Last Friday, I wrote on city unions and #OWS — a familiar point by now, but might be of interest:

One of the movement’s initial organizers, the anthropologist David Graeber, is a committed anarchist, who sees the encampment in New York City’s financial district as a post-capitalist society in miniature, in which direct democracy triumphs over market values. For Graeber, the point of the movement is not so much to reform the system — that is, democratic capitalism — but rather to challenge its moral foundations. For Graeber and the young anarchists who see him as a leading light, the fight over, say, public sector pensions isn’t really the main attraction.
The union leaders who’ve embraced the movement see things a bit differently. They see Occupy Wall Street as an attempt to capitalize on a media-saturated moment to advance their core goals. Among those core goals is protecting public sector pensions. By juxtaposing demands to preserve existing benefit rules against attacks on greedy bankers, union activists figure they have a slam-dunk case. There is, however, another way of looking at the situation.
During the late 1990s, when New York City’s coffers were flush, annual pension contributions averaged about $1.4 billion. In fiscal year 2012, the city has budgeted $8.4 billion for pensions. To get a sense of what exactly this $7 billion increase means for the city, it helps to know that the entire cost of the Police Department in fiscal year 2012 is around $8.7 billion.The police have been taking a lot of heat during the Occupy Wall Street protests. Indeed, one of the more colorful chants has been “f*** the police, from New York to Greece.” Yet it is also true that the NYPD has helped make the city dramatically safer in recent decades, which counts for a lot to those of us born and raised in the five boroughs and who’ve been the victims of violent crime. By hiring more police officers, we could deter more crime. This, in turn, would reduce the number of arrests and the number of women and men the city incarcerates every year. The trouble is that soaring pension costs make hiring more police officers extremely difficult.
Wait a second. Why can’t we just increase taxes on New York City’s richest households, many of them headed by greedy bankers? Part of the answer is that the greedy bankers can simply flee the city, as many already have. But that’s not the main issue. The traditional pensions city unions are defending, down at the Occupy Wall Street protests and through their lobbyists in Albany, guarantee rates of return in the neighborhood of 8 percent a year. If the stock market actually delivers less than that, taxpayers must pay the difference.
That’s right. Even if the economy takes a dive, the city’s pension outlays must grow as though the economy is booming. But when the economy takes a dive, so do tax receipts as people lose their jobs or take pay cuts. The city thus finds itself in a bind. Should we cut services that New York’s working families depend on? Should we raise taxes right when the city has taken a huge economic hit? Or do we start asking public employees to start collecting retirement benefits at 65 and move new workers into saner pension plans?

I go on to discuss staffing policies at city agencies. As Alon Levy has argued, the real issue isn’t compensation so much as staffing. We can easily sustain high salaries if we organize the public workforce more efficiently. By retaining only those workers we need to deliver a given quality of service, we can pay them handsomely while reducing the total compensation bill.

And in today’s edition of The Daily, I address discrimination against Asian American applicants in elite college admissions.