?”[/i]

    So if Toad had that wrong, I still await: where is a good example where the outcome of the collective bargaining process in our state has served the best interests of the regular citizens, especially those who need or depend upon public services?

    I also should pose this to those who believe in collective bargaining in public employment on a practical basis: Why is it unnecessary for federal employees?

    People say as if it is a matter of fact that getting rid of collective bargaining for public employees is ipso-facto “anti-labor.” But then federal employees seem to do perfectly fine without it. How anti-labor can that reform really be? I know it is popular to hate people like Gov. Walker of Wisconsin for the reforms he instituted. Yet doesn’t the result Walker achieved put his state on the same footing that President Obama and all previous presidents have had in Washington, D.C.?

    From a good government perspective the negatives of collective bargaining are very clear to me. I am still waiting for the evidence that the opposite is true (at least in some cases in our state).

  29. E Roberts Musser

    [quote]DMG: Will he have the fortitude to make the change? We tend to doubt it.

    ERM: Let’s give the man a chance before faulting him…

    DMG: That’s not faulting him, it’s throwing the ball into his court.[/quote]

    I don’t think the statement “We tend to doubt it” is merely “throwing the ball into his court”. Rather it is saying you very much doubt Pinkerton is up to the job, without giving him any real chance to show his true colors first…

  30. Rifkin

    [i]”Rather it is saying you very much doubt Pinkerton is up to the job, without giving him any real chance to show his true colors first … “[/i]

    Elaine, I don’t think your view of David’s words and his explanation of his words are mutually exclusive.

    When David wrote, “Will he have the fortitude to make the change? We tend to doubt it,” that means to me that [i]the burden of proof[/i] lies with Mr. Pinkerton; and thus, until he solves the real problems within the City of Davis as a corporation, there is going to be reason to doubt him or to doubt anyone in his position.

    To my mind this is rational thinking. We have wound ourselves into a terribly difficult knot. It’s not clear anyone can straighten out the rope. And until someone makes real progress toward that end, it is reasonable to think it won’t get done. Concluding that is not an indictment against the individual (Pinkerton). It’s an indictment against the mess we are in.

  31. roger bockrath

    Hpierce,
    “@ Roger B.. in your opinion, who are the “professional negotiators” for any of the 5 employee groups? [DCEA, PASEA, Fire, Police, Management”

    Unless I,m missing something here, City of Davis is negotiating with the union negotiators representing each of these bargaining units. My suggestion is simply that the city hire professional negotiators to negotiate with these professional negotiators instead of using staff personnel who have a personal stake in getting along with fellow City employees.

    Rich,

    “I also should pose this to those who believe in collective bargaining in public employment on a practical basis: Why is it unnecessary for federal employees?”

    I suppose one reason Federal employees are forbidden from collective bargaining is because, unlike State employees, they work for a “corporation” which has no constitutional requirement to balance the budget. The feds are in a position to pay their employees very well and just keep raising the debt ceiling.

    The City of Davis has chosen to allow collective bargaining so our employees don’t get hosed. Now we need to negotiate professionally with those bargaining units so Davis taxpayers don’t get hosed.

    Collective bargaining, for both public and private entities, is supposed to level the playing field. The firefighter’s union fiasco has demonstrated that the labor team has better players than the City’s management team. Time to recruit!

  32. E Roberts Musser

    [quote]To my mind this is rational thinking. We have wound ourselves into a terribly difficult knot. It’s not clear anyone can straighten out the rope. And until someone makes real progress toward that end, it is reasonable to think it won’t get done. [/quote]

    Assuming the worst is not giving the man a chance… I look at the glass half full, not half empty… 😉

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for