Strike!

by Karl

At 3:00 am tomorrow (Monday), the Czech Republic is scheduled to start being a mess.  Transportation workers have called a strike to protest the government's plans for changes to the pension system.  Trolleys and buses won't run.  There are discussions about whether subways will operate (that only affects Prague, since it's got the only subway system in the country; the Prague public transit authorities are hoping to provide Sunday service).

According to  Saturday's Mladá fronta dnes, the subway carries about 1 million travelers daily.  If you figure that for most people that's two trips (to work, and back), then that's half a million people, in a city of 1.3 million (plus an ungodly number of tourists).

The paper quotes a transportation expert who says that urban public transit carries two thirds of travelers [presumably that's in Prague specifically, but I imagine it's similar in other Czech cities].  So as the newspaper explains, "If subway employees join the strike, we can expect a total collapse of transportation."  There's not much point in heading out with your car.  As the quoted expert continues, "If [public transit] doesn't run, it's clear that there's no way that the road capacity can bear such an onslaught.  The result will be things shutting down completely."


As in any big national issue, the most important question is, "How does this affect me?" or in this case, "How does this affect us?"  My teaching at the university is done, so that's not a pressing problem, but the boys still have school--and it's Activities Week, so staying home is Not An Option.  We're very lucky on the morning end, because there's a shuttle that runs from Riverside's preschool to the primary school, and the preschool is less than 10 minutes away by foot.  The shuttle may get stuck in traffic, but the boys should arrive eventually.

Getting home, we usually rely on the bus, but there is also a train option.  The train tracks are right behind the school and the platform is a little bit north.  The train home feels inconvenient, because you have to go all the way down the platform to get to the underpass, but it's certainly a fine option.

Or not.  According to the Minister of Transportation, "The railroads will be fully operational, except that trains won't be running."  OK, so that's out.  We have friends at school who drive and who have been generous with rides in the past, so that's a possible solution, but of course if the roads are a mess, it would be a slow ride.

If Garrett were a couple weeks further along in his bike progress, riding would be an option--yesterday Ben and I did a lovely ride through Stromovka, over the river, downstream along the right bank for about 4 km, across on a ferry, and back on the left bank, and it took us right past the boys' school.  But Garrett's not quite there yet, so walking may actually be our best option.  According to Google Maps, it's 3.5 km (2.2 miles) from school to our house.  After the roughly 8-km day we did at Plitvice Lakes, we know the  boys can do it, so that's our back-up.

Of course other people's lives will be far more disrupted than ours.  A friend is heading to the eastern city of Ostrava today by train, planning to come back tomorrow ...  As the newspaper says, "The only means of transport that for now is not supposed to affected by the strike is air travel.  The question is whether anyone will be able to get to the airport on time."  A straight line from Berlin to Vienna runs right through the Czech Republic, so that's what the train between those two cities does.  "If the international line from Berlin to Vienna is stopped at the Czech border, travelers could turn to the courts for compensation," according to the lawyer Jan Černý.

In its effort to be useful, the newspaper solicited advice from people with more experience of such work actions.  The sidebar headline reads, "Parisians advise Praguers how to live with a strike," the joke being that strikes in Paris are a dime a dozen--that was even the motif for France in David Černý's artwork Entropa that Kate documented in an earlier post.  But as our friends Chad and Chantal explained, from their experience living in Paris, the strikes are frequent, but it's a few lines at a time.  One part of the system or another is shut down, but everything else is up and running, or the subways run but only one or two trains an hour.  It's obviously a hassle, but it's manageable.  What's planned for Prague is a far more extensive action.

Then again, it may not happen.  I read this morning in the on-line version of the newspaper Lidové noviny, a court has issued a preliminary finding that bans the strike.  The newspaper says the unions now face three options.  "They could call off the planned strike entirely, but given the tense atmosphere, that's unlikely.  So we can expect rather that the strike will be postponed for several days, or that the unions go ahead with the Monday strike despite the injunction."  So we'll just have to wait and see.

As for the motivation, I'm sort of in favor of the ends, but uneasy about the means.  According to Mladá fronta dnes, the unions are mainly protesting against the proposal to raise the retirement age to 70.  The state-run pension system faces the same basic challenges as others throughout the industrialized world: the proportion of retirement-age people (the "dependency ratio") is increasing, and the rate of wage growth isn't high enough to support the benefits that have been promised on the basis of the existing tax rates.  Mathematically, the only three options are to raise the retirement age, lower the rate of benefit payments, or increase the tax rate, or various combinations of those three things.  The basic argument for raising the retirement age is that people live longer than when these systems were set up, so it's reasonable to expect them to work longer as well.  The strongest counterargument is that it's one thing for a professor or a newspaper pundit to work until 70, but quite another for a steel worker.  A trolley driver's job is not as physically strenuous as a steel worker's, but it's probably not as intellectually stimulating as a professor's, and I don't know that we want to be forcing every bus driver to stay behind the wheel until 70 if he/she wants a full pension.  So I'm hesitant about raising the retirement age.

My bigger complaint with the proposed changes is the inclusion of some sort of privatization.  Right now, you pay a certain portion of your salary into the state pension system.  Under partial privatization, some of that money would go instead into an investment fund, where you'd have a certain number of options from which to choose.  The idea of choice sounds great, but in setting up systems like these there's a necessary tension between choice and risk.  If the government is going to force you put part of your money into some sort of private entity, it has a certain degree of responsibility to keep you from doing blindingly stupid things with that money.  (What you do with money the government hasn't forced you to save is your own business.)  So it has to set some bounds on what investment vehicles are allowed within this "privatized" part of the pension system.  Now the government is in the tricky business of deciding which investments are "safe enough" to be included, which is a hard thing to do in itself, and it introduces the possibility of bribes and other skullduggery: if I'm running an investment fund, it's worth a lot of money to me if the government approves mine as a place for people to deposit their mandatory pension payments.  In a culture that has a saying, "He who doesn't steal is robbing his own family," I'd be a fool not to use any means at my disposal to influence the politicians' decision.  And even setting aside corruption, there's the basic tradeoff between risk and return: if one investment has a higher expected return than another, it also likely has a greater chance of going under.  So in setting boundaries that protect people against losses from the savings the government is forcing them to do, the rules are necessarily giving up some potential upside.

Besides individual choice, the other big argument for privatization is that it can relieve the government's fiscal problem by bringing in the power of the stock market.  Under the current system, money comes in from taxes and goes out as benefits.  If you need more money for benefits in the future, you need more money coming in as taxes.  The vision of a private system is that people will save money now, then draw down that money in their retirement, and part of the burden will be shifted off of future taxpayers.

This is an appealing idea, but it's fundamentally confused.  When you save for your retirement, you don't save the food, electricity, clothes, and vacations that you will be consuming in your 70s.  You don't have a closet in your house stuffed with the doctors, nurses, and X-ray machines that will be providing your medical care in your advanced years.  What you're putting aside is claims on stuff that will be produced when you're retired.  What's available in your retirement depends on the productivity of those still working, and that reality isn't changed by whether your pension comes out of current taxes or from selling part of your stock portfolio.  One way or another, the ownership of things being produced has to be transferred from the people producing them, to you.  Those people can be taxed, and the taxes can be given to you.  Or they can be encouraged--or forced--to put savings into the stock market, and their savings can be used to buy out part of your position, so that you can go buy food or pay the doctor.  One way or another, if a retiree is consuming something, a person currently in the workforce is relinquishing his/her claim on it.  You've heard it before, but it's still true that there's no free lunch, and the privatization of pensions is no exception.  The average person can't be made better off by it.  The only people sure to win are the fund managers, who will have a much bigger pot of money on which to make commissions.

So that's my biggest concern with the pension changes (and why I stay away from the word "reform," which suggests a useful, necessary change).  But according to the brief mention in the newspaper, the unions are focused (understandably) on the retirement age.

And then there's the whole issue of public employees in transportation using their position to hold the state (and the public) hostage.  This one is trickier.  A blanket prohibition on striking seems wrong, because any employer, including the state, can try to take advantage of its employees, and the possibility of a strike can be a useful counterweight.  On the other hand, a strike in transportation (or education) is extremely disruptive, and it gives the unions involved in it a tool that can easily be abused.  I'd say it all depends on the seriousness of the issue behind the strike--when people went on strike to bring down the communist regime in 1989, I didn't have a problem with that.  The pension issue is serious, but I don't see how it rises to the same level as 1989--though it is expected to be the biggest labor action since then.

Reading some of the on-line comments from newspaper readers, there are the more conservative ones saying that this is a new red terror, with the unions destroying democracy, while other readers (presumably inclined more to the left, though it's no always as clear from their writings) say that the government has forfeited the people's confidence.  Without going as far as calling it red terror, I'm inclined to agree that the strike tool doesn't fit the pension issue.  It seems more like a hasty substitute for the long-run job of building up a political base.  Neo-liberal approaches to problems have come to be seen the default solutions that "everyone knows" are correct in principle, with the burden of proof falling on any alternative to make its case.  But somewhere along the line since 1989, the social democrats stopped really being about any particular idea, and sunk deep into ripping off the taxpayers, sometimes taking turns with ODS, its main more conservative opponent, sometimes in coalition with it.

At the same time, there's widespread and understandable disgust with the government as well.  It's a coalition that represents 57% of the seats in parliament, but it's done precious little on the anti-corruption platform that swept it into power, and the smallest of the three governing parties is drowning in its own private scandal, where the vice-chairman of the party was paying people to be loyal to him rather than to the official chairman, and the entire party seems to have been constructed as a vehicle for him to gain influence in government as a way to steer contracts toward his private security agency.  At the on-line site for Mladá fronta dnes, which isn't particularly left-wing, 36% of the respondents supported not just the strike, but the threat to block roads, which is a much bigger deal.  At Lidové noviny, which tends to have a lot more cheer-leading for laissez-faire and dismissal of anyone to the left as a "socán" (rude slang for a socialist), 28% chose, "I don't like the government reforms, so I support the strike," 5% chose, "I don't like the reforms, but I don't agree with the strike," and the remaining 66% went with, "There have to be some sort of reforms, the unions are overdoing it."  An unfortunate set of options: you may think there need to be some reforms, and you may think the unions are overdoing it, but you may think that the particular reforms are a bad idea that are worse than the status quo.

The upshot is that, while the government is legitimate in the legal sense of having been duly elected and installed, its moral authority has been pretty thoroughly eaten away in the last 11 months.  The prime minister says that the unions will be billed for all the costs associated with the strike (he mentioned the number 200 million crowns a day, about $12 million), but when I read that I think of the billions of crowns lost each year to corruption, which his government seems unwilling to tackle.  Though the prime minister means well, he seems to lack either the organizational backing or the spine to stand up to the "godfathers" who want to continue to use his party as a conduit to the public trough.  (It's been anything but an edifying year, following the local political scene.)

It's tempting to see the strike as comeuppance for an ideology of greed, if only I had a better impression of the union leaders.  And if we didn't have to solve the problem of getting boys to school.

Update: I didn't finish writing this before we went out for the day to meet up with old family friends of Kate's who are in town for a few days.  I checked on-line Lidové noviny when we got back, and the most recent reports are that the strike won't happen until Thursday but that it will be "živelný," a word that my go-to on-line dictionary translates as either "elemental," "unrestrained," "uncontrolled," or "spontaneous." We'll let you know which it is, if any of those ends up being appropriate. The plan is to shut down public transit in Brno, and to seriously limit it in Prague and other cities. Supposedly no trains will run, neither passenger nor freight. If it's only a 1-day strike, I'm guessing that has limited consequences, but every day the trains come through Prague bringing coal from North Bohemia to various parts of the country to run power plants, and I don't know how much coal is stockpiled at the plants.