Time for another Texas vs. California update:
Posts Tagged ‘Welfare State’
Greece managed to make its scheduled IMF loan repayment of around €750 million ($837 million) which “buys the country a few more weeks to reach a deal with creditors on fresh financing.”
Greek finance minister Yanis Varoufakis said “Greece must escape the ‘strictness trap’ of budget measures that might hurt the economy and so prevent the country from reducing its debt mountain to manageable levels.” In other words: “We absolutely refuse to stop spending other people’s money to prop up our welfare state.”
So the farce will continue on a little longer, at least.
In other Greek debt news:
And the Greece shell game over implementing reform (or, since it’s Greece, “reform”) continues.
Greece’s finance minister Yanis Varoufakis (who’s evidently still doing the negotiating, reports to the contrary notwithstanding) has handed the Eurocrats a proposal that doesn’t match what was discussed in negotiations. It’s like a cheap farce, or a con game to see how long they can keep string Europe along without actually agreeing to anything.
Greece Syriza government has said to their creditors: Economic reality? We don’t need your stinking economic reality! “Greece defied its international creditors on Thursday, refusing to cut pensions or ease layoffs to meet their demands, dimming prospects of progress next week towards securing desperately needed financial aid.”
Greece’s government also rehired public sector employees they previously laid off. What’s giving the engine a little more gas when you’re headed for the wall at full speed?
Other Greek debt crisis tidbits:
Despite the best effort of the far-left to spin it as such, the riots in Baltimore were not an “uprising” against “oppression.” (What oppression, the tyranny of CVS stores selling goods people want and the racism of fire hoses?) Instead, they were the standard, predictable outcome of the American welfare state.
In 1950, female-headed households were 18 percent of the black population. Today it’s close to 70 percent. One study of 19th-century slave families found that in up to three-fourths of the families, all the children lived with the biological mother and father. In 1925 New York City, 85 percent of black households were two-parent households. Herbert Gutman, author of “The Black Family in Slavery and Freedom, 1750-1925,” reports, “Five in six children under the age of six lived with both parents.” Also, both during slavery and as late as 1920, a teenage girl raising a child without a man present was rare among blacks.
A study of 1880 family structure in Philadelphia found that three-quarters of black families were nuclear families (composed of two parents and children). What is significant, given today’s arguments that slavery and discrimination decimated the black family structure, is the fact that years ago, there were only slight differences in family structure among racial groups.
Coupled with the dramatic breakdown in the black family structure has been an astonishing growth in the rate of illegitimacy. The black illegitimacy rate in 1940 was about 14 percent; black illegitimacy today is over 70 percent, and in some cities, it is over 80 percent.
The point of bringing up these historical facts is to ask this question, with a bit of sarcasm: Is the reason the black family was far healthier in the late 1800s and 1900s that back then there was far less racial discrimination and there were greater opportunities? Or did what experts call the “legacy of slavery” wait several generations to victimize today’s blacks?
Charles Murray made an exceptionally strong and well-researched case in Losing Ground that this rise in illegitimacy is a direct result of the perverse incentives of the American welfare system, in that single women garner far more welfare benefits than married women. (Another factor blighting inner city prospects is the loss of entry levels jobs for those who never attended college, some from globalization, but even more from an unchecked flow of illegal aliens taking those same jobs for lower wages and no government-mandated job benefits, thus knocking them off the first rung of the economic opportunity ladder.)
That welfare dependency was a big reason welfare was reformed in the 1990s to require more wlefare recipients to work. Naturally the Obama Administration gutted those reforms.
As John Nolte puts it, Baltimore is the direct result of Democratic Party policies:
Contrary to the emotional blackmail some leftists are attempting to peddle, Baltimore is not America’s problem or shame. That failed city is solely and completely a Democrat problem. Like many failed cities, Detroit comes to mind, and every city besieged recently by rioting, Democrats and their union pals have had carte blanche to inflict their ideas and policies on Baltimore since 1967, the last time there was a Republican Mayor.
In 2012, after four years of his own failed policies, President Obama won a whopping 87.4% of the Baltimore City vote. Democrats run the city of Baltimore, the unions, the schools, and, yes, the police force. Since 1969, there have only been only been two Republican governors of the State of Maryland.
Elijah Cummings has represented Baltimore in the U.S. Congress for more than thirty years. As I write this, despite his objectively disastrous reign, the Democrat-infested mainstream media is treating the Democrat like a local folk hero, not the obvious and glaring failure he really is.
Every single member of the Baltimore city council is a Democrat.
Liberalism and all the toxic government dependence and cronyism and union corruption and failed schools that comes along with it, has run amok in Baltimore for a half-century, and that is Baltimore’s problem. It is the free people of Baltimore who elect and then re-elect those who institute policies that have so spectacularly failed that once-great city.
American cities are by and large Democratic-party monopolies, monopolies generally dominated by the so-called progressive wing of the party. The results have been catastrophic, and not only in poor black cities such as Baltimore and Detroit. Money can paper over some of the defects of progressivism in rich, white cities such as Portland and San Francisco, but those are pretty awful places to be non-white and non-rich, too: Blacks make up barely 9 percent of the population in San Francisco, but they represent 40 percent of those arrested for murder, and they are arrested for drug offenses at ten times their share of the population. Criminals make their own choices, sure, but you want to take a look at the racial disparity in educational outcomes and tell me that those low-income nine-year-olds in Wisconsin just need to buck up and bootstrap it?
Black urban communities face institutional failure across the board every day….
Baltimore’s police department is, like Detroit’s economy and Atlanta’s schools, the product of the progressive wing of the Democratic party enabled in no small part by black identity politics. This is entirely a left-wing project, and a Democratic-party project…
The evidence suggests very strongly that the left-wing, Democratic claques that run a great many American cities — particularly the poor and black cities — are not capable of running a school system or a police department. They are incompetent, they are corrupt, and they are breathtakingly arrogant. Cleveland, Philadelphia, Detroit, Baltimore — this is what Democrats do.
And, as Allen West notes, it is more specifically a black democratic problem:
The population of Baltimore is 622,000 and 63 percent of its population is black. The mayor, state’s attorney, police chief and city council president are black, as is 48 percent of the police force. But as 36-year-old Robert Stokes says, “You look around and see unemployment. Filling out job applications and being turned down because of where you live and your demographic. It’s so much bigger than the police department.”
Everyone wants to have an honest conversation about race, so let’s us endeavor to do just that. Now, of course, when you speak the hard truth about race issues in America – and not just the liberal progressive talking points – and you’re white, you’ll be branded a racist. And if you’re black, well, y’all just watch the comments below and see the denigrating drivel.
Every single major urban center in America is run by Democrats — more specifically, liberal progressives, black or white. The morass that became Detroit. The killing fields of Chicago. The depravity of Washington DC. The shame of South Dallas. And yes, even the place that was once my home, Atlanta — even with all the successful black entertainers…
Just do the assessment yourselves, who are the elected officials heading up the urban centers? And where does one find the most dire socio-economic statistics?
Yet we hear these rioters blame whites — well, they need to make sure they’re specifically blaming the correct whites — those on the left. Blacks have been herded into these inner city clusters, a new economic plantation and in this 50th year of President Lyndon Johnson’s Great Society — well, the unintended, or maybe intended, consequences are deplorable.
There was a time when America’s disasterous welfare policies could be chalked up to good intentions gone awry. That time had long since passed. It seems that both a large, welfare-dependent underclass, and a small cadre of thugs willing to riot over racial grievance-mongering at the drop of a hat, benefit the Democratic Party.
At what point do we conclude that the destructive welfare policies the Democratic Party promotes and maintains exist not despite their exceptionally harmful effects on poor black Americans, but because of them?
Greek Finance Minister Yanis Varoufakis has been demoted, evidently because the EuroCrats he was negotiating with hated his guts (a significant drawback when you’re trying to convince creditors to pour more money down the rathole that is the Greek economy).
Will it make any difference to debt negotiations? Maybe, maybe not. It depends on which of two reasons he was fired for:
Option 1.) Varoufakis was the designated Bad Cop in negotiations, and now he’s the symbolic sacrifice. “Golly, that Varoufakis guy was sure a jerk when he asked you to give us more loans without getting any reform in return! Now that I’m here as Mr. Good Cop instead, I’m sure you’ll give us give us more loans without getting any reform in return because we’re asking really, really nicely.”
Option 2.) A lightbulb (or at least a dim, flickering candle) has finally gone off above the heads of the ruling far-left Syrizia Party that they will, in fact, actually have to implement real reforms if they want to shake more dough out of Mean Aunt Angela, and that implementing reform will only mean they’re really boned, while defaulting and leaving the Euro would mean they would be completely and utterly boned.
Arguing for Option 2 is Reality and Logic, which have had very little to do with Syriza policy heretofore. Arguing against it is every single action of the Greek ruling class over the last five years. Best case, probably-too-optimistic scenario is that they’re going to try the God Cop Con first, then, when it fails (and it will), they may actually be dragged kicking and screaming to Option 2. Or at least appear to do so as part of the extend and pretend strategy that has characterized the entire Greek debt crisis since the beginning.
None of it changes the underlying problem: The Greek welfare state is unsustainable, they’ve run out of other people’s money to pay for it, and they refuse to reform it, even at the point of impending national bankruptcy.
Time for another Texas vs. California roundup:
Unfunded pension liabilities are a concern for county and city governments throughout California. Reviewing this problem in Marin County, the Grand Jury examined four public employers that participate in the Marin County Employees’ Retirement Association (MCERA): County of Marin, City of San Rafael, Novato Fire Protection District, and the Southern Marin Fire Protection District, hereafter collectively referred to as “Employer(s)”
The Grand Jury interviewed representatives of the County of Marin, sponsors of MCERA administered retirement plans, representatives of MCERA, and members of the various Employer governing boards and staff. It also consulted with actuaries, various citizen groups, and the Grand Jury’s independent court-appointed lawyers.
In so doing, the Grand Jury found that those Employers granted no less than thirty-eight pension enhancements from 2001- 2006, each of which appears to have violated disclosure requirements and fiscal responsibility requirements of the California Government Code.
(Hat tip: Pension Tsunami.)
As with other areas of state and local budgets, a big factor is pension costs, which for UC have grown from $44 million in 2009-10 to $957 million in 2014-15. And the number of employees making more than $200,000 almost doubled from 2007-13, from 3,018 to 5,933.
While total UC employees rose 11 percent from October 2007 to October 2014, the group labeled “Senior Management Group and Management and Senior Personnel” jumped 32 percent.
(Hat tip: Pension Tsunami.)
Amidst word that other European banks are urging Greek banks to dump Greek securities, and continued mutterings of Greek contingency plans to nationalize banks, Zero Hedge just tweeted this:
GREECE ISSUES DECREE TO TRANSFER CASH BALANCES TO CENTRAL BANK
— zerohedge (@zerohedge) April 20, 2015
Not seeing confirmation yet, but if true, those quiet bank runs in Greece are about to stop being quiet…
Update: Here’s Zero Hedge’s post, citing an (unlinked) Bloomberg piece citing internal Greek decree, saying it’s the start of capital controls. If so, bank runs are all but assured…
Update 2: Now seeing news reports saying that Greece is “The Greek government is forcing the country’s municipalities to transfer cash reserves to the Bank of Greece in a bid to shore up its short-term finances, according to officials…The decree on Monday mandates the transfer of cash that is not needed to cover spending in the next 15 days, as Athens continues negotiations with creditors to unlock bailout funds.”
So, no forced bank funds transfers.
It’s appropriate that Zeno (the paradox Zeno) was Greek, since Greece appears to have entered Zeno’s Endgame. The country edges ever closer to default, without actually defaulting. Or without the Greek government actually ceasing to spend radically more money than it takes in, because the ruling left-wing Syriza Party would rather destroy the Greek economy than give up their bloated welfare state. Their latest plan is to raid pension funds to keep that welfare state going just a little longer. “This is the last bit of cash that the Greek state has.” “Honey, let’s cash in our 401K so we can buy some heroin!”
Sorry if this sounds like every other update on the Greek debt crisis over the last six years. It’s a vitally important story, which is why I keep covering it, but it’s also the story of a host of people making the same stupid, easily avoidable mistake again and again rather than making the hard choices necessary to deal with the problem.
A few other links of interest on the Greek debt endgame:
Tune in next week! Same bankrupt time! Same bankrupt channel!
Hope you’ve finished your taxes already! Time for another Texas vs. California update:
National Journal has a piece up by moderate lefty John B. Judis on all the problems plaguing Chicago.
Perhaps more than any other major city in America, Chicago is facing a truly grave set of problems—problems that are essentially more extreme versions of the challenges confronting city governments across the country.
But there’s a vital piece of information omitted from that sentence: “problems that are essentially more extreme versions of the challenges confronting city governments across the country run by the Democratic Party.” Though Republican cities are not immune to such problems, make no mistake that the very worst examples are cities run by the Democratic Party, most for a very long time (Detroit hasn’t had a Republican Mayor since 1962, Chicago since 1931), and most are in states with solid (if not overwhelming) Democratic Party majorities.
The failure of America’s bankrupt cities is a microcosm of the failure of the Blue model of big government liberalism. And the reason I have spent so much time on covering California and Greece is that they are part of the same story: The failure of American liberalism is a microcosm of the bankruptcy of the welfare state, and the bankruptcy of the welfare state is a subset of the failure of socialism.
The quandaries begin with Chicago’s dramatic social divide. To an even greater extent than is the case in, say, New York or Philadelphia, Chicago has become two entirely separate cities. One is a bustling metropolis that includes the Loop, Michigan Avenue’s Magnificent Mile, and the Gold Coast, as well as the city’s well-to-do, working-class, and upwardly mobile immigrant neighborhoods. The other Chicago consists of impoverished neighborhoods on the far South and West Sides, primarily populated by African-Americans. These places have remained beyond the reach of the city’s recovery from the Great Recession.
As we have known since Charles Murray’s Losing Ground in 1984, welfare programs don’t lift the poor out of poverty, but keep them ensnared in it. Indeed, a cynic might observe that welfare programs are designed to create a voting clientele for the welfare state and the liberal party that runs it.
The problem, as Mark Steyn put it, is that “the 20th century Bismarckian welfare state has run out of people to stick it to. In America, the feckless insatiable boobs in Washington, Sacramento, Albany and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social democratic evolution: There are no kids or grandkids to screw over.”
As Steyn further noted:
A government big enough to give you everything you want isn’t big enough to get you to give any of it back. That’s the point Greece is at. Its socialist government has been forced into supporting a package of austerity measures. The Greek people’s response is: Nuts to that. Public sector workers have succeeded in redefining time itself: Every year, they receive 14 monthly payments. You do the math. And for about seven months’ work – for many of them the workday ends at 2:30 p.m. When they retire, they get 14 monthly pension payments. In other words: Economic reality is not my problem. I want my benefits. And, if it bankrupts the entire state a generation from now, who cares as long as they keep the checks coming until I croak?
The story of Detroit’s current bankruptcy is the story of Chicago’s coming bankruptcy, and the similar problems of California. All are dealing with bloated public sector pensions that are making their cities insolvent. All promised and spent money they didn’t have against their decedents, not realizing (or not caring) that the debt burden will ruin the worlds of those decedents before they could ever pay it off.
The theme with all is that deficit spending destroys, and the only cure is to force governments to pare back the welfare state and stop spending money they don’t have. As the example of Greece shows, there reaches a point in welfare state dependency at which actually curtailing welfare state spending, even at the point of financial ruin, is politically impossible. The looting of the public treasury cannot be stopped because that looting is the only thing that holds left-wing coalitions in power anymore.
One of the many reasons the Tea Party exists is to hold American politician’s collective feet to the fire to make sure the terminal phase of the welfare state Greece is now enjoying never gets that bad in America. (To this end, they’ve had the tiniest little glimmer of success.)
Chicago is Detroit is California is Greece is, eventually, America. It’s all part of the same story, and one any voting public ignores at its peril.
(Hat tip: Instapundit.)