Scott Walker will learn that there is a heavy price for union busting. If it can be done in progressive Wisconsin today can it be done across American tomorrow?
It is just June yet, but I am sure it feels like November in Wisconsin, the picturesque Midwestern state where governor Scott Walker is sought to be recalled. It is only for the third time in US history that a recall election for a governor is happening. (A recall election—also called a recall referendum or representative recall—is a procedure by which voters can remove an elected official from office through a direct vote before his or her term has ended. In some states, a recall triggers a simultaneous special election.)
The atmosphere is electric, the election is close and it has got the nation’s attention; but it is also very divisive. Public opinion in the state is split right down the middle. Jacob Carrel of Madison, Wisconsin, who I spoke to told me that a opinion poll over the weekend shows 49% of the electorate in favour of governor Scott Walker and 49% in favour of Tom Barrett—the Democrat challenger—with 2% undecided. But opinion polls are aplenty and The Huffington Post opinion poll puts governor Scott Walker slightly ahead.
Going ahead, both Democrats and Republicans have rolled out their heavyweight campaigners—Bill Clinton was in Milwaukee for a raucous rally over the weekend to gather the faithful. Bill Clinton is enormously popular in Wisconsin and had carried it during both his elections. He is probably the most important Democrat campaigner today after President Obama. Many Republican governors have visited the state but neither President Obama nor Mitt Romney has gone there so far. The probable reason is that neither of them can afford to be seen backing a loser and nobody knows who that will be on Tuesday.
The importance of Wisconsin to President Obama is clear. He won Wisconsin by 16% points in 2008 and the last Republican presidential candidate to win it was Ronald Reagan, although George W Bush came close to winning on both occasions when he ran for president. But any calculation of 270 electoral votes for President Obama includes Wisconsin.
(Each elector gets one vote. Thus, a state with eight electors would cast eight votes. There are currently 538 electors and the votes of a majority of them—270 votes—are required to be elected. Since Electoral College representation is based on congressional representation, states with larger populations get more Electoral College votes.)
The governor’s recall election has suddenly put Wisconsin in play and Mitt Romney is setting up more offices there. It should also be mentioned that though President Obama carried Wisconsin in 2008 during the mid-terms in 2010 the Republicans swept the polls when because of the Great Recession many of the incumbents were defeated. Some other polls show Scott Walker, the Republican governor, leading in some polls but the Democratic challenger ground game is supposed to be in tip-top shape and ultimately it may all come down to turnover.
It is believed that a smaller turnover will favour the Republicans whereas a large turnover will favour the Democrats. In the election of the governor in 2010, $37 million were spent but the recall is likely to cost approximately $60 million. Jacob also tells me that the Republicans have probably outspent the Democrats by a margin of 12:1 and whereas most of the money obtained by the Republicans is from outside the state most of the money obtained by the Democrats is from within the state. Cities like Madison, the capital, which is a University town as also Milwaukee which is quite industrial are Democratic strongholds whereas the rural areas are Republican strongholds.
So what is all the fuss about and why the recall? Governor Scott Walker has followed the principles of fiscal conservatism—he has sought to rein in the fiscal deficit and make spending cuts reduce taxes. But more than that he has taken on a principal Democratic constituency the trade unions and has sought to weaken them if not destroy them. And this is particularly ironic as the first government workers union was established in Madison in 1932. He has prevented Unions of Western Public Workers from collective bargaining and the issues subject to collective bargaining are now restricted. He has upped their pension contribution of the workers and he has stopped automatic contributions to the unions. This is more than conservatism. This is union busting. And the Democrats had hit back and mounted a fierce challenge by organizing a recall.
Scott Walker will learn whichever way the election goes that there is a heavy price for union busting. But this has also made Scott Walker a poster boy of conservatism in America. If it can be done in progressive Wisconsin today can it be done across American tomorrow?
But will it affect President Obama in November. That is not certain. While the Republican base is highly charged, so are the Democrat followers. Further, nothing like the amount being spent in Wisconsin per capita will be spent in November and an economist survey has that unemployment in Wisconsin fell to 6.7% the last year, much below the national average. This might help the incumbent Scott Walker in the recall but will help President Obama in November as he is the incumbent.
I will end with what Jacob told me. He said a friend’s mother who is 80 years old is campaigning door-to-door for Tom Barrett the Democratic challenger. That is how high the stakes are.
(Harsh Desai has done his BA in Political Science from St Xavier's College & Elphinstone College, Bombay and has done his Master's in Law from Columbia University in the city of New York. He is a practicing advocate at the Bombay High Court.)
Credit rating serves a useful purpose but its severe limitations need to be...
Watch if the market closes above today’s high for a short rally
While the market pared its gains in the second half of trade on a weak rupee, a minor bounce-back in the last hour ensured a positive close. Yesterday we had mentioned that if the Nifty manages to hold itself above the day's low we may the see the index going up to the level of 4,910. Today the index managed a higher high and a higher low, showing the benchmark's resistance to fall further. If this behaviour continues, we may soon see some gains. The National Stock Exchange (NSE) saw a lower volume of 49.71 crore shares.
The market opened in the positive tracking the firm Asian benchmarks in morning trade as G7 (Group of Seven) finance ministers are expected to hold a conference call later in the day to discuss ways to end the spiralling Eurozone crisis. The Nifty opened 21 points up at 4,869 and the Sensex opened above the 16,000 level at 16,065, a gain of 77 points over its previous close.
A minor bout of profit booking in early trade amid a fair amount of volatility saw the indices dipping to their intraday lows at around 9.40am. At the lows, the Nifty went down to 4,864 and the Sensex retracted to 16,023.
Bargain hunting at lower levels lifted the market higher in subsequent trade helping the benchmarks in the noon session. At this point, the Nifty touched 4,899 and the Sensex rose to 16,138.
The HSBC India Services Purchasing Managers Index (PMI)-an index of Indian services sector activity-bounced to a three-month high of 54.7 in May from 52.8 in April, driven by robust growth in new orders and optimistic business outlook.
A mixed opening of the European markets and an 18 paise fall in the rupee to 55.84 resulted in the market losing steam and paring its gains to touch the previous day's close in post-noon trade.
However, the market managed to claw back from the lows in the last hour and ensured a green close. The Nifty settled 15 points higher at 4,863 and the Sensex finished the day at 16,021, a gain of 32 points.
The advance-decline ratio on the NSE was positive at 848:750.
Among the broader markets, the BSE Mid-cap index gained 0.33% and the BSE Small-cap index rose 0.21%.
BSE Capital Goods (up 2%) topped the sectoral gainers. It was followed by BSE Bankex (up 0.82%); BSE Power (up 0.80%): BSE Oil & Gas (up 0.71%) and BSE Healthcare (up 0.39%). The top losers were BSE Realty (down 1.37%); BSE Fast Moving Consumer Goods (down 1.09%); BSE Consumer Durables (down 0.67%); BSE Metal (down 0.27%) and BSE Auto (down 0.21%).
The key gainers on the Sensex were Larsen & Toubro (up 3.08%); NTPC (up 1.98%); State Bank of India (up 1.66%); Hindalco Industries (up 1.60%) and BHEL (up 1.47%). The losers were led by Tata Motors (down 3.15%); Bharti Airtel (down 2.58%); ITC (down 1.89%); DLF (down 1.48%) and Coal India (down 1.09%).
L&T (up 2.94%); Grasim Industries (up 2.72%); Reliance Infrastructure (up 2.71%); IDFC (up 2.57%) and Cairn India (up 2.33%) topped the Nifty. The main laggards were Ambuja Cements (down 3.29%); Tata Motors (down 3.17%); Siemens (down 2.64%); Bharti Airtel (down 2.31%) and ITC (down 2.22%).
Markets in Asia closed in the positive on hopes that the G7 would come up with plans to curb the debt problems plaguing Europe. Investors are also speculating that the US Federal Reserve might announce some initiatives on pressures in the jobs market.
The Shanghai Composite added 0.15%; the Hang Seng rose 0.40%; the Jakarta Composite advanced 1.73%; the KLSE Composite gained 0.33%; the Nikkei 225 climbed 1.04%; the Straits Times rose 0.50%; the KOSPI Composite surged 1.05% and the Taiwan Weighted settled 1.53%.
At the time of writing, the CAC 40 of France rose 0.47%; Germany's DAX was down 0.87% while FTSE 100 of Britain was closed for the Queen's Diamond Jubilee celebrations. On the other hand, US stock futures were trading in the red.
Back home, foreign institutional investors were net sellers of shares totalling Rs637.14 crore on Monday while domestic institutional investors were net buyers of equities aggregating Rs446.23 crore.
Wind turbine major, Suzlon Energy, has launched a new machine designed for low wind speed sites. Featuring a rotor diameter of 111 metres and a swept area of more than 9,500 square metres, the S111 is the latest generation of Suzlon's 2.1 MW fleet. The product was launched at Windpower 2012 in Atlanta. Suzlon Energy closed at Rs17.15 on the NSE, down 0.58% from its previous close.
Jet Airways is set to launch a second service between Mumbai and Kuwait from 8th June. The new service will operate four flights per week to the Gulf destination. With this launch, Jet Airways will now offer 11 flights a week from Mumbai to Kuwait. The stock declined 0.41% to close at Rs317 on the NSE.
IT services provider Subex has successfully completed the TM forum business metrics automation certification on their ROCware platform. The product has been successfully certified against business metrics automation interface version 1.0 and the revenue assurance metric groups in the Business Performance Measurement System Version 5.6. The stock gained 0.22% to close at Rs22.65 on the NSE.