For a shocking change of pace, the Friday LinkSwarm will be on Friday:
Posts Tagged ‘unions’
While attention was focused on the Boston bombing, Gosnell, and gay marriage, Greece just got another bailout. This is in exchange for further “austerity.”
So Greece wants more money because it can’t even keep to its previous promises on its fake austerity goals.
Let me explain it once again: Real austerity is cutting spending until it matches incoming receipts. Not reducing the rate of deficit spending. Not raising taxes so politicians can continue to spend.
No country in the EU (at least outside the Baltics) has practiced real austerity. That Forbes piece on the Baltic nations includes a lot of good advice that EU nations are largely ignoring:
Don’t run up big debts. It is a lot easier to manage when things go bad if you aren’t overextended to start. Observed Rosenberg: “Estonia’s experience shows that prudent policies during the boom may not avoid a bust, but they can put the country into a better position to deal with shocks.”
Don’t engage in an orgy of “stimulus” spending. That will run up big debts without generating long-term growth. When budgets eventually are cut, as they will have to be, the economic loss and political pain will be even greater.
Make tough decisions early. People typically are ready to act after the crisis hits. In the case of Latvia, argued Asmussen, by acting swiftly “most of the required painful budgetary decisions could be passed before the so-called ‘adjustment fatigue’ kicked in.”
Maintain fiscal responsibility. Otherwise any progress will be transitory. Growth is the natural result of reform. Delaying reform exacerbates the problem while prematurely terminating reform short-circuits the recovery.
Emphasize budget cuts. Expansive and irresponsible public outlays usually contribute to economic crisis. Moreover, the state as well as citizens should sacrifice after a crash. The answer is to cut expansive and irresponsible public outlays. In fact, economists Alberto Alesina and Silvia Ardagna found that “spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.”
Finally, don’t rest on one’s laurels. There always is more to do. Even nations which have implemented serious reform programs, like the Baltic States, could make further improvements.
As far as I can tell, none of the core EU states (and certainly none of the PIIGS) has tried this approach since the 2008 recession hit. They keep trying Neo-Keynesian pump-priming and deficit spending to keep both the Euro and their unsustainable welfare state float, and they keep experiencing endless recession. Their fake austerity comes in slightly reducing the amount of their deficit spending enough to pretend they’re in compliance to keep the bailouts coming. Ireland hasn’t practiced real austerity. Neither has Portugal, Spain, or Italy (though Italy has come closest).
The shell game of bailouts and fake austerity will continue as long as the Eurocrats can keep getting away with it.
Time for another Texas vs. California update:
Alarm bells have been ringing loudly in the heads of municipal bond investors…If you’re the chief of municipal bond investing for a big bank, whether on Wall Street or in San Francisco, Los Angeles or Chicago, this gets your attention. You might hesitate to lend hundreds of millions of dollars to other cities and counties if you fear they might go the Stockton route. Even if you proceed, you might insist on higher interest rates to compensate for what now appears to be added risk. That can translate to higher local taxes.
Time for another Friday LinkSwarm:
And still more on the late, great Margaret Thatcher:
This is incredible quaintness bordering on total delusion, the notion that Thatcher invented or popularised the previously unpopular notion of selfishness is laughable. As if before Margaret Thatcher the population of Britain was a kibbutz, or British people were known for their intense altruism, tossing money out of windows in the hope that literally anyone else would have it… She was a democratically elected politician after all, she won three elections and lost none, she didn’t dictate the mood of the public, rightly or wrongly – she reflected it.
More on the late Margaret Thatcher:
“I am not a consensus politician. I’m a conviction politician.”
“There is no such thing as society. There are individual men and women and there are families.”
“We have not successfully rolled back the frontiers of the state in Britain only to see them re-imposed at a European level, with a European superstate exercising a new dominance from Brussels.”
Britain was a disaster: The lights frequently went out, trash was piled up in the streets, and the IMF was called in to bail the treasury out — in response to which the civil service decided that their role was to “manage” Britain’s decline and fall….’Diversity’ types are amusingly silent about her — and for good reason, as her example is utterly lethal to the culture of victimhood on which they rely. The global Left, likewise, has strong motives to disparage her: She realized that decline was a choice….She was right and they were wrong. While they blathered, she helped to defeat Communism, restored democracy to the Falklands, and saved Britain from the reds at home. She was, without doubt, our finest post-war premier and she made an incalculable contribution to the life of my country of birth.
Those on the Left who still probably regard Thatcher as a hate-figure, have either forgotten the history of the Cold War or possibly never understood that Communism meant the virtual enslavement of millions of people in the East European countries, who loathed its ideology as much as Margaret Thatcher herself. It is simply not possible to imagine Thatcher visiting Russia in the 1930s, like certain Left-wing useful idiots from Britain, and being taken in by Stalin’s propaganda machine. Ordinary East Europeans took a different view of her to her critics in this country. For them she symbolised opposition to Communism; indeed she was given a tumultuous welcome by the shipyard workers in Gdansk when she visited them. She wept at the sight.
Thatcher on Socialism
Announcing the invasion of the Falklands
Her statement on European integration (“No! No! No!”).
(Hat tip: Ace of Spades.)
Thatcher on William F. Buckley, Jr.’s Firing Line:
On the danger of the Euro:
Time for another Texas vs. California roundup! Just imagine how the MSM would crucify Rick Perry if the head of, say, the Texas Teacher’s Retirement System were indicted on multiple counts of felony fraud…
A grand jury in San Francisco charged Federico Buenrostro Jr. and Alfred Villalobos, and they were booked and released on bond Monday after briefly appearing in court.
Buenrostro, 64, served as CEO of the California Public Employees’ Retirement System from late 2002 until June 2008. Villalobos, 69, served on the CalPERS board and is a former vice mayor of Los Angeles.
The indictment alleges the two conspired to fabricate documents that certified to federal regulators that Villalobos’ firm had obtained required “investor disclosure letters” from CalPERS to serve as a “transfer agent.” The indictment charges that the falsified documents allowed Villalobos to reap $14 million in fees for serving as a middleman between CalPERS and a prominent investment firm handling $3 billion in CalPERS’ money.
Naturally the day after I post my usual Texas vs. California update, I see this five part California in Crisis series by Conn Carroll in The Examiner.
The first part is a general overview.
In his state of the state speech, Brown claimed, “California lost 1.3 million jobs in the Great Recession, but we are coming back at a faster pace than the national average.” The first half of Brown’s statement is true, but the second half is not. California has only gained back 556,000 jobs since the recession ended, or 42 percent of those lost — well below the national average of 60 percent regained. As a result, California’s unemployment rate is still near double-digits at 9.8 percent. By comparison, Texas, which lost 427,000 jobs during the recession, has gained them all back and created an additional 265,000.
California is no longer a model that other states want to or should emulate. It currently has the nation’s third highest unemployment rate, its highest poverty rate and more than one-third of the nation’s welfare recipients.
To make a long story short, the same political constituencies that have made Brown’s Democratic Party invincible at the ballot box have also made the state unable to compete economically. California public employees, who are represented by the nation’s most politically powerful government unions, benefit from some of the nation’s most generous compensation packages. These unions have made it nearly impossible to keep spending down, thus making debt and higher taxes inevitable.
These unions also make it impossible to improve how government services are delivered to taxpayers. As a result, while California once had the most admired education system in the nation, it now ranks near the bottom in almost every measured educational category.
The state’s powerful environmental lobby has secured a slew of green energy regulations, including strict clean air rules, the nation’s first carbon cap-and-trade program and an ambitious renewable energy mandate. As a result, energy prices have shot up, consumers now have less to spend on everything else they need to survive, and many manufacturers can’t stay profitable in the state.
Finally, wealthy urban environmentalists have completely inverted the infrastructure spending priorities that once made California an engine of economic and population growth. Endangered species of wildlife are now favored over farmers and food. Highways and suburbs are losing out to mass transit and urban centers. The emerging result is a disappearing middle class, and what’s left of the state is split between a highly educated, landed, wealthy and elderly elite, and a poor, government-dependent, uneducated lower class.
The second part goes into how Jerry Brown’s budget surplus is illusory: “Since the recession began, governors’ budget projections have overestimated revenue by an average of 5.5 percent. Apply that average to Brown’s 2013 projections, and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.”
California is controlled by the Democratic Party, and the California Democratic Party is controlled by the state’s government employee unions. You can’t win a statewide election there without at least the tacit approval of those unions. And for decades, the cost of their friendship has been protection from spending cuts in lean times and generous retirement package increases in good times.
Throughout the 1990s and 2000s, government unions at the state level won huge increases in retirement benefits, including a lowered retirement age and more favorable benefit formulas. As a result, the state’s two biggest retirement funds, the California State Teachers’ Retirement System, or CalSTRS, and the California Public Employees’ Retirement System, or CalPERS, are both underfunded by $64 billion and $52 billion respectively. According to a recent report, Brown would need to spend an additional $4.5 billion per year just to make CalSTRS solvent.
The third part focuses on California’s expensive-yet-failing education system, while the fourth and fifth parts deal with green delusions. Including this gem: “fewer than 2,500 green jobs have been created in California since 2010.”
There’s not a whole lot that will be unfamiliar if you’ve been following my Texas vs. California updates, but it’s a very solid overview series. And yes, Texas gets a mention.
Read the whole thing.
Another Texas vs. California update! And I don’t even have a line item on how the Houston Rockets picked the Sacramento Kings’ pockets’ in yesterday’s trade.
Busy day! Here’s a quick Texas vs. California roundup: