The Financial Times -- which has one of the most ridicules copyright policies of any newspaper -- has a story today about the city of Vallejo California. They had to declare bankruptcy, so now there are almost no city services to speak of. Potholes are everywhere and the police are horribly understaffed. The paper goes on to note that this is the future for more than a handful of U.S. cities.
But here is the rub: it's all the unions fault for demanding outlandish benefits packages. Never mind that all the parties to the contract sat down at the same table at some point and negotiated a contract in good faith, and never mind the fact that contract terms and conditions and enforcement are a bedrock principal of the legal system. In addition, never mind that collective bargaining equalizes the negotiating process, making any contract negotiated through collective bargaining that must more viable from a contract theory perspective. Also note that despite the love of law and order and always siding with cops and firefighters because they do gods work and they are so brave, now we see politicians running for the doors.
Here's the real answer, ladies and gentleman: if you want a nice country, you have to pay for it. That's the bottom line. A country the size of the U.S. requires an expansive infrastructure. We need solid roads, schools, court houses and the like to operate. These things are not free. Yesterday I noted that my home state of Texas is cutting school spending to the bone -- again. This will hurt our competitiveness in 20 years -- long after the idiots and yahoos who made the cuts are out of office. But that is long-term thinking (actually that is thinking in general regardless of the time frame over which we are projecting the intellectual results) which is beyond the pale for most of our culture.
The reality is the U.S. is an expensive country to run, plain and simple. If you want a nice country, you have to pay for it.
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Indeed. Even in some places where the politicians have a backbone, the right thing still isn't done. San Francisco politicians have several times in the past attempted to reduce fire and police costs through negotiating a tiered contract, but then the unions would always successfully run to the electorate to get the lower tier eliminated. MUNI, interestingly enough, has successfully cowed the politicians in the past, but perhaps unsurprisingly, the electorate haven't played along there.
What I don't get is how people can fail to understand the basic notion that you get what you pay for. The reason that police are paid what they are paid is because if you paid less, the qualified people wouldn't take the job.
Evidence has shown, time and time again, that public sector employees are paid equivalent to their private sector counterparts with similar education, training, and experience. This makes perfect sense when you consider it because if they didn't pay that much, people would stay in the private sector. For some reason, people have certain expectations of pay when you ask them to run into buildings that are on fire, etc.
There is no evidence I'm aware of that any police, fire fighters, teachers, etc, are overpaid. The main issue here is that most public employees have their pay back loaded. So they get less in salary but get better long term benefits. This especially makes sense for physically demanding jobs like fire fighting, when those life long health benefits will be put to good use.
So as a result with the economy being basically stagnant for a decade, the returns on the pension funds for all these cities and states have been below expectations. In the private sector that pain would be born by individuals who are in 401K's, etc. But in the public sector, those benefits are fixed promises that have to be paid no matter how the economy performs.
The problem of course is that no politician has been making the argument for any of these services for decades. They were built up long ago and have slowly been allowed to decay as something we take for granted. All the while politicians promise tax cuts because it gets them reelected. Nobody in power is making the argument for paying for the basic maintenance of our country, and that's why we're seeing failure after failure.
It'll be interesting to see if unions start moving to defined contribution because they can't trust governments to pay defined benefits.
Also, who didn't think that Vallejo CA would have (more) problems with their finances. It's just one of those places, sprawl for the sake of sprawl.
This is so much commonsense that it's amazing it even has to be said. Makes me nutz, it does, to hear such shortsighted policy.
Bonddad.....the Texas Republican Party is being very short sighted
about this....
"In 2007-08, Hispanic students (47.2%) were the largest enrolled ethnic group in the state, followed by White students (34.8%)."
In 2008 Texas was 47% white and 37% Hispanic by total population.....
A group of older Texas politcians are
worshiping at the no tax altar while they screw a large young hispanic populace that will come back and vote them (or their party out of office)
I say much the same thing here, only in the broadest terms I can manage. I'm address the premise on a different scale.
You are invited.
Papicek: You are right. I am rolling my eyes.
Saying there is no recovery is utter bullshit (as promised, I am not being polite about this anymore). EVERY SINGLE METRIC, including jobs, and including income, has risen off its bottom. That means we are IN a recovery - like the recovery ward in a hospital.
We will not be recoverED - past tense - until all of those metrics, including jobs and including income, surpass their pre-Great Recession highs.
To say that we are overly focused on financial metrics misses the - literally - dozens of posts I have written on jobs and income.
If you want to pretend we haven't been talking about things relevant to the middle class, then you have put your fingers in your ears and refused to listen.
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