The teachers’ strike was big news in the major media. It’s settled, the teachers are back to work, well, except for Columbus Day and a day of teachers’ conferences, they are sorta back. The city is left with a billion dollar budget deficit and few solutions to solve that little problem. Local media were strongly in favor of the teachers, but now they have started to address the billion dollar problem. Sitting in the stands is far easier than being on the field. You get to second guess everyone, players, coaches, refs, etc. That’s what media does best when they aren’t decked out in cheerleader costumes and pompoms rooting for Obama.
If you question that, why is the gasoline price run-up so quiet when it was so loud when Bush was president?
On opening day of the Chicago Symphony Orchestra attendees found there was no show. Musicians went on strike. Their paltry $175,000 a year salary average was far too low. The strike only lasted 48 hours. The musicians got a 4.5% raise over the next four years.
These musicians aren’t like Big Bird. Their product doesn’t sell for face value. They cover only 50% of the performance cost with tickets. If your product is only worth half what it costs to make the product, should your be asking for more? Where does the other half come from?
Patrons, of course.(Millionaires and billionaires) But, if you add the ticket sales and the $16.8 million in unrestricted patron contributions together, it’s still not enough. They had to dip into endowments for $11 million. Still, they had a million in shortfall.
This is where it starts to sound like government. Pensions costs are skyrocketing. Then management spent $110 million in renovations in 2007. They floated a bond for $145.5 million. Then to protect from interest rate increases on their floating rate bond they bought credit swaps. As interest rates went down, not up, the cost of the swaps has gone through the roof, it will cost $14 million to get out of the swaps contract.
The orchestra business is bad business. Philadelphia is emerging from bankruptcy. Strikes and lockouts linger in Atlanta and Detroit. Boston and New York are losing money. (Solyndra)
So let’s sum it up. The public won’t pay enough for the product to cover costs. Patrons keep throwing money into the pot to balance the books, but it’s not enough.(rich people are not rich enough to support the country) Excessive spending has created a huge debt that requires debt service. But, mismanagement created a bad credits swaps decision that is creating a bigger deficit. Too generous retirement plans are underfunded. Still, workers who aren’t worth the price they are being paid, based on ticket prices, strike for more and get a raise.
It’s a microcosm of America. The only good news is there are no tax dollars in this debacle. As the hat they have to pass gets bigger and bigger it may be hard to fill. If these musicians are on the street there is zero chance they can be paid what they make on this job. The old supply and demand issue. If they were making a profit on their product like the NFL, a strike makes sense. But, striking when your product value is less than 50% of the cost to produce your product is strange. But, settling the strike is even more bizarre.
