By Matt Stoller, a fellow at the Roosevelt Institute. You can follow him on Twitter at http://www.twitter.com/matthewstoller.
The big story on Tuesday was Wisconsin Governor Scott Walker’s win over unions and liberals, as voters ratified his attacks on public workers, the young, and women’s rights. But that vote was relatively close. Two other voter initiatives, in deep blue California, were not. San Diego and San Jose residents voted overwhelmingly to cut the pensions of city workers. In San Diego, the measure passed with two thirds of the vote, and in San Jose, the measure passed with seventy percent of the vote.
The measure gives city workers an option: They can keep their current pension, as long as they agree to contribute more of their salaries — up to 16 percent — to the pension fund, or they can enter a less generous pension plan with a higher retirement age, benefits that accrue more slowly and smaller cost-of-living adjustments. Future hires would be put into a plan that costs even less, and would be required to contribute up to half of its cost.
This is not a Republican initiative – the San Diego Mayor is a Democrat. And pension cuts like this are happening nationally, mostly with full support from voters in the Republican Party and a good chunk of the Democratic Party as well. The union representing city workers, of course, went to the courts rather than pursuing a strategy of engagement with the public. These unions will probably end up losing the fight, because they have no ability to persuade voters that they represent anything but a self-interested group of insiders.
The states and localities suffering from budget crises are having problems because Wall Street blew up the economy, and in many cases, ensnared these municipalities in extremely bad deals. The wealth of taxpayers was and is being transferred to banks. In 2008, the choice before Bush, and then Obama, was clear. They could hand taxpayer resources to Wall Street and oversee a series of budget crises in states and localities, with the opportunity for later privatization of public assets and the breaking of public sector unions. Or Bush, and then Obama, could crack down on Wall Street, and make sure that bailout monies went to states and localities, and, with record low interest rates, spur tremendous investment in new energy, infrastructure, and education initiatives. It was a choice. Bush picked Wall Street. Obama also picked Wall Street, with public sector unions supporting Obama like turkeys cheering on Thanksgiving.
Now voters are making their own choice. Once again, this is a direct consequence of how Barack Obama has led the Democratic Party and redefined liberalism, into a party and an ideology that is defined by wage cuts, foreclosures, debt, and acceptance of dramatic political and economic inequality. Voters don’t want to pay for a government and for government workers who they perceive as out of step with their interests.
These pension cuts and the victory of Scott Walker-like candidates are consistent with the overall trend of liberals losing or throwing in the towel nationally. For example, prominent progressive incumbent Congresswoman Lynn Woolsey, who chaired the progressive caucus in the House, just endorsed the establishment candidate in Northern California over the more outspoken anti-corporate candidate, Norman Solomon. Solomon is behind by a little over a thousand votes, with tens of thousands remaining to be counted. Meanwhile, New Mexico liberal Democrat Eric Griego, who ran ads demanding Wall Street bankers be sent to jail, lost his primary to a more moderate candidate. Sending bankers to jail is a popular position, so why didn’t Griego’s message work? It’s simple. Voters don’t trust any Democrat to credibly deliver on that or really any promise on economic justice. Obama has designed the party’s policy framework specifically in opposition to economic justice. In that case, why not vote for the Republicans? It’s a more consistent brand.
342 comments
Comments are closed.
Voter attacks on public pension funds in th end undermines the voters own retirement system. The only kind od retirement fund that can succeed for everyone is a nationalized system.
No pension fund is actually funded. Pension funds are expressed as some “value” that only exists if only a few try to “cash out”.
The money reflected in pension fund values, individually or collectively, has not been printed yet.
Any attempt to exceed the rate of net government spending in realization of “gains” would result in a kind of bank run with plummeting value for “investments”.
The total value of investment funds and related investments exceeds the actual quantity of cash in the economy by at least a factor of 8.
+1000. It was always clear that the looting class would deal with civil servants as they dealt with industrial labor: defer negotiated income, then renege. There’s only one way to short-circuit divide-and-rule expropriation of promised compensation:
http://www.ilo.org/public/english/protection/secsoc/areas/legal/standard.htm
These are not perks, they’re rights.
The problem with the public pension plans is the perceived abuse that appears to be going on. Here is my personal take on what is needed:
1) Public employees can only start pulling down on their pensions at 65. They can still have early retirement, but they don’t start pulling their pensions until 65.
2) No employee can work or consult for the state AND pull from a pension at the same time.
3) Employees are only eligible for one pension. They can choose which pension they want from the state, if they have multiple options.
The problem is the abuse of a few (police and fire are the worst offenders) are now causing all public employees to be attacked. The governments should have cracked down on these problem sometime ago because they are costing us a fortune, without providing much benefit.
Just my two cents.
The problem with your solution is the money supposedly in the funds doesn’t exist and won’t until we deficit-spend the dollars into the economy.
Even then it probably won’t help because the parasites in th efinancial world just keep expanding th eleverage and giving the cash to themselves.
Those of you with pensions will never realize them in full.
At current deficit levels how long will it take? (we need upwards of $30 Trillion+)
If we balance the budget how long will that take? Can you say forever?
All pensions funds(private, public, ss) are doomed to failure when collectively, the receipients take more out of the fund than was contributed.
The federal, state, and corporate fund managers are also guilty of underfunding pensions by imputing unrealistically high returns on investment.
Can’t incluse SS in this group.
The government can always afford to pay SS benefits.
The government can always afford to pay any debt denominated in dollars.
You blithely suggest that SS can be paid at rates greater than the contributions merit simply by depreciating the dollar. No thanks. To the comment which said that no pensions are funded…rubbish. Mine is. By me. The problem with public pensions is that the nature of public employment in states and localities leaves the public union as a powerful voting block. Yet their pay is determined by the politicians. That’s a recipe for disaster…which has occurred.
You blithely suggest that SS can be paid at rates greater than the contributions merit simply by depreciating the dollar. Alan H
If banks were put out of the counterfeiting business (as they should be) then it would require massive Federal spending just to prevent deflation as existing credit was paid off with no new credit to replace it.
Alan H has forgotten one key fact.
The dollar *must* be depreciated; constant (low) inflation is *essential* for a functioning economy.
The basic reason for this is that it must always be, in some sense, more valuable to get real goods and services NOW than pretty pieces of paper or shiny metal which you will trade in later. If money retains its value perfectly, people will stop buying real goods and services until “later”, so people will stop producing real goods and services, and the entire economy seizes up.
@Nathanael
I can stomach much of what i see you post here, and see much common ground, however, in your above comment i must say, in a not-so-nice way;
What kind of Horseshit is that? Where do you get this nonsensical notion from? People need Food and water and clothing and shelter and clean air — AT ALL TIMES… besides those *real goods* are made like CRAP and are slowly continually getting crapier and need replacement more often — think just of household goods/appliances let alone all other things.
So you think that if my $1 USD today bought as much *real goods* as it could in 1913 that somehow we’d all be worse off? with a frozen economy? Well heck — Bring It On! Freeze that b***ch up! Please!
Love
I might add that the pension is based upon the top 3 of the last 5 years of service, no overtime in the last year to boost it, and perhaps a max of 10% overtime over the regular salary per year.
Unfortunately, Paul, most of those voters don’t have a retirement system, so there’s nothing left to undermine. Nearly all private sector workers in the US have been shunted into the 401k scam over the past few decades.
So, since private-sector workers have been screwed, it’s only fair to screw the public-sector workers now. I don’t have a pension, so why should you?
Precisely why divide and conquer works so well.
Soon when companies double back to take away the benefits of older private sector union workers who went along with lower wages and benefits of new workers, creating two or more tiers of older and younger workers working side by side, will the new lower-tier youngsters stop it from happening? More than a few will be happy to see the old-timers who sold them out get shafted. Solidarity is hard to achieve and easy to lose.
Sanders, the mayor of San Diego, is a Republican. San Diego didn’t have a Democratic mayor in about two decades.
“Defined benefit pensions with little or no employee contributions are not appropriate when the taxpayer has to pay for them…”
Employees accepted these payments in lieu of direct pay, which taxpayers also pay for.
What’s the difference?
Sorry,
My comment above was in response to CPD’s comment below.
If the point you are making is that public sector wages are lower than private sector wages, I don’t believe that is the case, particularly when other benefits are included (e.g. healthcare). But if they are, the difference would have to be substantial to cover the difference in total payouts between the pensions (if the comparable private sector employee even has one).
If you are making another point, I don’t understand what it is.
“If the point you are making is that public sector wages are lower than private sector wages, I don’t believe that is the case, particularly when other benefits are included (e.g. healthcare)”
This is in fact the case. Public workers are in general more educated and more professional (better trained) than their counterparts in the private sector earning comparable wages.
“But if they are, the difference would have to be substantial to cover the difference in total payouts between the pensions (if the comparable private sector employee even has one).”
The payouts from pension funds are unrelated to contributions and have zero to do with taxpayer dollars. The funds are investments, and can only be “funded” from net government spending, as I explained in the first comment at the top of the page.
If it were true that public sector employees are generally more educated than private sector employees, that would be a very sad situation. I disagree.
You are right that the payouts are unrelated to the contributions but that’s the problem. The public plans use unrealistic return assumptions which, together with the generous payout terms, add a significantly escalating burden to “net government spending”. Where do you think the money comes from when governments have big deficits and growing pension payment obligations? And don’t say debt issuance – that robs from the future and does nothing to promote a sustainable fiscal position.
Where do you think the money comes from when governments have big deficits and growing pension payment obligations?
The government prints it. The source of every dollar in existence. Where do you think it comes from? China? They manufacture a lot of stuff but dollars aren’t one of them.
“And don’t say debt issuance – that robs from the future and does nothing to promote a sustainable fiscal position.”
You have backed yourself into a logical dead-end you won’t be able to get out of without violating the laws of arithmetic.
All money is debt. A dollar is a liability of the government and an asset of the non-government.
The government chooses (by self-imposed law) to issue new dollars as debt but has broken that rule many times over our history, which is how we have come to have $5 Trillion in net cash in the non-government not offset by public debt.
Public debt is nothing more than the accounting record of money creation over history.
Public Debt is identically equal to non-government savings.
Are you beginning to get the picture?
One indicator to look at is voluntary turnover. Of course with the job markets as they have been the past 4 years or so, recent data is probably not so illuminating. But I would assume that if compensation packages are similar, you would see similar data on turnover. You would have to be careful to see if the job types were truly comparable, though. Probably would work well for DMV employees, general administrators, functions like HR, finance, facilities engineering, IT, purchasing and the like where there are pretty obvious counterparts widely employed in private concerns but less well for firemen. An $80,000 salary, if you never have to worry about downsizing, demotions etc., could be considered excess compensation even if the same $80,000 is paid elsewhere for about the same skills and experience. Voluntary departure data could be one way to try to assess this.
@ Eric377
Your comment is reasonable and well thought out but it is like: “tastes great…less filling”.
Public pensions aren’t the cause of any state budget problems.
State budget problems are causing public pension problems.
Pensions are problematic regardless, because the gain in paper value is never matched by the creation of dollars it would take to pay out the cash.
This implies that there was never any intent at some level to pay out these funds.
So now “they” are trying to make the funds go away and they are dividing us against each other to do that for “them”.
My point has nothing to do with the mechanics of money printing and debt issuance and everything to do with the amount. We have created artificial (and unsustainable) economic growth off of excessive debt issuance and monetary stimulus. But thanks for your enlightening description which you presumably got out of the last textbook you read.
“…excessive debt issuance and monetary stimulus…”
What does this even mean?
If we were spending too much we wouldn’t have unemployment. We would have high inflation.
Cut spending and see what happens.
Hope you have a good nest egg.
You have failed to make any coherent argument built upon any logical chain of reasoning. In your mind this is so because you say it’s so.
Systems don’t respond the way you would think to that kind of faulty reasoning, which means you are driving blind.
Welcome to the Eurozone.
The government does not print the money. It borrows it from the Fed, with interest (even if currently nominal).
If it just printed the money we could save the interest cost.
@redleg
“The government does not print the money. It borrows it from the Fed, with interest (even if currently nominal).
If it just printed the money we could save the interest cost.”
You have the right sentiments but your analysis of the operation is incorrect.
The Fed is effectively a part of the government, it’s heads are appointed by the Executive.
The Fed and the Treasury work together as a team, one spending new dollars into the economy and the other managing settlement balances (reserves) in the FRB banking system.
Any interest paid to the Fed is returned to the Treasury, less operating costs.
Every net dollar in existence was printed through a dance between the Fed and the Treasury and spent into the economy in excess of taxation.
Every other dollar in existence was issued through the banking systemas loans and is neutered by an offsetting liability requiring that it be paid back.
As far as we observers in the non-government, the government creates (prints) and spends money as directed by Congress every time it spends a dollar.
Taxation removes money from the economy and thus destroys it.
It makes no logical sense to say that the government borrows that which only it can create.
Paul, you’re mistaken as to the origin of money. Coins are issued into the economy by government. The other apx 100% of money is issued as overdraft IOUs by private banks to whichever person or entity enters into debt. The banks create current accounts, aka deposits, which are IOUs in their own name. As money is exchanged in the banking system, these IOUs are netted out and the difference transferred bank to bank by means of reserves, current accounts in the Central Bank. Even if you believe that the Federal Reserve System is a government entity — it isn’t, it’s owned by a bank consortium like Mastercard — the FRB creates those reserves by the overdraft purchase of public and private securities, not by government spending. Reserves represent a small percentage of money, and they need not grow with new money creation, as banks on average gain and lose reserves in rough equilibrium with each day’s transactions.
This is all outlined in JK Galbraith’s Money, and a thousand other places, including the Chicago Fed’s Modern Money Mechanics and your introductory economics textbook. It’s not in informed dispute.
Federal Reserve Notes are, in fact, printed by the Bureau of Engraving and Printing in the Department of the Treasury — in other words, the government.
All the interaction with the Fed is a voluntary choice made by Congress and the President, nothing more.
@ Eric377
You misunderstand Galbraiths explanation of the monetary system, which is based on MMT (Modern Monetary Theory, which actually is not theory but a mathematical description of the way it is).
Reserves aren’t money, they are an accounting entity on the government side of the ledger. We as observers (users) of currency in the non-government never encounter reserves.
Any net money that exists in the non-government was spent there through net government (deficit) spending.
Thus, currently there exists approximately $5 Trillion in cash and $10.5 Trillion in bonds (the sum of which equals the National Debt) that exist without claims against it in the non-government.
These dollars and dollar-denominated financial assets were created from thin air and they can only be destroyed by taxation.
All other dollars that exist in the non-government were created from thin air as loans that are accompanied by an off-setting liability which makes these dollars self-extinguishimg (when they are repaid).
Currently there is about $54 Trillion in outstanding private debt.
Private debt adds nothing to the net worth on your balance sheet when you get the loan.
If someone buys something from you using borrowed money your balance sheet goes up and theirs goes down by an equal amount.
This remains true for the non-government as a whole (sum of all non-government balance sheets) as the dollars make their way through the economy.
Private debt adds nothing to the net savings of the non-government.
Anyway, the details are not so important as the idea that the government is the ultimate source of all dollars and doller-denominated financial assets.
Every other dollar in existence was issued through the banking systemas loans and is neutered by an offsetting liability requiring that it be paid back. paul
It is NOT neutered! Credit spends just like money NOW and drives up prices NOW!
Only over time do assets = liabilities + equity and not even then really since credit loans create the principal but not the interest. Thus continual borrowing is required in aggregate to prevent default.
@ F. Beard (there are multiple F. Beards here – assume you are different people)…
“It is NOT neutered! Credit spends just like money NOW and drives up prices NOW!”
What you say is true but then you cinveniently forget the effect of th eliability on future spending.
When you make a loan payment that your income goes to the ether and demand drops.
The process happens more slowly than spending generated by credit but credit doesn’t create the interest so the hit to spending is magnified.
Further, credit issuance is limited by the borrowers ability to make payments and that ability comes to an abrupt end because spending created by credit can’t accrue to wages overall.
When the economy encounters the ceiling that is the aggregate ability to service debt the party stops.
No more borrowing from Peter to pay Paul, no more credit expansion, bang. It’s over and the economy is in the toilet until the debt is repaid. Spending is cratering.
Shit falls apart and gains turn into losses. How much did you say you made on that investment you haven’t cashed out yet?
Where will the cash come from to satisfy the debts?
The source of all cash – net government spending (at the worker level and below, giving money to rich people does zip).
“Only over time do assets = liabilities + equity and not even then really since credit loans create the principal but not the interest. Thus continual borrowing is required in aggregate to prevent default.”
This is mathematically impossible since there is a quantifiable ceiling on the ability to service debt. Eventually it will not be possible to borrow any more (for the non-government).
The government simply creates new money then borrows it back. Nothing but an accounting trick to balance the books.
What you say is true but then you cinveniently forget the effect of th eliability on future spending. paul
No, I don’t; since the economy requires a constant expansion of credit (to pay the interest) to avoid a recession then the repayment of existing liabilities is muted by the increase of new liabilities.
>>Federal Reserve Notes are, in fact, printed by the Bureau of Engraving and Printing in the Department of the Treasury — in other words, the government.>> Nathanael
Not only that, it has the reproduced signature of the Secretary of the Treasury, and the Great Seal of the United States. That’s USG’s acknowledgement that the note is legal tender, will be accepted for public debt, and that its use will be enforced in court for private debt. But the Federal Reserve Bank “pays” (as deposit credit) only printing costs for these notes, whereas they pay face value for the coins. That is to say, the face value of Federal Reserve Notes does not add to the USG’s balance at the Federal Reserve Bank. These notes are sold to banks as the liquid component of reserves; they are not spent into the economy except as asset purchases by and for the bank.
BTW, we should never use the term “The Fed.” There’s a Federal Reserve Board of Governors in Washington DC with a meager component of public accountability. They set monetary policy, tight or loose. And there are the Federal Reserve Banks, 100% private institutions whose promissory notes are used as much of the globe’s paper money. Federal Reserve Notes are private banknotes, much like the private banknotes that circulated before the Federal Reserve System was created. They’re not government money, and no component of the Federal Reserve System is the US’s fiscal agent. They’re private IOUs, not the public purse.
There’s been a call for “coin seigniorage”, for the US Treasury to issue trillion dollar platinum coins to pay off the deficit. The USG could indeed do that. But the idea that the USG is the monopoly issuer of the US dollar is conspiratorial nonsense. The USG is a two-bit player; its Sacagawea and Presidential dollar coins were a desperate attempt to raise money, in the mere hundreds of millions, via coin seigniorage. Otherwise, the USG collects taxes and goes hat in hand to bond markets for money to spend.
I don’t like or defend this system, but I’m describing it accurately. Consider looking up and joining money reformers such as the American Money Institute who are attempting to make money issuance operate as some of you already imagine it does. They’re greenbackers, and I don’t stand with them either, but they are at least attempting in good faith to fix the deadly flaws in our present system of private, debt-based money.
(there are multiple F. Beards here – assume you are different people)… paul
Nope. There’s only me here.
Correction: American Monetary Institute, http://www.monetary.org/ is the org I was referring to, attempting to reclaim the issuance of money by government. See also Carl Herman’s frequent posts on Washington’s Blog. Here’s one from Thursday:
http://www.washingtonsblog.com/2012/06/3-minute-video-todays-economic-slavery-human-nature-betrayed.html
@F. Beard
“No, I don’t; since the economy requires a constant expansion of credit (to pay the interest) to avoid a recession then the repayment of existing liabilities is muted by the increase of new liabilities.”
Are you referring to public or private borrowing in this statement?
Are you referring to public or private borrowing in this statement? paul
Either or both.
@F. Beard
Public spending is not constrained either by borrowing or interest payments.
Interest payments on the National Debt™ aren’t a constraint because they are never paid – new money is printed and spent into the non-government.
Thus interest payments manifest themselves as additional money spent into the non-government.
Public spending is unconstrained because there is an infinite resource of dollars.
There are no constraints on the government side of the ledger other than self-imposed and political. Nothing on th egovernment side is real or has any direct bearing on reality.
Government monetary operations exist only on an accounting ledger.
Just like in the Monopoly game where you can’t run out of money. If the money that comes with the game runs out the rules allow the bank to print more on pieces of paper so the game can continue.
Public spending is not constrained either by borrowing or interest payments. paul
Agree but borrowing by a monetary sovereign is “corporate welfare” according to Bill Mitchell so why is it tolerated? Because it helps to manage the banking system which should be purely private to begin with?
Thus interest payments manifest themselves as additional money spent into the non-government. paul
For what? For lending the Federal Government what it can create for itself interest-free?
Public spending is unconstrained because there is an infinite resource of dollars. paul
Agreed so why is Federal borrowing not illegal? Why is the Federal Government allowed to pay interest needlessly?
Just like in the Monopoly game where you can’t run out of money. If the money that comes with the game runs out the rules allow the bank to print more on pieces of paper so the game can continue. paul
Yes, but the existing sovereign debt holders jealously (and hypocritically) protect the value of their bonds by resisting the issuance of new money in amounts sufficient to increase yields on the new bonds.
Sovereign borrowing is a huge mistake and is unethical from the get-go.
@ F. Beard
We aren’t really disagreeing here. I read Bill Mitchell religiously and don’t disagree with anything he writes.
I can’t find any disagreement with your latest comments either but I think it’s important, especially when these ideas are new or seem crazy to many of the people in comments sections that an attempt is made to point out the realities.
The argument you are making is a conclusion, one I happen to agree with, but not a part of MMT theory itself.
Bill just the other day was asked to clarify his position on nationalization of banking, and he made clear that nationalization was an opinion held by him and not a part of the Theory.
It is important to understand the distinction but beyond that it doesn’t matter.
paul said The Fed and the Treasury work together as a team, one spending new dollars into the economy and the other managing settlement balances (reserves) in the FRB banking system.
Forgive me please for not reading the all the follow-ups in this long subthread, but when i read this above, i felt i needed to reply/question; What “reserves” are you talking about? (and ‘managing settlement balances’ isn’t an answer)
— to me, and perhaps many others “Reserves” implies some kind of “Asset”, and said assets have to have “Value” in order to be deemed as such, wouldn’t you agree?
If you do, the TBTF Banks (backstopped via the gubment, and the People/Taxpayers) are completely and utterly Insolvent, ergo, no Assets, no Reserves. Any and All National Debt is “value” stolen from WeThePeople, and We need to be Reimbursed .. now!
Love
..and just to add; There is no “Value” in anything the Financial Sector does, quite the opposite; they “extract” the Value/Wealth from the inhabitant Sovereigns–WeThePeople.
They (Global Financial Terr’sts) are Foreigners, Treasonous, Traitors, using Weapons of Mass Financial Destruction to accomplish their goals–and WeThePeople are allowing it
Love
@Econccx
I’m aware of the various texts you’ve posted. We can find hundreds of semantic descriptions/interpretations of government-side operations re money creation.
I look at it from as a mathematical result since that’s all that matters – how much or how little is spent (if any) into the non-government.
All sovereign monetary systems are set up under various and different operational frameworks but in the end they all work the same.
New money is created from thin air and it ends up in our pockets.
Where does deficit spending come from?
How does it get into the economy?
What is the difference between money spent into the economy by the Treasury and money lent into the economy through the FR banking system?
Paul:
I did not read all you say because I am lazy. But I agree with you for the most part. All investments for the little guy are a farce because the little guy has no ability on average to get the information to make a wise choice.
That is why a social security system is the only one that makes sense being the most transparent and most diverse.
Let us assume we keep the ss system just as is. It should be augmented by something called GDP bonds. These are like treasuries or I bonds but are also indexed to GDP.
With this system if America does great you do great. If America is a loser you are a loser. It gives you what the stock market says it does but with ultimate in diversity and much more transparency because everyone can watch what the GDP is doing, so the immense ability for watch dogs.
Then people have as you say a base retirement fund social security and they can buy GDP bonds. If you want a great retirement buy a lot GDP bonds. Then you get base retiremnet from SS and perk retirement from GDP bonds.
The system will be as good a safety net as we are willing to fund ss and as fair a retirement fund as wages are fair ( which of course they are not)
It is simple, it is roughly fair, it has social value, it is a form of capitalism, it is Yankee doodle and apple pie.
Further along the lines of great ideas.
People should stop whinning that corporate unions are being busted because divide and conquor works. It is time for people of some means to start forming consumer unions over the internet and use their buying power to extract concessions over the internet. You may not be able to get majorities in cities to favor the progressive position but they can be linked economically over the internet and then people can vote in a block with their dollars. Get just a million out of 300 million in a block and believe me Coke will listen. I would appreciate your comment in my underwear.
@Curt
Your ideas are interesting and may work at some level but I think you may be missing the big gotcha.
Assume a finite amount of money in the economy. This is the case of a balanced federal budget.
Any operation that results in wealth accumulation will require an increase in financial wealth on balance sheets.
So saving and profit-taking will have to be accompanied by increased cash balances.
In a closed economy with no new net money creation this can only occur at another agents expense.
So we could characterize the economy as two piles of money, one the consumer and the other the producer. (Think of an hourglass as a model).
It follows that money flows from consumer to producer in the net and, since the money in existence is finite the end game is for the few (producers) to end up with all of the money.
In that sense, who will be able to buy the products of the future?
The same holds for investments. The “value” goes up through leverage, but the funds needed to pay out benefits don’t exist.
The government would have to create (print) lots more money and spend it into the economy to fund these investments. The investments retain their “value” provided only a few try to cash out.
You just saw something like that happen re the GFC.
The government could actually never spend enough money to fund these investments because the parasites at the top of the economic food chain always get to handle it first, so we don’t ever get our share.
Investing in 401K or other type of pension fund or (stocks) is buying into a scam we (most of us) cannot beat.
Buy US treasuries or try to get into a position where you own everything (including your house) outright. Avoid debt like the plague. If you can’t pay cash, you don’t need it or at least can’t afford it.
The government will always be able to make SS payments regardless of whether it takes FICA out of your pay or not.
We already are able to produce way more than we need. Funny that we think we can’t afford to buy the products of our own labor.
Paul nobody is listening to us and we are probably not listening to one another but:
The government with fiat money does not go broke so they can ute redistribwealth as they wish (with polical constraints) so
ss and t bills are more secure than corporate obligations.
I just happened to look up GDP bonds and it turns out Schiller had the concept in 2009.
The amount of money is not fixed in a system even with a balanced budget in theory.
The government in theory is printing money to stimulate business and then to take a piece of the pie which in theory it uses to promote social good. In theory it is all good.
The government acts as the general underwriter of business loans. It can print some money and then lend it out to private business. If the business uses this money wisely then business is created and the government gets paid back hopefully with interest. For this to happen the money supply needs to be perpetually growing which is just what you want because the business is growing and you need more money for business activity. Now in such a system the government grows more and more wealthy but then the government can spend the money on things like bridges. Then the government balance sheet increases but the government does not charge tolls on the bridges autmatically. Also if the government wish it could declare a dividend.
This can all work out. The problem is not government, or corporations, money, or debt. These are abstract terms.
Then when they become better defined they are tools which are used or misused by people. If the tools are to be used for the benefit of the larger society (can we possibly define this) then there must be watchdogs on the tools. In theory self policing might work. Another tool.
I see the problem as one in which the tools are so complicated that a few can use the tools to their advantage and against the social good(can you define this)
The internet is an abstract concept. When made more concrete it is a tool which can be used potentially for social good.
But in its current incarnation it is turning out as a whole to be a destructive tool. The interesting part about these discussions is that they basicly go nowhere. It is a million people yelling out into the wilderness while the organized get heard. I have a bssic solution to this. As I speak to you I bet you think your time is valuable no. Well I do. So I get all excited when you give me the like button because geeks and wallstreet are that way. I do not want no f…king like button. What I want is payme button.
I really liked what you said so I would be willing to pay you paul. Say a nickel. Ok don’t take that as an insult but just an example. And if a thousand people liked you a nickel youd get 50 bucks. If I wrote this back to you and you did not like love me with a say a few bucks, I might stop talking to you. Money talks bullpoop walks. The internet is bullpoop and when they introduce low cost micro transactions than an information age will come about. Now we say paypal is the micro payer. Well no because while they might do it now, if I try to institute such a system they will have their greedy little fingers in that pie.
So I see the whole problem as an information problem. It is a market place of ideas where only the well known get paid and the rest of us are free labor. Bad model.
And think about this paul, if I asked you to send me 2 cents for my thoughts youd have a cow. If I offered to send you a dollar for your thoughts youd have a moose.
Paranoia rains in the information age and we are left with useless gossip.
@Curt
Very perceptive… I like it, keep it going.
BTW; if only we could impose a FTT (Financial Transaction Tax) on those Global Terr’ists on Wall St on their HFT (High-Frequency Looting, ..er Trading) scam.
I too am sick of the dumbed-down YouBoob style of the [Like+] / [Dislike-] (500char limited, agent provocateur driven, infiltration ridden, bribed cronies and minions) nonsensical BS system of what should be Intelligent Discourse! — this is not “Second Life” (or Facecrap) FFS! ..sigh, TPTB will never ever again allow true “Boycotting” or “General Striking” to occur–the masses of sheeple have been indoctrinated.
Love
@Curt
“…The amount of money is not fixed in a system even with a balanced budget in theory…”
In order to see this problem clearly you must keep separate in your mind net dollars and dollar-denominated financial assets (cash and treasury bonds) and credit, which adds NO NET FINANCIAL ASSETS to the economy by accounting.
There is only one way to add NFA’s to the economy – net government spending.
This must be true by accounting and by extension arithmetic.
If you don’t see the difference between these two distinct classes of “money”
(cash and credit) then you will likely misinterpret/misunderstand most of what I write.
The problem is not the idea of a pension – there have been public pensions since the days of George Washington, when wounded Revolutionary War veterans were able to collect a public pension.
The problem is in assessing the costs. Public pensions have turned out to be phenomenally expensive, much more so than previously imagined. It turns out that supporting people on something close to a full salary in perpetuity until death can be shockingly expensive – particularly when life expectancies are steadily increasing while retirement age is static or even declining (specifically, due to increasing numbers of disability claims that trigger an effective early retirement).
The move by voters and politicians to limit pensions has been based on the simple fear that the costs cannot be controlled – a proposition which has plenty of real-world evidence to support it. The defined-benefit plan as it currently exists is enormously expensive, and makes the total cost of public employees far more than what it is on paper – quite possibly a large multiple of nominal salary.
What is happening now is an across-the-board adjustment to public compensation, given that the off-balance-sheet costs have proven to be far larger than previously imagined.
There’s a lot of money involved, but it’s all being removed from the economy of 2032 or so. Consider a vision:
Consider crowds of lonely people looking out into the street from behind their windows — barbers, car salesmen, waiters — looking out at another crowd of homeless retired civil servants shuffling up and down the sidewalks. Can anybody sell another car this month? Will the landlord wait a while longer for the rent on the cafe? Will anybody get a haircut?
Yeah, pensions are expensive. What boggles my mind is that I’ve read many times over the decade that pension funds do their accoounting with an expected rate of return of 8%! I haven’t seen an honest investment steadily deliver that kind of return in a decade or more, outside of Mr. Madoff of course.
They’re especially expensive when they’ve been systematically underfunded for years.
This article entirely misses the main point about public pensions. Over the last couple of decades, private sector pension plans have been hammered and the shift to defined contribution plans has been dominant. It is completely unreasonable for taxpayer funded government employees to get significantly better pension benefits. Defined benefit pensions with little or no employee contributions are not appropriate when the taxpayer has to pay for them. And the problem is compounded by the mis-leading return assumptions (typically around 8%). If realistic return assumptions were used (which I think are around 4-5%), the current and future funding obligations would explode.
This is not to say there aren’t other big issues (among them the problems of TBTF banks). But politicizing the linkage between these issues is not helpful.
Dear CPD;
I must take issue with your analysis. Defined benefit pensions, at least the ones presently in focus, were designed back in an age when the 1% weren’t extracting as much of the wealth from out of the system as they do today. The movement to unfund pensions is an artifact of the sociopolitical drive by elites to capture as much of the economy for themselves as they can. They have tried to redefine “Public Good” as “Private Good.” As long as voters are living in the Floating World pushed upon them by the minions of the elites, little of a positive nature for all the people, not just elites, will be done. I fear that America will have to fall into another Great Depression before voters as a class wake up to the massive con that has been played on them.
I happen to agree with your point about the substantial wealth extraction by the wealthiest, which I think was started by wall street. But that doesn’t make either right. We have lots of problems, all of which have to be addressed.
If the masses weren’t drooling over cars and McMansions, the 1% wouldn’t have accumulated as much wealth.
You’re blaming the victims.
Wanting a nice car and a nice house is only natural. Why not?
And heck, haven’t the godless preached that this life is all there is?
What? Just because someone doesn’t believe in God does not mean they are amoral or antisocial. Some of the kindest, most generous, most moral people I’ve ever met aren’t faithful. Most people who wear their religion on their sleeve, however, tend to be mendacious and cover it up with righteousness.
If Jesus came back and saw the number of gold crosses people wear, he would roll his eyes and give up on mankind.
If Jesus came back and saw the number of gold crosses people wear, he would roll his eyes and give up on mankind. ScottS
I don’t disagree that gold crosses are silly but your are Biblically ignorant to suggest Jesus would ever give up on mankind.
you’re
I’m not blaming anyone… it is waht it is… it’s what I call determinism.
I partly agree, but some of the most signficant problems in defined benefit pensions history have been with firms where it is hard to make this case very seriously. For Delphi, GM, Chrysler plus several formerly prominent steelmakers it is easier to think of more prosaic problems. Specifically, these heavily-unionized industries settled into patterns of compensation that worked well in the absense of intense non-domestic competition. I do not think there was general bad faith in any of it, but they ended up through the years with too many workers, translating to too many retirees, retiring too young to support the pension plans (plus retiree health plans) as expected. These were very significant drivers of multiple bankruptcies. It just could not be sustained and I think some public entities are at the same point. But I would be slightly more willing to aver that there had been a degree of bad faith in some of these entities.
While there has been extraction of money by the “financial” system, there is also a privatization of government functions to convert them for profit as with prisons, Charter schools (for profit but financed by tax payers}, and all other systems that could earn money for those with money already. The costs of private systems could be higher when profit is factored in, but the people are focused on unions as the reason for their economic problems. Often private sector had their pension money taken by management. Could that also happen to public sector employees?
This reply was for ambrit.
Dear LillithMc;
Point taken, the public and private sectors continue to merge. I have personal knowledge of a case of private sector “pension fund looting” that occured some twenty years ago. Former fellow workers at the Job Foreman level and on down all were left ‘holding the bag’ as it were. This occurence led to no public prosecutions at all. The ‘fix was in’ that far back.
I think I’m trying to say that the public sector is in the position of “leading the way” on social issues. The reason being that the private sector is so narrowly focused on roughly personal enrichment the it loses sight of, if it ever did see clearly to begin with, the Public Commons. By defunding public pensions at a time of economic unrest, the Public Sector would be renouncing its’ traditional role as protector and promoter of the Public Good. When the Government ceases to fulfill that role in the modern society, it has effectively thrown away its’ reason for existance. Illegitimate governments have a tendency to go up in flames sooner or later. Which would be a good thing if so many innocent people weren’t hurt in the process.
CPD:
10 and 20 years ago no one wanted to be a teacher or a public worker because the pay was crap. The difference was made up in benefits very similar to what was offered to the UAW to forgo wage increases except many public workers could not strike as it was illegal. The pensions were the equalizer. Now because of contibution holidays and over forecasting of returns, the public worker takes it on the chin. If you wished better bennies, you should have been a public worker rather than a private sector worker were salary was paramount oh ye of short memory.
The problem with deferred bennies, however, is that when the time comes to get them the boss will say “what bennies?”
This means that working for a higher salary is the only thing that makes sense. As a worker you have no choice but to get the compensation now for the work you do now, and hopefully don’t get tricked into working for compensation you will never receive.
I have no idea if the current level of unemployment is permanent. It may well be. If it is not, the public sector will have a credibility problem trying to attract anyone in the future with anything but “Money, Now!”
Cops, of course, have a good alternative to the public pension system, they can receive their bennies from Organized Crime. In fact, a surprising number of public sector workers can receive bennies from the criminal element rather than from tax funded compensation, or just extort money from the public in the form of bribes if it comes to it, and indeed that is the way the public sector works in the Third World economies that the United States is intent on joining.
That’s basically the way cops work in several of the more corrupt parts of the US too.
Mr. Stoller;
Not to quibble, but perhaps the use of ideas like “consistent brand” is an indicator of how much the mainstream elites have shaped the discourse. I find myself using similar turns of phrase all the time, which sends me back to the memory bank to riffle through the ‘deposit slips’ to try and find out when and where the “thought guidance module” was inserted into my thinking.
Lest I appear churlish, I appreciate and respect your hard work on behalf of us all.
Cheers.
Like
Oops, now I’ve done it to.
I second both halves of your comment.
Happens to me too, except with military metaphors.
Or Bush, and then Obama, could crack down on Wall Street, and make sure that bailout monies went to states and localities, and, with record low interest rates, spur tremendous investment in new energy, infrastructure, and education initiatives. Matt Stoller
There’s the problem. The bailout should have gone to the GENERAL POPULATION, not to Wall Street and not to state and local governments. That would have fixed everyone from the bottom up.
I suggest the Left get genuinely populist. A universal bailout with Greenbacks is an excellent place to start.
Exactly.
what remians of the progressive and traditionally liberal wing of the D’s must come to grips with the fact that the Democratic party is now the moderate wing of the Republican party.
Most D’s and R’s don’t understand this. They also don’t understand fascism, but both are rushing to embrace it. The difference is that the D’s are running full speed towards it while the R’s have inserted a rocket in their bum to get them there that much faster.
We need a new party or two, and the R’s and D’s can complete their merger.
Not really fascism exactly — neo-monarchism, I would say. Louis XIV policies. All the nastiness and violent abuse of fascism, but without the autobahns and Volkswagens.
Those policies aren’t sustainable.
And the Progressive/DEMS, like the Fascists of Europe in the last century, control the corporations, not the other way around (see “Liberal Fascism” by Jonah Goldberg).
Nope. Jonah Goldberg is a right-wing propagandist and he’s talking nonsense.
The corporate CEOs are running things. It’s obvious enough when you look at who’s getting the most benefit. The CEO’s are buying the Congressmen with their spare change, not the other way around.
@Nathanael
Totally agreed! … see? ;-)
RIO for Corps to Critters is phenomenally high — somewhere between 200-7000% at all times, IIRC. ..and TPTB warchests are ever growing ..and flowing. (Thank You SCOTUS! you traitors!)
Love
“In 2008, the choice before Bush, and then Obama, was clear. They could hand taxpayer resources to Wall Street and oversee a series of budget crises in states and localities, with the opportunity for later privatization of public assets and the breaking of public sector unions. Or Bush, and then Obama, could crack down on Wall Street, and make sure that bailout monies went to states and localities, and, with record low interest rates, spur tremendous investment in new energy, infrastructure, and education initiatives.”
I am not sure I agree with the assumptions implicit in this conclusion.
Wall Street and pensions and other public assets are inseparable at this point. The vast majority of public assets are managed by Wall Street, and a very large portion, if not a majority, of Wall Street’s assets under management are public funds – pension plans, university endowments, charitable trusts – of one sort or another.
That makes the “Wall Street versus Main Street” decision profoundly difficult; and provided all the justification the previous and current administration needed to support Wall Street. If the Wall Street banks had failed, or even been substantially restructured, it would have come at a tremendous cost to public funds, which were either directly or indirectly exposed to the Wall Street banks (and, lest we forget, to the GSEs that are joined at the hip to Wall Street).
Restructuring the Wall Street banks was always an option, of course – but the cost to public funds would have been incalculable, and since neither the previous administration nor the current administration had any idea of how to protect pensions while carrying out a massive restructuring of Wall Street debt, they took the easy road and decided to bail it all out.
The beauty of the old pay-as-you-go pensions was that no money had to be sent to Wall Street to be managed; pensions just came out of annual revenues. The problem was that pensions disappeared the second the company or the municipality declared bankruptcy. Pension plans with assets matched against liabilities were supposed to solve that problem – but they came at the cost of putting the assets under the control of Wall Street. Once pensions and Wall Street got mixed up, Wall Street got a “get out of insolvency free” card courtesy of retirees everywhere.
An alternative, of course, is state-guaranteed pensions not overseen by Wall Street. But then you have precisely the situation that France is currently in: facing rapidly-rising, taxpayer-funded pension costs against an economy that is growing slowly at best. There are, simply, no easy solutions here.
“Restructuring the Wall Street banks was always an option, of course – but the cost to public funds would have been incalculable, and since neither the previous administration nor the current administration had any idea of how to protect pensions while carrying out a massive restructuring of Wall Street debt, they took the easy road and decided to bail it all out.”
Exactly. How soon we forget. In 2008-2009, that was part of the argument about the ongoing bailout of bank and GSE bondholders — that restructuring that debt would whack grandma’s pension fund. And yes, indeed, it would have.
Now we have the idea that “austerity” — in the form of recognizing reality regarding the growth of assets in pension funds — is somehow an Evil Right-Wing Idea. However, the argument over the bank bailouts all along had included the potential cost to pension funds, 401K’s and other investors. Many of us argued that it would be far better to let the chips fall and help out the most vulnerable as best we could — just as long as we didn’t perpetuate and reward the financial oligarchy that caused the mess in the first place. That was the trade-off.
So, I understand why progressives are now manning the barricades on “austerity” — because it’s currently being coupled with ongoing subsidies for Jamie Dimon and other “bankers.” However, we should be able to recognize the necessity for scaling back projections for the growth of asset values (where are you going to get 8-10% per year, mortgage-backed securities?) at the same time that we also continue to demand blood, er jail time, for the Lloyd Blanfein’s and Joe Cassano’s. Time’s running out for that, of course (feature, not a bug).
“Many of us argued that it would be far better to let the chips fall and help out the most vulnerable as best we could — just as long as we didn’t perpetuate and reward the financial oligarchy that caused the mess in the first place. That was the trade-off.”
Good point. It would not have been painless to restructure the banks since doing so would have forced investors including pension funds to take significant losses, but it would have been more just, and some of the bailout money that ended up in banker pockets could have been used instead to help the most vulnerable.
“However, we should be able to recognize the necessity for scaling back projections for the growth of asset values”
Oh, certainly. But that’s not “austerity”. Austerity’s about current spending, not about projections of asset values.
“Obama has designed the party’s policy framework specifically in opposition to economic justice. In that case, why not vote for the Republicans? It’s a more consistent brand.”
A better question is why vote at all? Why sanction a system that routinely presents the evil of two lessers as your choices?
A vote for these lessers sanctions violence against your fellow citizens. Most times the flavor of violence, be it red or blue, is indistinguishable.
I’ve been a fan of voting a straight Anyone-But-Majors ticket. Unlike turnout, which estimates political engagement, a vote against the majors is a more accurate measure of non-confidence in the regime.
Indeed. In elections where there’s a “good guy” running on a major ticket (this means local elections usually) I’ll vote for him/her, but when you’re facing two unpalatable options, yours — anyone but the majors — is the best strategy for voting.
It seems to be about one of the only (peaceful) options left to exercise; that is, other than;
— Occupy!
— Massive marches upon the Capitol (Millions and Millions)
…anything along those lines
Love
Voting can be productive at the local level, even if you have serious doubts about national candidates. Local politicians are frequently more connected to the community and more responsive to the voters – and may even be willing to push back against State and Federal initiatives that are not in the peoples’ best interest.
At the national level, third party votes are not “wasted” as is so often alleged – they are a clear signal to the two major parties that they are not serving the people. When the margin for victory in a national election is razor-thin as it so often is, even the few people dissenting and voting third party can force the major parties to reassess their approach.
Stoller should be ashamed of himself, he is as misleading as any of the conventional analysts with his version of peak oil denial.
Stoller: “These unions will probably end up losing the fight, because they have no ability to persuade voters that they represent anything but a self-interested group of insiders.”
Who can best deliver on the promise to support car use, unions or the Republicans? Union representation is too narrow, becoming narrower. The point isn’t who can deliver social justice, it is who can deliver $2 gasoline.
Stoller: “The states and localities suffering from budget crises are having problems because Wall Street blew up the economy, and in many cases, ensnared these municipalities in extremely bad deals.”
Wrong, the US has reached the end of a seventy-year run … of an auto-dependent waste-based economy that cannot afford itself. Muni-unions are of a piece of non-remunerative suburban sprawl, auto waste, debt subsidies and systemic corruption. You wanna keep those precious union jobs? Get rid of the goddamned cars!
Peeps are like children with hands caught in the cookie jar. Good grief!
Stoller: “Now voters are making their own choice. Once again, this is a direct consequence of how Barack Obama has led the Democratic Party and redefined liberalism, into a party and an ideology that is defined by wage cuts, foreclosures, debt, and acceptance of dramatic political and economic inequality. Voters don’t want to pay for a government and for government workers who they perceive as out of step with their interests.”
Wrong! Voters are choosing their cars over abstract ‘liberalism’, ‘feel-good-ism’ and ‘equality’. Car ads are more effective than unions’ ads. This is how our waste economy works; the marginal utility of one group’s marketing relative to that of other groups.
Where does this road lead to? The choice now is drive a car or have a (union) job. The next choice is drive a car or have something to eat. Right now, everyone in this world is making the wrong choice over and over. The consequences are multiplying: see ‘Greece’ which is where we are all driving to.
Stoller: “Voters don’t trust any Democrat to credibly deliver on that or really any promise on economic justice. Obama has designed the party’s policy framework specifically in opposition to economic justice. In that case, why not vote for the Republicans? It’s a more consistent brand.”
Wrong again! It comes down to who will ‘protect the car’ and the car-idea and who can bring forth more motoring, cheap gas and consumption. Social justice is irrelevant compared to shiny toys. Unions cannot do that, there aren’t enough of them. Republicans make a better promise.
When you’re a hammer, every problem looks like a nail.
When the only tool you know how to use is a hammer, you use every tool as a hammer.
Right! When you’re a fire hose every fire looks like a … fire.
Having gotten the obvious out of the way, now what?
Cars are a big part of the problem, but they’re not THE problem. The problem is a global hierarchical based industrial power structure (inherently corrupt, which should go without saying), based and thus dependent on a one time only non-renewable supply of cheap fossil fuel energy, designed for the express purpose of exploiting a global labor and natural resource pool, the labor portion of which is also an unsustainable historical anomaly only made possible and brought into existence by that same unsustainable cheap energy supply, for the final purpose of consolidating all the possible exploitable wealth of the planet into the hands of a very privileged few. The ultimate game of Monopoly if you will. Or Ponzi scheme, same difference. Can this madness succeed? Don’t look now, but all signs so far seem to indicate YES! As far as it goes, anyway. Although, it’s beginning to appear that the ultimate spoils of such a system may not be survivable, in human form at least.
The end of a 70 year run. Avoiding stability the whole time, like lunatics. Because growth was fantasized as synonymous with profit with capitalism. But because capitalism really didn’t keep up with profits, debt became synonymous with growth with profit, etc. That must be the instability factor: capitalism really cannot deliver. It’s an oxymoron. But if it could we might be even worse off, environmentally. It would have taken comparative massive resources to actually make capitalism work.
As Ann Pettifor says: impose financial regulations, control the flow of capital, control the creation of credit, forgive the debt. I wish she had said something about palliative measures we could take to cushion the fall for everyone who bought in to the frenzy and lost their patriotic shirt and their retirement, or their college degree and their hoped-for job. Why aren’t there political programs to insure education and jobs as well as retirement housing and purchasing co-ops. No no. That would never do if you must engage in disaster capitalism to keep the sputtering engine grinding forward.
Until the 1950’s the US Motto was E Pluribus Unum or Out of Many, One.
And what sick road did we go down with the motto change? I don’t want to give it credibility by repeating it here. IMO, it has bastardized what was trying to be a secular Republic guided by democratic principles.
And now the velvet glove is coming off the iron fist of class culture where the global inherited rich play nations against each other in combinations or individually. That is what you get with a deadly embrace of the religious factions and their endless wars funded by the global inherited rich that profit from the genocide and it provides cover for keeping any challenge to inheritance and accumulated private ownership of property, etc. muted.
What’s with the car digression?
It’s not completely orthogonal. If you view the American culture as a car culture (that’s fair, right?) then one way to protect the culture is a petrostate. Which is in fact happening, no?
Unions don’t have much place in such a dispensation…
The car culture is dying. I think even becoming a petrostate will not preserve it.
It’s going to be interesting, in a bad way, watching the elite throw massive effort into preserving the unsustainable and impossible. We can only try to make them fail sooner rather than later.
Dear Nathanael;
An interesting digression indeed. However, I think that this is one of those cases where the elites aren’t monolithic. Some elites, especially overseas ones, are working hard at ‘alternative’ sources of energy to power cars. The more important point here is the concept of mobility and ‘power’ that cars, whatever their motive force may be, give to the individual. Atomization is a natural result of such a situation. Gone is the ‘neigbhorliness’ of stable and fairly dense population centres. When everyone has at the least the promise of personal mobility and escape from the social pressures inheirent in communal living, the incentive for effort to engage in and cooperate with ones surrounding social matrix diminishes to the fabulous Parralax Point.
Maybe not a petrostate, but d— sure a car state.
Ambrit,
I think Steve In Virginia would say that there won’t be enough no-petro energy to run all the cars, or even very many of them. So “alternative energy” for cars would be a fool’s errand which will come only to grief. James Klunster of Custerfluck Nation says the same thing but without nearly as much real argument. He just declaims and declaims . . .
I myself think that we won’t have the total sudden grand crash that Steve In Virginia and James Klunster hope for as cultural comeuppance and a lesson to us all. I think we will make some gray faded adjustments. People now driving cars to work (if they have work) will drive those little Italian style motobikes. People who still have 5-day-a-week jobs will begin spending a week living in apartheid-era-South-Africa-style “commuter hostels” and driving back home to their families in the downscaling suburbaslums. There will be a huge proliferation of such “commuter hostels” in those city-zones with lots of jobs. They won’t be as nice as Mao-era Chinese housing was, but they will be borderline affordable. We’ll make those sorts of adjustments as we fall nice and slow all the way down John Michael Greer’s “long decline” staircase.
There will be time enough for at least a few million homeowners to transform their house-and-yards into Survivalist Doomsteads, if they are smart enough to see it and do it in time. Many of the still-employed public sector workers may well “own” their own houses. They still have time to turn their house-and-yards into mini-survivalist “foodsteads”. They and their unions still have time to study the “Mormon Stake” system very carefully and apply it to themselves. In other words, they still have time to Survivalize, if they get started right now.
@different clue
I think your picture of the not-so-distant future, as we fall down the other side of the peak-oil mountain slope, to be fairly accurate and even pragmatic/historical.
Two things though;
– There’s not even enough oil to produce all those *Tires* that all those automobiles/trucks need (Yes, just the tires, not even taking into account all the parts made of plastic used throughout manufacture ..of just autos even). IINM, it takes 7 Barrels of crude to make just one car tire, and if we factor in how many cars exist worldwide (800million?, again, not sure though)…the math tells us how change is inevitable.
– “own” is never going to happen; it doesn’t exist now. We are mere renters/tenants of the houses and land we occupy. The concept of Allodial Title is not something the “State” will ever accept..ever! You don’t pay your taxes? –> into the Cage for You! and your family will be evicted and made homeless, your House and Land confiscated! .. and this doesn’t even take into account the sickening State Aggression when they invoke eminent domain.
Love
@enouf
IINM, it takes 7 Barrels of crude to make just one car tire, and if we factor in how many cars exist worldwide (800million?, again, not sure though)…the math tells us how change is inevitable.
Seven gallons. Imagine what a tire would cost at seven barrels, or 294 gallons.
http://www.treehugger.com/cars/within-5-years-tires-could-be-made-from-sugar-cane-corn-or-switchgrass-instead-of-oil.html
Some of us are convinced as well that the idea that petroleum is liquified animal matter is laughable.
http://seekingalpha.com/instablog/400230-vinod-dar/47079-abiotic-oil-and-gas-a-theory-that-refuses-to-vanish
Funding of large plans is pure utopia. No large entity can stop itself from raiding the funds over time. It is just too tempting.
Trying to fund plans is guaranteeing that the total amount ends up getting paid out twice… or never.
“Funding of large plans is pure utopia. No large entity can stop itself from raiding the funds over time. It is just too tempting.”
Funds aren’t funded. What gets raided is the contributions. See the first comment at the top of the page.
“…or never.”
Bingo. So the question is, why should we as workers pay into them? Buy or invest in US treasuries instead.
I know what you are saying. When I say funded, I mean funded according to actuarial caluculations.
Anyway, my point is that government and corporations should not be overseeing large pools of money, DC or BD. IMO, it should be pay-as-you-go… then it would have been obvious that the baby bust would have trouble paying for the boomer bulge. By playing the funding game over the last few decades, we have been pretending that this squeeze could be avoided with capital markets.
IMO, government should do pay-as-you-go and if individuals want more, they invest individually.
Go back to what it was: welfare.
I agree, let’s go back to having 60% of old people living in destitution…dying on the street in front of kids…teach them about moral hazard early on. But you know that could be messy, how about the Nazi way of handling it, they were so neat and efficient with those death camps of theirs…of course we’d have to prvatize the Death Camps for the elderly. Yeah, that’s the ticket, no Dickens like scenes for us…nooo sir…privatized Death Camps are the way to go!
I’m not saying that.
I don«,t know how they can fix the mess but one thing is for sure… they can’t keep on paying those pensions without giving money to the others.
And you can’t keep on squeezing the young so those with pensions can get to live in their 3 car door garage McMansions.
You don’t have to pay them their pension, I don’t know where you are getting this from.
Pay them the money they would have been paid in lieu of the promised pension.
You will have to pay them a higher wage so they can invest in their own pension (which would be a mistake, invest in treasuries instead).
Oh, you don’t want to pay them more? But you want to complain that if they don’t invest in their own retirement you don’t want to have to “pay” for it.
Sounds like you are advocating a “soylent green” solution.
What goes around comes around.
The worker didn’t come up with these crazy pension schemes. Employers and “investors” came up with it as a way to reduce costs.
Now that it hasn’t worked they (and you) want to renege.
paul,
I am part of the 10%. But I exepect it will get taken away from me. The boomer bulge is big and it votes. Do I blame boomers, hell no because I would do the same if I were a boomer. I believe we are a product of our times. I believe in determinism.
I don’t expect to retire. If I can, it will be a gift. The only thing I pray for is that I will be able to work until the day I die, even if it’s in a McDonalds.
As a Canadian I realize that we have been exploiting emerging markets to indulge in our materialism. It might last a few decades more, or maybe it won’t.
Moneta,
I’m 65 and I (and my wife) have no debt other than a small mortgage that will be paid off in a few years.
We’re in good shape as long as one of us doesn’t get real sick, at which point I suspect i would refuse to let the system benfit from my misery and would just take one for the team.
We have been talking back and forth but not about th esame things.
Even so, I have sympathy for those that weren’t as careful. Most people don’t understand money. After 9/11 GWB told us all to “keep shopping”.
That is hard to overcome when you hear and se it every day.
I’ve mainly been using your comments as a foil to get my points across. I understand your point of view but don’t agree with all of it.
Things that seem logical at the micro level fall apart at the system or macro level.
Many arguments seem to make good sense but you have to view them in the context of feedback loops that change the original assumption through natural events generated by the original action.
In this context you undermine your own argument if you aren’t aware of the feedback effects.
Hopefully you will think more about the things we have discussed.
Moneta, as a Canadian, you have practically-free healthcare.
That makes an enormous difference.
paul,
I think our system is a very complex system with a lot of feedback loops. I don’t think I am right 100% but I think each one of us grasps some part of the truth.
As a Cdn and foreigner, I am just trying to show another point of view because, IMO, Americans often seem to get caught up in memes. Especially now with the radicalization of the left and right.
I believe in pay-as-you-go. The pension age should be markedly increased and those who really can’t work would be entitled to receive it earlier. Pension benefits should be transformed into welfare for which the goal is not to send retirees to the poorhouse but to offer a basic amount that pays for the necessities of life in our society. An equal amount for everyone. If individuals want more, they would need to save, invest or create businesses that can generate a stream of cash flows.
Nathanael,
Essentially, as a Gen-X, we are starting to get squeezed from every angle:
– Soaring tuition for my kids.
– CPP (= SS) funding should go from 10% to 15% soon. In the boomers’ early career it was around 4%.
– Toll booths everywhere to fund crumbling infra
– OAS (old age security) increased from 65 to 67 in 10 year … boomers spared!
– Already 10 years of low returns on our portfolios and probably another 5-10.
All this to fund soaring health care, CPP and public pensions costs.
You can’t ask a bust generation to work like maniacs so a boom generation can retire because that’s what they were promised.
The elastic will snap.
Had we accepted the concept of pay-as-you-go instead of pretending these plans could get funded, it would have forced the boomers to live within their means because the boomer bulge would have been right in our face the whole time..
“…it would have forced the boomers to live within their means…”
Can you define “living within your means”?
If one doesn’t finance their lifestyle by borrowing money they haven’t earned yet then I would think they are living within their means.
In this instance I mean private sector borrowing not public sector, since the public sector doesn’t “borrow” to fund it’s spending
Maybe they would have bought bungalows instead of McMansions. Maybe the economy would not ba as bubbly and more sustainable.
You’re not really disagreeing with me here.
I said …if they didn’t borrow to finance their lifestyle….
This is unrelated to our current crisis.
Human nature being what it is, the bubble was caused by the offer of credit with no strings attached.
Give a million people the offer of money for nothing, half of them will take the money.
The lenders responsibility, his main responsibility, is to loan money only to those that are likely to repay it within some confidence factor.
The system is designed for a certain percentage of defaults because no one is perfect.
By abandoning this tried and true practice, the lenders violated their basic fiduciary responsibility.
This has zero to do with the problem of unfunded pensions, which have been a kind of ponzi from the beginning.
When you lend money to someone you have to look at how much they can make over their whole lifetime.
If they can not afford the loan unless they sell the asset at one point in thier life, that’s unsustainable. If it happens to a few individual, it’s not a problem. When such loans are made to a large cohort, it’s an issue.
The boomers were that cohort. And these DB plans extended the lie. We knew there was a demographics problem but we were convinced capital markets would make it all work out.
My father never had a BD and saved like a maniac. Because he saved like a maniac, he NEVER had a huge loan. Most of those with no DBs plans probably have no portfolios… therefore not contributing to the bubbly capital markets.
Here is Canada, many of those with guaranteed DBs plans are the most oblivious investors. They buy McMansions because they have stable cash flow and feel no need to save. And now that we have a real estate bubble, they are using the equity in their homes to buy mutiple condos.
These DB plans have EVERYTHING to do with the credit bubble. Take aways that false sense of security and capital markets would not be what they are today.
The terrible thing about public DB pensions is that while the private sector mostly enjoys lackluster pensions, the public sector got to suck up the profits and returns from the private sector thanks to the equity portion on their portfolios…. those same profits that could have gone as higher wages to the workers. And now that equity returns are not there, taxes and deficits go to fund them.
You seem to keep missing the point.
Can you define the demographic problem?
You seem to be saying we are out of money. That is impossible.
You seem to also be implying that we don’t have the resources to take care of our elderly and retired.That’s nonsense.
1.5% of our workforce produces all of the food needed to feed America plus much of the rest of the world.
Productivity is rising at incredible rates, so fewer and fewer people will be needed to work to support the many.
Any production beyond that would be going to waste.
You are fretting over a non-existent problem.
BTW Moneta, saving is a destructive practice.
It’s one of those things that are good for the individual but bad for the economy as a whole. The paradox of thrift™.
Net profit is another one.
Both remove spending from the economy which can only be replaced by new money creation. All money naturally accumulates in th ehands of the few, so all we do is make them so rich they can afford to buy anything and everything. Which they do.
They end up with the power, we get the dregs.
In a perfect world saving wouldn’t be necessary because we would realize we can afford to take care of our elderly and sick without destroying the spending cycle. Can you say National Retirement System?
50% of produce comes from California… where infrastructure is crumbling and water is a constant fight.
Have you looked at the population pyramid? For the first time in a few decades, the cohort of highest paid will be shrinking vs. the number retiring.
My grandparents have 7 kids to help them. Today’s boomers only have a couple…. how will gen-X be more productive?
Oh, the “demographic problem”. Solved by immigration, except that immigrants now realize that this country holds no opportunity and are moving to Mexico instead.
(Really. Look it up.)
Moneta:
Most homes in the US have seven or fewer rooms are under 2000 square feet and 20 years oldbesides needing updating. These do not qualify as the over discussed McMansions.
Maybe they wold have invested in health care instead of golf courses and hotels.
Living within your means is when you don’t need a greater fool to buy your assets so you can retire.
For example, if at age 40 you buy a very expensive house that you can afford on a cash flow basis but could not keep in your golden years, that’s living above your needs. It’s renting a lifestyle.
Again you are missing the bigger picture.
When you borrow to purchase a house (long-term debt) you will typically be paying back at the very least 50% more than you borrowed. In th epast when rates were higher 300% was common.
Where does that extra 50% plus towards interest payments come from?
The money was not created when the loan was made. The private sector can’t create its own dollars (counterfeiting is illegal).
Our problems have nothing to do with extravagent lifestyles except as it relates to resource constraints.
There are no constraints on money creation as it is available in (literally) infinite amounts.
You will have to blame the worlds problems on something else.
The worker has created everything that we consume. The worker is not part of the problem.
I don’t agree. You can’t just look at money printing. You have to look at the underlying goods and services consumed, the per capita consumption of joules… resources and energy and whether or not it was sustainable.
It is a no brainer that instead of buying expensive houses, boats, going on trips, there are a lot of ways the boomers could have preapred for their golden years: residences, health care, etc.
For me it is obvious that they have lived beyond their means because they have no money, did not invest enough in what they would need and are now expecting Gen-X, a baby bust, to prop them up.
For me it is obvious that they have lived beyond their means because they have no money, did not invest enough in what they would need moneta
When honest saving is punished by negative real interest rates it is no wonder that people are driven into speculation to provide for their future.
As for your fanatically saving father, it was other people’s borrowing that allowed him to save. It was other people’s consuming that provided his income.
Quit blaming the victims of a vicious money system!
Actually every time my dad keeps on complaining about financial repression, I keep on telling him that he should be kissing the spendthrifts feet for his current wealth…
because if it had not been for their excesses, he would not be retired.
On top of saving during the good market years, I got him out of the market in 2007 and made him downsize in time.
I don’t know why you keep on attacking me. I beleive in fairness. I hate gated communities. ‘m on the side of the 99%… I’m just the messenger and I don’t believe the current pension system is fair at all.
It sucks if you lose your pension but it sucks even more if you had none.
And frankly, I knew 20 years ago, these pensions would get reviewed, that’s why I always opted for my own savings. And if saw his, I don’t know why others did not.
@ Moneta
“I don’t agree. You can’t just look at money printing. You have to look at the underlying goods and services consumed, the per capita consumption of joules… resources and energy and whether or not it was sustainable.”
Don’t know what you are talking about – we produce way more than we can consume. Why do you think we have such high unemployment?
“It is a no brainer that instead of buying expensive houses, boats, going on trips,”
None of these things matter if you bought them with cash and not credit. Credit is the problem.
“there are a lot of ways the boomers could have preapred for their golden years: residences, health care, etc.”
Most of us have those things. There is not enough money in existence for us to pay ahead for health care in our final years. You have set the bar ridiculously high.
“For me it is obvious that they have lived beyond their means because they have no money, did not invest enough in what they would need and are now expecting Gen-X, a baby bust, to prop them up.”
We have money until our pension funds are raided, then we have none.
Investing just puts more of our hard-earned money in play so the few can steal it.
When we boomers are gone you won’t be able to blame your plight on us anymore, you will have to own it yourselves. Maybe then it will dawn on you that debt and liabilities can’t move forward in time.
You will always be able to consume what you produce. Unfortunately, in the relatively near future people won’t be needed to produce anything for their own survival.
What will you do then to “save” for the future? You won’t have a job.
You have ignored everything I’ve said about the evil of pension funds so i have to assume you’re mind is impenetrable.
I’m just the messenger and I don’t believe the current pension system is fair at all. Moneta
It isn’t but not because public service workers get too much (though exceptions exist) but because the rest of the population gets too little.
I say everyone is entitled to a BIG and everyone who has worked is entitled to a national pension too.
Well I do think we should print. But right now that line of thought is heresy.
But if boomers “lived beyond their means” (i.e. did not invest properly for their future) and we print, the monthly pension cheques won’t buy much as they will get devalued by inflation.
Well I do think we should print. But right now that line of thought is heresy. Moneta
Afraid of being burned at the stake? :)
But if boomers “lived beyond their means” (i.e. did not invest properly for their future) Moneta
If they worked productively then they invested in their future.
and we print, the monthly pension cheques won’t buy much as they will get devalued by inflation. Moneta
Banks are another source of money into the economy. Abolish their ability to create money (so-called “credit”) and massive government spending would be required just to prevent massive DEFLATION.
That’s where we will have to agree to disagree. OUr boomers might have been productive but in a malinvestment kind of ways. Think statue making on Easter Island…. instead of incorporating exercise in our daily lives, we built expensive clubs so we can run on a treamill.
I believe the system led our boomers to malinvest. The system works as long as we have easy resources to extract and a population pyramid. The population is not a pyramid anymore and the US imports its eneryg.
We are stuck in a system with too much entropy. A system where we have to keep on plundering the world to maintain our lifestyle. A lot of the production has gone to the dumps or in houses that will depreciate because they will be too costly to maintain.
No. I think I’m being realistic. I’m just stating what I think will happen and not what I want to happen.
I think we will see cuts before pensions for everyone. IMO, most DB pensions will get converted into DC or cut.
And at one point down the road, probably when a few countries in Europe split and start printing their own currency, we will see mass printing.
I believe the system led our boomers to malinvest. moneta
Honest usury alone would have caused problems. Usury for counterfeit money (so-called “credit”) is much, much worse since it forces people to borrow or be left behind by those who do borrow.
It’s the money system that is at fault. There is no needed to drag in cars, CO2, exercise gyms and the kitchen sink. Remember Occam’s Razor ?
One thing I find really intriguing about America is its love affair with free markets and capitalism and its dread of socialism. It’s like it is stuck in its infancy, refusing to grow up.
It seem pretty obvious that capitalism ultimately benefits the top 10% or less.
In my mind capitalism can benefit an entire population when a country is getting colonized, land is still free for anyone to pick up and resources are plentiful. Or if a country can exploit other countries, like the UK did for a while and the US has been doing for 3 decades now. But the US does not fall in that category anymore.
If everyone wants to get a pension, that means everyone beleives in sharing… and when everyone gets a share of the profits it look an awful lot like socialsm to me.
… and when everyone gets a share of the profits it look an awful lot like socialsm to me. Moneta
Without the government enforced/backed counterfeiting cartel, the banking system, whereby the most “credit-worthy” steal from the rest of us, then it is likely that the corporations would not have grown to their present size UNLESS they had “shared” with the general population.
It’s not socialism that is needed so much but the elimination of the fascist money system.
I understand why the strategic management of Boomer hate is useful — for example, to those who want to destroy social insurance programs and force everyone to pay 401k scam artists their rent — but what I can’t understand is why a smart guy like moneta deploys it.
There is more to life than securities… you can start a business.
GDP is too small right now for the size of the capital markets. Nobody wants to do the dirty work.
We’re in a world where we ALL want to be rentiers. We all want everyone one else to do the work for us and make our money grow. There are too many capitalists for the number of workers.
That’s clearly not true Moneta. The rest of the population has the ability and the resources to provide for the needs of the retired. 10% of the working population is standing by idly, these can be trained in healthcare and whatever services are neccessary for retirees. There is sufficient food. There are adequate physical resources and the technological know how to meet their transportation and shelter needs in an energy sustainable manner. the discussion should only be about the retirees quantum and the relative distribution.
It is actually only a matter of accounting that needs fixing. The proper accounting knowledge, the political will and a few clicks on the keyboard can solve the issue.
The above comment is a reply to this statement.
“There has essentially only been one generation that has been able to retire en masse and live long… and it’s the boomers’ parents… because they had a lot of children to support them.”
Dang those fat fingers.
Maybe this is what needs to happen.
Seems like most people agree we’re all overworked. Now we need two incomes to live the same lifestyle we used to live on one. People are working longer. We have too much stuff. Jobs pay less for more work.
. . . so maybe if fewer people worked the people that worked would be happier, more productive, and make more money and be able to support more people who could provide more happiness for the rest of us.
To go to specifics . . . I second Beard’s notion of removing the fascist money system and giving people a universal bailout. Then giving every body in America a minimum income of say $25,000 would drastically improve conditions. For starters, at least.
I would add these basic social safety net policies for maximum happiness (and people should of course be paid via Greenbacks from the national government):
1. Socialized health care.
2. Socialized education, from day care to secondary school.
3. One year maternity/paternity leave for all regardless of whether they have a job.
4. Same Social Security deal we have in now, locked in, but maybe a touch sweeter, a touch more progressive, and with a fair COLA. Of course no payroll taxes so benes paid by national gov. via greenback.
5. UI insurance paid by federal government which is a lump sum no fault payment of 1/8 to 1 year of salary.
It seems like asking for the moon in our crazy political reality but it’s a pretty basic but solid deal.
Oh, and maybe insurance companies could be nationalized and go no fault (for auto) or reformed in some way.
6. Minimum Wage of $16.00 – $25.00 by region, with fair COLA.
7. 30 hour work week. Overtime required over that.
8. Retirement Age of 62 for Social Security, etc.
“Sometimes, I think it would be a lot easier being a dictator.”
Theoretically we should be fine. But in practice we will always be attracted to goods or hard assets before services.
Humans are attracted to scarcity. That’s why the elite alway endd up controlling the money supply which is tied to hard assets.
If we want to change our system we need to value services which are unlimited and shrink materialism. And if there is one materialistic country on this planet, it’s the US so for this change to happen, we would need to press the reset button… and surely a lot of people would suffer in the transition.
If the retired have no money, don’t work and still get their services, that means the workers are working to pay themselves. You are asking a younger population to sacrfice itself. It’s the part a lot of you don’t seem to see!
It’s not just an accounting trick. It’s a brain reset.
There is nothing wrong with working until the day we die or until we can’t anymore.
There has essentially only been one generation that has been able to retire en masse and live long… and it’s the boomers’ parents… because they had a lot of children to support them.
Retiring en masse is an anomaly.
We can print all the money you want but at the end of the day what you will get will depend on how many people can serve you and what is being produced.
The only way your money will be worth anything is if we invest in what is needed and if there are enough qualified people.
Moneta,
I think you are confusing “boomers” with “yuppies” . . . as the CEO MSM encourages every consumer of its propaganda to do. How many “boomers” ever had 3 car garages with McMansions? Or ever will have? Only the yuppies and preppies had/will have that.
Obviously, you have not compared the average American’s standard of living to that of a Chinese and asked yourself why it exists, how much longer it could last and what could change it.
When I say McMansion, it’s a metaphor for our Western overindulgent lifestyle.
Sorry, it might sound rude but it is not meant for you in particular but for Americans in general.
Americans don’t seem to realize how materialistic they are and don’t seem to realize how much energy is spent to maintain their lifestyle. And I am not only talking about oil, I am also talking about the million of years of energy it took our planet to create nature that we rape in decades without batting an eye.
Boomers might have produced a lot but to produce they have consumed a lot of energy. Was that production and consumption long lasting or ephemeral? Since we are on a quarterly schedule now, we can say that long term planning has not really occured. And with rates at all-time lows, we are now at the summum of short-term planning.
I’ve produced a lot in my 43 years. None of it material. I taught my way through grad school and then produced computer software. I had a house intended to last the rest of my life, and savings sufficient to retire comfortably. Then came divorce, and all the savings were gone, and the mortgage increased to cover the costs. Then came outsourcing, and with it any hope of a raise or promotion from one of the world’s largest software companies. Then came 2008, and my house equity went from $200 grand to negative $140 grand. I’m in a recourse state, so it took a Chapter 7 to get the bank off my back. Then my health collapsed, and my salary went from 6 figures to 4. I couldn’t make both alimony and expenses on my SSDI, but my ex-wife sued for contempt of court, and 55% of my disability check went to her and her lawyer. I’m now homeless and destitute, but working to regain my engineering skills and start a small company. At 58 there is not much time left, and I could well end up starving on the streets, or more likely in the woods.
And anyone who calls me a lazy boomer? They’re asking to get hurt, bad.
Yep. The strategic hate management on Boomers is pretty intense right now. Time for a grand bargain!
what makes me mad is how we are saying that “we can’t afford these pensions,etc.” and yet all the benefit cuts are occurring in the future. it’s like owning a house today that you can’t afford but saying that ‘in 15 years, the new house i will own I can afford”. If we are broke now, then why not cut expenses now? Why continue the obligations now? What happens in 15 years if the economy is better and we no longer have these pension obligations? I know the answer. Massive tax cuts and more cuts to worker benefits. All the while current obligations will continue to crush us and destroy our middle class. Part of it is playing favoritism to baby boomers, who are a large voting class.
“…Part of it is playing favoritism to baby boomers…”
Baby boomers have zero to do with any so-called “financial” problems we appear to have.
Note I said “appear”, because we don’t actually have any other than that caused by misunderstanding and ignorance.
Feel free to blame us for the corrupt political and economics system we have left you with however.
Why nor cut the benefits now, you ask? Um, have you ever heard of a contract being enforced by our legal system? Have you considered that if we cut the benefits of those public sector workers right now, ie. retires or those soon toe retired, they will have less money to live on and that means their spending will go down by necessity and thus demand will fall as will tax revenues and the public sector’s fiscal position will only worsen?
Well instead of having only the public servants get the pension money, maybe that same money should be distributed to everyone.
Ok, if youwant to renegotiate deals after the ontracts are signed, why pick this deal? Surely, if you’re in favor of really broad redistribution, this isn’t the place to start.
Changing things so that contracts are generally considered trash is not a good move for the elite, and yet that is what the elite are doing.
It’s not a good move because it means nobody in their right mind will start a business in this country; they’ll go somewhere with a better-functioning legal system, like Mexico.
Are these public worker pensions legally binding enough as contracts to be sue-able over in courts of law? If they are, is there any good reason why the union-fulls of workers involved do not go right ahead and sue?
If voting changed anything, they’d make it illegal. As it is, disenfranchisement of entire blocks of voters who might actually not drink the kool-aid is progressing nicely, in tandem with enhanced electronic voting machines.
Anytime the vote might deviate from the will of the 1%, that vote will be negated in some fashion.
Voting is for suckers.
Republicans and Conservatives appear that voting by too many of the “wrong people” may indeed change things. That is why they are working so hard to suppress and prevent non-upperclass voting by non-upperclass non-Conservatives and non-Republicans. It would also explain why the leadership elites of both parties have worked so hard to pre-fraudulate the voting-counting system with digital votefrauding/ election-frauding technologies.
And there are still referenda and initiatives which change things depending on how they get voted about.
. . . that’s “Republicans and Conservatives appear to think” ect. . . .
This was not a victory for Republicans or a loss for democrats. It was a victory for taxpayers over tax spenders. And this battle will play out the same in every country and state and city over the next few years. I actually believe that humans are incapable of preparing for old age and I teach Financial Planning. But the pension systems(both public and private) have been used and abused to the point that their future is not bright.
I will vote against higher taxes every time until our politicians begin to defend taxpayers against public servants.
It was a victory for the Koch brothers. Watch all the no-bid contacts Walker hands to them.
Ciwood who rakes in more tax money: the teacher who clips coupons and carpools to work, or the big bank that got a trillion-dollar bailout for wrecking the economy?
Republicans like Walker do not reduce taxes for middle and low -income tax payers. They reduce taxes for corporations. They never leave money in the government system. Walker had to borrow money before he could run ads saying that he balanced the budget. Thinking Walker was doing something for tax payers was the carrot. The stick is that the Koch Brothers got it all.
Walker raised your taxes in order to lower taxes for large out-of-state corporations.
This is what Republicans don’t tell you.
I see you want your public servants to be underpaid semislaves. Public servants indeed.
I sincerely hope you become as poor as you would like public servants to be. It would serve you right and it is what you deserve.
Stoller, you can’t say you weren’t warned. But better late than never.
Mr. Stoller, not too long ago I saw an article about how Democratic control of state legislatures and governorships plummetted under Bill Clinton. I *think* this might have been a post at Open Left. Do you have any memory of what I’m talking about? And what do you think a similar chart for the Obama presidency would show?
If you are an American and you accept the ideas that there’s no money for your pensions, your schools, your health care, etc let me just say this:
You are a fucking idiot.
There’s no need to debate it.
There’s no argument against it.
If you believe that all of a sudden that there’s just no money to benefit your survival in this country – a line that just happens to be promulgated by the elite then
again – quite simply – you are a fucking idiot.
Oh, there are many ways to refute such idiocy but let’s just cut to the quick at this point and reiterate:
If you believe in the austerity bullshit being foisted upon you as an American citizen, you are a fucking idiot.
+1
Thank you for saying this so i didn’t have to.
You do realize that California and many other states are in deep doo-doo, do you not?
Do you realize that California cannot borrow out of this mess?
Do you realize that California’s only choice is to cut? We spent like drunken sailors during the boom, and now we cannot afford to keep deficit spending. California is not like the Federal government that can do this.
California is not going to bail out any city, and the Feds aren’t going to bail out the states, so we’re stuck. We have to cut. This is why pensions are on the chopping block.
This is circular logic and you are ignoring the feedback loop that will result in a downward spiral that will not end until th esystem is totally locked up.
Cailifornia has done this to themselves by limiting taxation but allowing the implementation of new services by referendum.
This has nothing to do with pension funds. Thes funds were designed as a substitute for paying people real wages. It was a dollar for dollar trade-off.
Now you want to break the contract.
I can see going forward you may not want to offer workers these benefits.
If they aren’t compensated for the loss of benefits it is a pay cut.
Lowering wages has the reverse effect of that intended, ie it reduces prices less than it reduces spending power.
Another downward spiral ending in disaster for everyone except for a few.
People need to educate themselves about closed systems with natural feedback loops.
Simple household budget arithmetic only holds at the micro level.
And is California a member of the United States of America?
Gee, didn’t states used to get money – when needed -from the fedreal government which has the means to print as much money as it needs/wants?
Tut, tut, no we have to have balanced state budgets!!
Whose fucking idea was that, huh?
For what possible reason would the elite put such asinine strictures on state governments for no seemingly no good reason?
Oh, that’s right, because the “good” reason was so that the elite now have a seemingly plausible excuse/cover to steal more commoner money.
Sorry, we have to have a balanced budget, no more money for you, sucka!!
Again:
If you believe that this country doesn’t have enough money all of a sudden, you a fucking idiot.
Adding:
EVERY state except Vermont has some form of balanced budget amendment.
Germany, Italy and Spain have balanced budget laws.
http://en.wikipedia.org/wiki/Balanced_budget_amendment#U.S._states
Hmmm, I wonder why this rush all of a sudden for balanced budget laws?
Gee, are we seeing the true nature of these “laws” in that they are simply machinations by which the elite can “legally” deny life-sustaining goods and services to the proles?
Nah, probably not.
These murderous elite assholes were probabaly just really really worried about our fiscal soundness right?
They just – shucks – were looking out for the betterment of their states/countries, right?
Here’s just one example of idiocy:
States have to pay interest back to the federal government when they are loaned money to pay out unemployment benefits.
http://money.cnn.com/2010/11/22/news/economy/Unemployment_benefits_state_loans/index.htm
Now, why the f*ck should a state have to pay interest to the federal government for money borrowed?
What is the point?
Sure, one could argue this happens since the Fed charges interest in the first place etc etc but that’s beyond the point of why should a state in the United States be charged with interest payments for a loan?
As the article states, some states then issue bonds to cover the hit to their budgets which – again, for no reason – and then those are put into their “must-be” balanced budgets.
We all now “normal” the propaganda apparatus makes this sound but it’s really just effing madness.
Edit:
We all know how “normal” the propaganda apparatus makes this sound but it’s really just effing madness.
The country might, but the question is if California does. And Illinois. And Detroit. For Stockton, I think we already know the answer.
Where did I say the country didn’t have enough money? I said the Feds are not going to bail out the states. You obviously didn’t comprehend what I wrote, and instead chose to go on a hysterical rant complete with an ad hominem.
I was not directing “fucking idiot” at you.
I was simply carrying on with my general statement in the original post.
That’s not true, it sounds like your rehashing the lazy Greek propaganda. California, like other states, has been hoodwinked, paying the mob for derivative exposure. The problem is Wall Street, not the states going broke. How is spending on educating children, providing alternatives other than prison for the very poor – spending like a ‘drunken sailor’?
It’s funny how pension obligations are always de facto negotiable, whereas debt obligations are not. By whose law? Although, with pension privatization, pensioners these days are increasingly screwed either way. Let’s face it, the money’s been absconded with and it ain’t coming back. Not by conventional “lawful” methods anyway. Even worse, those for whom austerity will bite the hardest have been convinced that they all (or at least those “other fools” around them) deserve their fate, and actually support radical political agendas that will serve it right up to them. The coming collapse won’t be pleasant, but come it must. The decisions that could have saved us from this fate are at least 20 years in the rear view now. “The American experiment” indeed!
How are cities supposed to pay pension obligations if they’re broke? Sure, they were stupid enough to guarantee them, but that doesn’t change the fact that they can’t afford to deficit spend. This is reality.
Generally speaking, revenue constrained governments that have obligations they are unable to cover will be forced to find other sources of revenue.
The answer is really very obvious. Taxes.
But, since that’s a “naughty word” now the only other option is to just give the local public employees the finger and break every promise ever made to them.
The answer is really very obvious. Taxes. Douglas
Obvious but wrong. Federal taxes destroy (government) money and make private debt harder to pay. What is needed is MORE government money in the economy.
What planet are you living on? Was the debt at GM better treated than pension obligations? GM is the single biggest example of a tussle between debt and pensions (plus retiree health care) the country has yet seen and look which came out smelling like a rose.
Citalopram has many dangerous side effects, including muddled thinking: “Do you realize that California’s only choice is to cut?”
NO! Do you realize how rich California is, and how many of the 1% parasitize that state? That’s jsmith’s point of exasperation (at risk of being put into moderation purgatory for his use of the F-word). Why do we accept the one-percent’s false gospel of scarcity and austerity without question? Because it pre-empts any discussion of raising taxes on the rich and shameless! How can this propaganda campaign be any more obvious?
It’s astonishing how readily people will readily swallow the elite Kool-Aid that the US and states like California are poor! It’s a lie. It’s using the politics of envy resentment to fuel the most cynical form of kiss-up/kick-down class warfare, a slightly shifted replay on Reagan’s welfare queens. How gullible we are, even after thirty years of supply-side, crony-capitalist propaganda.
This is the richest country in the world, yet we have the highest incarceration rate, rank 17th in academic achievement, have the highest number of people without healthcare (rank 29th behind Saudi Arabia in outcomes), etc., etc.
Time to stop taking citalopram.
Mr. Terpstra;
Alas you make too much sense. It makes me so depressed sometimes I yearn for the Zombification the dreaded Prozac induced in me the time I was prescribed it, and, like a fool, took it. Nancy was right; “Just Say No To (Legally Prescribed Psycoactive) Drugs.”
What about Calif. renegotiating our bond payments? The proposition process and the local cities went wild for bonds. Bond payments are as much of a problem as pension payments.
Most pension money rests in systems like CAL-PERS that is not so easy to raid.
Mr jsmith,
You are correct sir!!
The bourgeoisie mindset always asks: Do you know how much that costs? Where are we going to get the money? I don’t want MY money going to pay them!!
The working people ask: how do you expect me to do all of the work?
In times of political struggle to the death, never follow the money, follow the enforced servitude as measured in stolen time from our lives that could be spent living but is instead sacrificed to fulfill the need to pull a few dollars from the circulation of capital through your paycheck.
Despite monumental productivity gains, we make and do more with less, we have not moved the work week owed to the economy down from 40 hrs/week. Hours and years worked go up as productivity goes up. Who is doing all of the work? And who has been liberated from working against their will by means of the economic gains of increased productivity? Who has less and less to show for more and more of the time of our lives in labor. Meaningless labor that serves to occupy our time at a predesignated place, that serves as no more than totalitarian control by means of money.
WE have solved the economic problem of food and shelter. We have not resolved the political problem of control of space, the territory of the state and time, how we live individually. WE are planned for, not the planners. New plans are being drawn up, the consequences which are not clearly understood here or by the contestants for power. What is clear, is that like urban renewal and slum clearance, the deals that were struck decades past are being smashed by a wrecking ball of financialized political power that is making way for the new edifice to be built.
VERY well said!
As I like to say:
When you strip away all the “it’s a smarter planet, think different, twitter revolution” propaganda two of the most significant consequences of the technology boom over the last two decades in the capitalist world have been increased unemployment and lower wages.
Upon introducing work-saving/productivity-increasing technology instead of our society saying “Ok, you all will get paid the same amount but you only need to work 2 days a week now” our capitalist society simply fired everyone and forced the remaining workers to double their efforts.
Bigger than the iPad3, bigger than Facebook, is the damage that technology has seemingly permanently wreaked across our planet as the capitalist society is not able to adapt itself to tech’s benefits.
Obviously, this is just warmed over Marx but people get so lost in the “wondrous beauty” of technology that they fail to see the very real and disastrous downside to much of it.
If an alien arrived tomorrow and gave us the keys to viable nuclear fusion, the elite would still find a way to keep this shitass societal structure going.
Edit:
Bigger than the iPad3, bigger than Facebook, is the damage that technology has seemingly permanently wreaked across our planet as the capitalist society is not able to adapt itself to tech’s benefits in which truly benefits humanity.
But then again, captialism doesn’t give a shit about humanity.
“But then again, captialism doesn’t give a shit about humanity.”
+1
@jsmith, you are forcing me to use up all of my bonus points.
What, do think bonus points grow on trees or can be conjured from thin air?
Veblen is more important than Marx. Read Veblen. He explains the abnormal pscyhology which drives the elite. This is key to understanding what they will do, both their effective moves, and their gross mistakes.
jsmith,
“fucking idiot”: +1 2nded (I personally prefer to use the word “moron”) Resp,
Isn’t this a bit simplistic, asking readers to quell surprise when a Democrat helps destroy collective bargaining? D Govenors in other states are working behind the scenes to do just the same. The problem with defining collective bargaining or unions in general with “Big Labor”, is that labor isn’t big by any stretch in this country, and they have sold out their best interests time and time again to the Democrat party. Trumka is supporting Obama even though members have been thrown out of work, foreclosed upon and lied to repeatdely the last three years. Collective bargaining is considered a threat by near sighted corporations, they endlessly propagandize, influence peddling to destroy Democracy in the work place.
I guess if I have choose between a crazed burnout coming straight at me with an axe, and the friendly guy who puts his arm on my shoulder and then sldes a shiv betwen my ribs, I’ll pick the crazed burnout. Much more straightforward.
Adding… Since the same guy has them both on his payroll.
with a declining population the defined benefit ponzi is unsustainable. intergenerational equity demands only defined contribution plans for the public sector.
“…with a declining population the defined benefit ponzi is unsustainable. intergenerational equity demands only defined contribution plans for the public sector.”
Any pension fund that relies on an increase in “paper” value to “fund” the system is unsustainable and a scam to take your hard-earned money. Better to put the money in a mattress or buy land so you can sustain yourself.
This is what we are seeing now and it’s ironic that the voters are doing it to themselves.
Our betters are much smarter than we are. All they have to do is sit back and watch us eat our own seed corn.
Even if the population is declining, productivity is shooting upward.
+1
This is so obvious, yet it remains hidden in plain view.
“What good is a brain without eyes to see?” – Igor in “The Bride of Frankenstein”.
Not that I challenge your conclusions, but it’s hard to get upset about this when the entire concept of the pension fund (public and private) is going to be evaporating in the next few years.
Well, eventually won’t the Pentagoners in places like San Diego see little fruit bearing in their retirement schemes too? Guillotines were eventually wackin’ everyone, even the gated community types back in the French Revolution.
We are returning to every animal for himself and devil take the hindmost, survival of the most vicious, in other words, Law of the Jungle.
It is a rejection of civilized society, ironically, voted in by the majority. Reminds me of the 30s and the failure of democracies in Germany, Spain and France.
RE: Walker’s Win In Wisconsin:
With all due respect Matt, a big part of the problem remains voter apathy. For an election of such magnitude to get out only 57-58% of the eligible vote is untenable. Here is the breakdown:
Voter turnout = 57.7 %
Scott Walker total = 53.1%
% of eligible voters that elected Scott Walker = 30.6%
Yup, barely three out of ten eligible voters put this bought out Koch brothers puppet back into office. Until people in this country begin to understand that the ONLY way (left, for now) to begin to fix the system is to VOTE the corporate muppets OUT, then there is NO HOPE. Perhaps the country needs mandatory voting like our friends down under.
Do all states allow write-in votes? I mean, if you’re on the party’s ticket in the general election, most likely you are there precisely BECAUSE you are a corporate muppet.
No, not all do. Arkansas, Hawaii, Louisiana, Mississippi, Nevada, New Mexico, Oklahoma & South Dakota do not apparently.
Actually , those numbers were damn high, comparable to a Presidential election. Besides, what would necessarily change of even 100% turnout occurred? I’m no pollster, but, 54% is pretty damn high for a sample, I’m pretty sure.
I’m trying to make the case that if less than 6 out of 10 eligible voters showing up is considered acceptable (and high), then that’s part of the problem. Point taken that perhaps nothing might have changed, but we will never know and given the gravity of this particular election, we need(ed) to know. the fact remains – three out of ten eligible voters put Scott Walker back in office. That is pitiful.
And, if 3.4% out of every ten voters took Walker out of office, would you be happier?
Nope… I want to see 5.4 out of 10.
This is a battle that the anti-Public-Sector-Union crowd will probably win.
Most of us with boot-on-the-ground experience know that the average public sector worker we come in contact with on a daily basis is not better educated on average than their private sector counterpart. And most of us know that they are paid at least as well and get better benefits. And most of us know that their retirement benefits are far better than most of us will ever see.
We live in small to medium sized towns with our high school friends, some of whom grabbed a 4 year degree, some a 2 year degree, and many with no degree after high school at all that jumped into a public sector job by the time they were 22 or so at most.
Many of them have already retired from their first public sector job at the age of 47 or so, at the latest, and some have gone into a second public sector job with the opportunity to “double-dip”.
I can name at least 10 people right now that I grew up with that have “retired” many years ago and a couple of them are making damn close to what I make annually right now and with far better health benefits than I presently get with my three College Degrees, and absolutely will get after I retire. If I’m lucky, retirement may come in another 6 or 7 years when I reach my mid-sixties.
Their contributions were no higher, and in many cases less, than what I’ve been contributing (consistently max amt. and with little to show for it due to all the busts) to my 401K for the last 25 working years or so (between layoffs).
The ones I know are making in the neighborhood of $40K to $50K per year in retirement plus excellent health benefits and, depending on which Union they were in, many are also collecting S.S.
We all know that their contributions are funding only part of this while we continue to work and pay taxes to help fund the rest. Forget MMT and the B.S. of “real” cost. The fact is the Pols and propagandists tell us daily that we can’t have infrastructure repair or new Public Works because we have to fund our friends’ retirement instead because the Public Pension funds are getting hammered in the markets.
And the Public Sector Unionists propagandists tell us the Public Sector workers are better educated than we are and deferring their lower pay for better retirement. On a local level we know that neither is true.
Bottom line – the average $50K a year or so college educated private sector worker resents paying taxes until at least 65 years of age (if they’re lucky enough to keep a job) while looking forward to the threat of no S.S. and a crappy 401K/Roth payout, while his/her retired prison guard, cop, county road worker, teacher, DMV clerk friend is making a guaranteed $30K to $60K a year + health benefits and all the while listening to stories of regular week long fishing trips, problems with the R.V. or summer cottage, etc.
If the financial fraud continues at it’s present pace, the propagandists will successfully continue to divide us all and Public Sector workers will find themselves in the same boat as the rest of us.
That’s the way it is.
You’re right.
In San Jose the main issue is the high salaries of policemen and firefighters.
In many cities in the Bay Area police-firemen salaries take up almost 50% of the cities’ budget. They both get around 120k salary plus generous benefits, and many work overtime so they get about 180k. They retire on almost full pay plus benefits after 25-30 years, which means many retire at 50-55.
Their jobs are not particularly demanding. There are very few fires in urban areas – mostly the firefighters go out with the full truck as glorified paramedics and spend the rest of their time perfecting chile recipes, polishing their equipment and trying to invent tasks to do. The police almost never get shot or assaulted. Mostly they cruise around and give traffic tickets (in between frequent stops at the delis and donut shops). If you look at the police blotters, the main activity is stopping illegal emigrant Mexicans and arresting them for not having a drivers license. Other big make-work activities are harrassing homeless people and giving tickets for loud leafblowers.
Probably 30-50% of the fire/police could be fired without any drop in “service”. Their places could easily be filled by folks ready to work for half their salaries, especially since police/fire doesn’t require college education.
The police/fire salaries are generally determined by other overpaid city workers, the city managers. The city councilmen are mostly politicians or part-timers who out of the loop and don’t get involved in financial matters.
At the same time as the police/fire salaries went through the roof, the cities’ revenues have declined dramatically, since property taxes have fallen due to lower house prices. So what are the cities supposed to do? Road maintenance has been put off, parks and libraries have been defunded. They have tried to raise money through higher permit and parking fees and fines and the like, but this is just a backdoor method to soak the general public.
Come on how defeatist! “is not better educated on average”
That’s corporate propoganda, the point of collective bargaining isn’t to reward better educated, better looking, or more heinously, the well connected, the wealthy. No, their purpose is to get some sort of Democracy in the places that we work. Sure, lament the inevitable, but it’s high time everyone had a leg up at work, whereever they are and whatever they do. The idea that needs defeating is the idea that we can’t have collective bargaining.
And you’re wrong. But don’t let the facts get in the way of your rhetorical nonsense. City of San Jose’s total budget is approx. 3 billion per year, General Fund obligations running about 1 billion of this. Money paid out of this General fund for police and fire INCLUDING pension costs hovers at 420 million per year. City of San Jose is in no way even close to declaring bankruptcy.
FACT. Police and Fire have taken 16% salary reductions, pay 17% and 22% into pensions, have lost 10-15% of workforce, increasing workload. San Jose has the lowest paid public safety in the entire county of Santa Clara, and some of the lowest pay in the region.
FACT. POA/L230 attempted to negotiate to OVERFUND their pension obligations and were consistently rebuffed due to bad faith bargaining by the city.
Matt Stoller may think this is over, but San Jose’s attempt to negotiate thru the ballot box flies directly in the face of 70 years of BASIC contract law and volume’s of legal precedence.
td;lr – you’re a fucking idiot
[…] Other big make-work activities are harrassing homeless people and giving tickets for loud leafblowers. […]
I totally agree with kidnapping and caging leafblower users; it’s noise pollution on an insane level — but I would prefer to cage their users’ Employers, since they are the pondscum that benefits from the efficiency a leafblower provides (as a great detriment to the commonwealth).
Give the poor underpayed immigrants some f’ken Rakes yo! ..after all, you (employers who even might pay ‘decent’ wages) .. You! (Landscaping Employers) do NOT get to steal their wealth whilst also “Disturbing the Peace” <– Yes, .. i refer to something called LAW ..not some Unlawful bullcrap called an Act, Statute, Regulation, Code, etc.
Love
If you want to go after the the big problems we’re facing, I would point out that Wall St and the TBTF banks were bailed out by US taxpayers with a total of $29 TRILLION in direct bailouts, and loan guarantees. That’s all happen within the last two years.
Why are you concerned about rather trivial pension benefits? That’s like trying to shut the barn door after Wall St let out all the horses and then burned down the barn, and the rest of the farm.
Us debt slaves are easily distracted by our neighbors seeming slightly better off. I think somebody said this a little better than me a couple thousand years ago:
“thou shalt not covet thy neighbour’s wife, nor his manservant, nor his maidservant, nor his ox, nor his ass, nor any thing that is thy neighbour’s.”
Your “debt slave” comment reminded me of a North Korean propaganda video I recently saw. It was well done, and it delivered a pretty accurate critique of the capitalist system.
Anyway, they kept referring to Americans as “debt slaves” in a casual manner, which I thought was funny . . . as in “why is this debt slave jumping up and down with tears in her eyes? Is she praying to her God? No. She is on a television show and one debt slave [Oprah] is giving the other debt slaves free consumer merchandise made by slaves in the Third World. . . ”
Don’t know why I got a chuckle out of it . . . anyone else weirdly excited? :)
Not to distract from your good comment though, sorry, carry on.
Glen, you said “Why are you concerned about rather trivial pension benefits? That’s like trying to shut the barn door after Wall St let out all the horses and then burned down the barn, and the rest of the farm.”
I’m sorry you missed my point, which was that the anti-Public-Unionist/Collective Bargainist (is that a word? :) are the odds-on favorites to win this battle. I, personally, am not concerned about “rather trivial pension benefits” and fully understand who is stealing what from whom.
All I, admittedly in a long winded way, said was that from the point of view of the average person in the average town, these benefits, and the work and education necessary to get them, do not appear to be trivial at all.
I do not “covet” anything my neighbor has. I covet my money that I earned which has been and will continue to be stolen from me by Gov’t and Wall St Financiers. I also fear that my retirement will fund very little little beyond a cardboard box on a nice warm steam grate in mid-town Manhattan. And I’m not alone.
What I am concerned about is the fact that the propagandists on both sides of this issue are not telling the truth, and my boot-on-the-ground view, which is the same as most others, sees friends and neighbors with what appear to be safe and relatively early retirements, along with potholes in the streets, more closed libraries and public schools, laid-off teachers and firemen and other fifty year old private sector men and women without jobs trying, some desperately, to hang on to what they now have, let alone worry about what will happen to them 15 years from now.
The view from my front porch is not good, and the Political/Wall St. propaganda is intentionally designed to divide, conquer, and steal as much as possible from all of us.
Unfortunately the only relatively peaceful solution seems to be the one I probably will never see in my remaining lifetime and that is the end of the fraud by the 1% and their Gov’t lackeys.
[…] What I am concerned about is the fact that the propagandists on both sides of this issue are not telling the truth, …
Pray tell! what incentive does *any* sociopathic delusional Welfare Queen of the Global CorpCommieCapitalistPig cartel have in “telling the truth” ..Amerikaans have swallowed the “it’s ok to lie” meme incessantly, Hook-Line-and-Sinker *culturally*. The advent and proliferation of Television (and its utter technological misuse is mostly to blame) ..and so the world spins. Shame is closely associated with, and stems from Guilt – traits that psychopaths lack.
Love
Love
Thanks for your perspective. It doesn’t seem fair that the people you describe shouldn’t all have similar deals.
I just wish everyone had a similar pension deal. We should have a national pension basically like the public union pensions. We should also lower the Social Security retirement age to between 55 to 62. This would lower unemployment, open up jobs for younger people, and increase the pay for workers. Older people that continued working would do so out of choice.
I think a minimum income of something like $25,000 for every person would also help a great deal.
Also, Medicare for All with some socialized medicine would also really make things more fair. People are trapped to jobs because that’s how they get health care for their families.
So if we simply printed greenbacks and paid Social Security and Medicare benefits with greenbacks there would be no need for payroll taxes. It would lower costs for business and worker alike. Win win. Except for the bankers and health insurance executives.
I believe that everyone is missing the point. Let’s go back to the last decade.
As an employee, I had a contract with my employer for services rendered, part of which payment included portions withheld for pension and health-care coverages.. And yes I had a contract with the government in that I paid withholding taxes for the promise of future benefits like social security.
The system was set up by the actuarial industry who using formulae developed over centuries, determined how much money I would have to pay in, in order to get the promised pay-out.
Everything was going swimmingly until Wall Street propagated the biggest scam ever perpetrated on the American people.
In collusion with the Fed, and ZIRP, pension managers, municipal governments, insurance underwriters, brokers, and average investors were sold products that promised the rate of return necessary to meet actuarial and investment needs.
The investments offered were RMBS and CMBS. The pooling of mortgages both residential and commercial which “guaranteed” a favourable rate of return.
Now I think we all know the story of how the fraud was perpetrated. Yves and Bill Black have been eloguently describing tales of Liars Loans, rating agency malfeasence, Wall Street theivery and the governments blind eye.
Now, the sheeple have been sold the story that it is the evil Public Sector Union that is the cause of their financial woes, and they are buying it en masse.
They never blame the losses on the biggest financial fraud in history. They never point out that pension funds and municipalities, home owners and the rest of us, lost trillions thru triple A rated dreck passed off as investments, that left municipalities and investment funds holding the bag for the shortfall, and now desperate to make it up somehow, and now the public sector has been chosen as the scapegoat.
I feel sad that some of the (I believe) intelligent people here have fallen for this sleight of hand.
Yes let’s not look at the real problem here, let’s blame the school teacher, that fireman, that trash collector, because we all know that what they were promised in their contracts with the taxpayer is to blame for the financial crisis that municipalities currently face. After all it’s easier to pick on the small guy than the government protected financial elite.
You betcha… and they are winning. Fraud and propaganda is the New Economy, divide and conquer is the weapon.
This is something I was alluding to in my post.
All of sudden, the system which has been used for centuries is now totally effed up and the commoner is going to have to take it in the shorts.
Never mind the sociopathic elite and the disasters they have visited upon our society in one form or another over the last 4 decades.
Nope, it’s really just that we’re – gee, willikers – plum out o’ cash and you peons are going to take it medieval-like.
To NOT be a fucking idiot about this whole situation, one must not even engage in the elite-parametered debates about said “crisis”.
Why?
Because with all the pseudo-intellectual, plausible sounding argumenation, a person – even an intelligent one – can very easily lose sight of the fact that the elite’s entire premise really is bullshit.
It’s very easy to become a fucking idiot because that is the purpose of the entire propaganda apparatus.
To turn everyone into a fucking idiot.
Good Lord! It has been settled for decades that Social Security is definitely not a contract. You start out with an easily verified false claim like this and it is hard to treat the rest of it seriously.
Just what is it then, if not a contract?
You take my earnings now, and pay it back to me in the future, with interest.
It was a form of “forced savings”, because as we all know, we are incapable of looking out for ourselves.
As JSM said, the propaganda has turned a lot of us into non-thinking, buy into the artfully created scam, fucking assholes.
“You take my earnings now, and pay it back to me in the future, with interest:”
They take part of your earnings now and the money ceases to exist. There is no need to tax wages for future retirement, makes no mathematical sense.
In the future uou receive inflation-adjusted payments from money created out of thin air. We have run a continuous deficit with few interruptions since the beginning of the Republic.
“It was a form of “forced savings”, because as we all know, we are incapable of looking out for ourselves.”
We are (the 99%) incapable of looking out for ourselves as long as the 1% has the ability to renege on every contract and constantly change the rules to enrich themselves.
We have learned nothing from our treatment of the American Indian, where we have broken every treaty.
We did it to the indigenous peoples and now it’s happening to us.
We blame it on our fellow citizens instead of those that are behind it.
Poor people and workers have never caused the economy to crash. Crashes have always been financial.
They take part of your earnings now and the money ceases to exist. There is no need to tax wages for future retirement, makes no mathematical sense. paul [emphais added]
Well said! That money should instead remain in the economy (so long as price inflation is not a problem) to maintain aggregate demand and thus investment.
We take your earnings now and pay current retirees… and pretend to invest for your retirement.
Here in Canada, they don’t have enough for boomers so they are planning on going from 10% to 15% funding and they are telling us Gen-X and Gen-Y that that extra will fund our retirement.
LOL!
Watch out — looks like Canada took a page from the Greenspan con — he got a committee together to address the feared “shortfalls” in S. Security — solution? Increase SS tax payments (raise threshholds) IN ORDER TO CREATE SAFETY FUND FOR BOOMERS.
Guess what? The extra SS taxes have been levied since the late 1980s but there is no buffer fund anymore (in Federal Gov. Accountant-Speak of course).
It was a big secret con here and it will probably be the same thing in Canada.
Sorry to hear about this development.
SocialSecurity has nothing to do with forced savings and ALL to do with “Insurance” scams, and Felons, and Psychopaths, and Sociopaths, and Self-Aggrandizing elites.
“Insurance” == deferring liability == Unlawful
— Corporations (as they exist today) are Unlawful
— Insurance is Unlawful
— Usury is Unlawful
Get it or not — suck on that for a while
Love
SocialSecurity was invented to combat all the ills of the pondscumbaggery that did NOT want to take care of our elders; how f’ken dare they — and How the F did they ever even get that power to decide?
Love
It should be a contract. It was sold to the people as a contract. At least a social compact.
And the payroll tax system certainly implies an annuity type contract! Our dollars were extracted out of our blood, sweat, and tears . . . if we can pay bankers using printed money we can certainly honor treasuries printed in the trust fund.
We should simply print greenbacks to pay benefits anyway and end the payroll tax.
But apart from being smart policy, Social Security is a FUCKING SOCIAL COMPACT. Every generation should get the same deal. And the current generation paying the most in payroll taxes should not get screwed with the most meager benefits. Also, we just spent trillions bailing out banks, some foreign. We can spent a few trillion giving the American people their social security.
But somehow our media and politicians have brainwashed us into wanting to tear each other down and give each other less.
erm.. You think it isn’t a contract because you never explicitly consented to it; which equates to Null and Void. You can opt-out, and some have done so, though it isn’t easy to do, nor does doing so make travel(passports), credit(cards, no cash), ..the things that make jetting, yachting, ..things that make the “sophisticated” lifestyle *easy* to enjoy. All are easily overcome, if only one applies their Creator-given common sense and uses the art of preemption (legally filed court docs, etc) against those that presume!
Love
.. atleast until WeThePeople cause systemic change globally
Love
Please go and read “Retirement Heist” by Ellen Schultz to see how the cynics have destroyed the pension funds and literally robbed workers from their pensions.
They all use the excuse that people live longer, which sounds logical to all, without mentioning that for years they were raiding those funds long before the financial crisis.
never mind that we are only living a few years longer, its not like we now live 10 years longer
San Diego is an extreme Republican city that was bankrupt only a few years ago. There is talk statewide about reducing government pensions. The way to change benefits is to do it upfront and honestly. When people pay into a plan that is government-backed, they expect the “contract” to be honored. All the talk about social security and medicare is similar. Be honest about the deal going forward. Don’t keep collecting the money and expect to then take it either by management as in the airline industry or the government as in the Ryan plan. These pots of money need protection or they should not be created in the first place.
Bingo! Thank you!
I don’t think teachers, firefighters, cops, and civic maintenance workers collapsed the world economy. And I don’t think unions (public or private) did it either (or else they would have done it when unions and union membership were much higher).
States, counties and cities are running out of money because we had to bail out the crooks on Wall St.
Scott Walker, Precipitating Factor
For those in this comment section complaining about government debt…
Would any of you be willing to trade your $100,000 treasury for my $100,000 mortgage? This would mean you would have to put the mortgage in your name.
I mean they’re both debt instruments right?
I would even pay a $5000.00 premium.
Depends where your house is located and whether you have good title to that mortage. :-) I might be interested in seizing that collateral. :-)
You are talking about being on different sides of the debt instrument but then you know that or no one would have given you a mortgage.
Well, from one side the bond earns interest and the mortgage receives principal plus earns interest – the holder or creditors perspective.
I’ll take the bond from this perspective.
From the other side the debtor pays interest or the debtor pays principal and interest.
I’ll take the bond from this perspective too, remember I get the face value of the bond in advance on which I will make interest payments. You can have the payment stream from the mortgage.
Correction.
After further review, Frank B. is correct on this, I am wrong.
We have reached a different stage in our well designed race to the bottom economic system which is a sociological state of “men eat men”, and when we end up slaying and ripping each other we will still have to face the fact the it was all a ponzi scheme….
No kidding, ripping the other guy’s face off and eating it is starting to look like an apt metaphor.
States can print their own money. How would the IRS handle a high percentage of states doing this and paying for public payrolls and retirements this way? Legally funded of course. How often does someone go to another state to spend money? Almost never. Stiglitz has been saying that productivity killed the American dream. Hate that phrase, it’s so smarmy because what’s the difference between a dream and its desperation? Cooperation makes the only difference, not individualism. It’s ironic they are all sappy about how to save the American dream, but ruthless in their efforts to kill off any grassroots cooperation, like say, unions. But resurrecting cooperation would require actual policies. Real politics. Not the BS we’ve got. When we establish the New Productivity it should eliminate all of the evils that led us here today.
@ Susan
States are free to print their own money but you would be unable to use it to pay your income taxes, which would be denominated in US dollars.
The state money would be like a commodity, much like gold. It wouldn’t be as safe as the dollar by any stretch of the imagination.
It wouldn’t be as safe as the dollar by any stretch of the imagination. paul
But safe enough. Can’t one go to jail or lose property or both for failure to pay state and local taxes?
Also, if state and local taxes can be paid with state money, does that not REDUCE the value of the dollar since it is then less needful?
I suggest the Federal Government wise up and bailout the population of all the states before the states decide to take matters into their own hands.
Not much to disagree with there.
this has been tried before. didn’t work then either. and even banks got into the act in the past. thats didn’t work either. as pointed out, the Feds wouldn’t take. and a lot of others wouldn’t either. and a majority of folks you owe money too, wouldn’t either.
Nope. You could use state money to pay your income taxes if the federal government chose to accept it.
The federal government currently accepts checks and credit cards, and they’re not legal tender….
You could certainly use state money to pay your state taxes — the state would certainly accept it.
what are the odds teh Feds would accept it? some less than nil. they only allow the others because it makes easier for tax payers to pay. and they are denominated in dollars
If California issues it, the Feds will take it. If Wyoming issues it… probably not.
People underestimate the power possessed by the State of California.
There is no “income tax”; Only Corporations are obligated to pay taxes on Profits/Gains. Read the Code
Love
from Article I, Section 10: No State shall … make any Thing but gold and silver Coin a Tender in Payment of Debts;
I know it’s quaint of me to consider the document that that’s from to be of any importance, but I just can’t help myself.
You don’t need to make it legal tender to have it be used by everyone.
If California printed money, people would accept it, legal tender or not.
Nathaniel
Checks and credit cards are denominated in the unit of account – the dollar.
State-level money would not be allowed to do this – it would be counterfeiting.
The states would have to call their currency something else. – Buckaroos or CalBucks or something. They would have some value relative to the dollar but would not be usable to pay taxes.
You can’t pay your taxes with gold, nor can you pay with Euros or property.
California can denominate its money in dollars. What’s to stop it from doing so? Absolutely nothing!
To do it “legally” California needs to set up a state-owned private “Bank of California” and have that issue the banknotes.
Relevant?
“Utah to accept gold & silver bullion as currency, move highlights broader financial realities in US”
http://civsourceonline.com/2012/04/19/utah-to-accept-gold-silver-bullion-as-currency-move-highlights-broader-financial-realities-in-us/
Love
That is understood to be legal tender for PRIVATE debts, imo.
Am I wrong? Certainly a state can issue legal tender for debts to itself? Why not?
beowulf has the law on that and I think States cannot do it (create their own currency or a competing currency).
However Cali has paid vendors in what could be described as “tax warrants” in lieu of USDs (that they found themself in short supply of) which was derided by morons as “IOUs”… I believe states could use electronic state “tax warrants” priced in USDs to pay vendors in a voluntary program if the state leaders could muster up courage to face down a possible Federal legal challenge… Resp,
“Certainly a state can issue legal tender for debts to itself?”
Sure it can. So can you if you can get anyone to accept them.
But any profits or income reported in the alternative currency would accrue federal tax liabilities that would have to be paid in dollars.
But any profits or income reported in the alternative currency would accrue federal tax liabilities that would have to be paid in dollars. paul
Agreed. But so what? Mightn’t it be easier to acquire only the dollars necessary to pay one’s Federal Taxes and pay all other debts with state money than to acquire ALL of one’s income in dollars?
I’m not (necessarily) arguing for state monies but merely pointing out that if the Federal Government does not solve the money shortage the states can – particularly the rich ones such as California.
True, just pointing out the limitations.
Susan the other: States can print their own money.
No, they can’t. The US Constitution prohibits this, “emitting bills of credit” :
Art. 1 Sec. 10 No State shall … coin Money; emit Bills of Credit
States are tied to the US dollar. That being said, the courts have relatively leniently interpreted this clause, e.g. allowing states to run their own banks, which can issue US dollar denominated bank money. California IOUs are an interesting case – looked up the law on these matters a while ago, but forgot most of it!
Susan .. the IRS is owned by the IMF
(just thought i’d let you know)
Love
My Fellow Americans,
I’m pleased to see that you’re saving money by choosing to cut pension funds and eliminate public sector unions, and now it’s both my privilege and honor to announce the creation of the new Banker Bailout Fund.
Unlike public sector unions, we bankers are the job creators and we need your support.
Donate whatever you can afford to give, which can be defined simply as whatever money you don’t need for food and gas to make it to your next paycheck. If you can’t afford to donate, think again. There must be something you can do without.
Does your family really need that vacation to Six Flags? Does your daughter need a $10,000 wedding? Do you have to spend $300 going out to the restaurant several times a month? That second car, all those groceries?
Of course not. Austerity is here, my friends. To save America’s future and save Main Street jobs, let’s get rid of public sector unions, Social Security, Medicare, public transport, public libraries, etc and donate your money instead to the Job Creators, the Banker Bailout Fund.
Here’s how it works, depending how much you donate, we have gifts and prizes ranging from (I love Lloyd Blankfein Job Creator) or (I love Jamie Dimon Job Creator) T-Shirts, (Ben Bernanke or Larry Summers Job Creator) baseball caps, (Hank Paulson Job Creator) buttons, etc, for those who donate less than $25,000 ….
All the way up to lunch with Larry Summers or Hank Paulson for those who donate $100,000 to $500,000 or more, and finally, drumroll here please, the ultimate prize of lunch at Masa’s, (with either Jamie Dimon or Lloyd Blankfein), for those who donate $1 million or more.
On the other hand, if the American people refuse to donate to the Banker Bailout Fund, we Job Creators will have no choice other than force you to wake up and smell the derivatives!
We won’t hold back this time, we’ll go all out using credit default swaps to annihilate the global economy, requiring the taxpayer to bail us out, only this time it’s going to cost you over $200 trillion.
So you can do it the easy way or the hard way. Donate your money now (all of it!) to the Banker Bailout Fund and save Main Street jobs, or face austerity and be forced to pay $200 trillion later.
The choice is yours.
I suggest you take the easy way and pay up now.
Thank you and have a nice day.
Well written!
One caveat:
The fund’s official name will now be “Job Creator Fund”
Some are concerned that if we call it Banker Bailout Fund, alert members of the American public might suspect that this fund is really just another way of looting the public, which of course is absurd, but why take any chances?
Ha ha ha
but .. but ..
the “job creators are on strike”–John ‘wretched pondscum’ Boehner
How’s that for “union” organization? :-P
Love
Lloyd Bankster: This is MONEY!
Let’s start a Kickstarter for this.
I can contribute a soundtrack (am working on an updated rendition of “Buddy Can You Spare a Dime” as sung by banksters).
Thank you :)
Most of the exit polls revealed that the voters were pretty much offended by the fact that the recall was drummed up in the first place over an issue that most felt was not “impeachable”. Walker campaigned on these issues, and carried through with his promises, and a 55 million dollar sour grapes whine fest ensued, with EXACTLY the same results as the earlier election. What, do we now expect midterm recall elections because the losing side is pissed off that the winning side is carrying out policies that don’t quite jibe with their stance? Isn’t our political system divided enough? Do we all want constant divisive campaigns with the foul advertising that accompanies them? Oh, wait, maybe the media outlets would have a different answer to that one, considering how much they profit from it all.
Get over it. Walker won. Twice. Hey, I think the guy looks nearly disabled with those beady little eyes and the near slackjaw, sounds like an idiot, and, he’s obviously owned, but, who isn’t in politics?
Oh, and the exit polls also told us that most voters favored Obama over Romney. Now, try to wrap that one into your little narrowly focused view of the political world.
“Now, try to wrap that one into your little narrowly focused view of the political world.”
Said without a hint of irony…
How so?
Because many of us are not surprised “the exit polls also told us that most voters favored Obama over Romney.” Thus maybe you that has the narrow political view.
Although we may disagree slightly about why there is that overlap. I am somewhat sympathetic to your argument that Mid-westerners especially don’t like it when one side plays dirty–the Jimmy Stewart angle. But I think the more simple explanation is that Obama is a conservative and shares most of Walker’s agenda and therefore they will share a lot of voters.
Indeed, Obama refuses to let national federal workers organize so he and Walker are peas in a pod because walker doesn’t want his government workers to organize either.
People in Wisconsin mostly didn’t know about the John Doe investigation.
Walker’s a criminal who hires pedophiles, but people didn’t *know* that.
Heck, most of them didn’t know about the stripmining law. Most of them didn’t know about Walker’s appointment of the “eliminate public hunting” man from Texas as deer czar, and those that did didn’t believe Walker would actually do it. (Walker may not be able to do it, but he will certainly try.)
Media bias is the big problem, but people believing what they want to even when the evidence is the other way is another big problem.
“People” know a bit more than you give them credit for. “People” are sick and tired of sleazy attacks from both sides, enabled by both sides in the media. Birthers versus pedophiles. At a certain point, you spit on the ground and pull the lever.
Yep, just pull the lever and get this dang nonsense done with.
Both parties count on compliant, spurious information addles masses , since voting in this sense is much less a choice, than it is, in any sense, a Democracy. Even worse then the pretense of a choice is to make it seem like retribution is going to be hurled against the undesirables, whomever they may be.
Nope, sorry, the polls show that 30% of the Wisconsin population wasn’t aware of the John Doe probe *at all* — on voting day. 50% didn’t know about it three-or-so months before.
Most people don’t know much. People commenting on Naked Capitalism are likely to know more (selection bias).
http://www.rall.com/rallblog/2012/06/08/burn-it-down
10% own 70% of the country’s wealth. The top 20% own 93% of it. The rich pay most of the taxes because they have most of the wealth, but, and this is important, they are paying little in taxes relative to the size of their wealth.
States and municipalities are facing a situation similar to Greece. Their rich aren’t paying the taxes that the middle class could have afforded if the wealth that the rich have been siphoning off from them for the last 35 years had stayed with them. The result is there is not enough money to pay for public worker pensions, or public education, or public services, or healthcare, or infrastructure.
People think that kleptocracy doesn’t exist or that it has no effect upon them and their daily lives. But this is completely untrue. Every pothole your tire clunks into, every raised fee, every service done away with or reduced, the poor schools you send your kids to, the healthcare you can’t afford, and the public worker pensions you begrudge are all kleptocracy in action. So much of our society no longer functions at all or does so poorly, and it is getting worse. Yet secure in their fantasies and indoctrination, they refuse to connect the dots between all the wealth that has been stolen from them and things falling apart. It is, in every sense, a con man’s dream.
Well said, Hugh.
have you ever asked yourself “how did it get this way”?
I proffer it’s due to assimilation, and indoctrination of the absurd notion of “State-sponsored Aggression”.
Love
I have voted for members of the Democratic party for decades, including Barack Obama in 2008 with reservations after his FISA vote in the Senate. However, by February 2009 it became obvious to me that the country had been manipulated by a master who appears to be sociopath (example, the “kill list”). On numerous occasions back in 2009, I tried to point out what had become obvious to me…that Barack Obama was destroying or actively working on destroying everything I had always associated with the Democratic party.
Over the years, I have repeatedly asked in comments, when did the Democratic party become the party of tax cuts, cuts to the social safety net, pushing privatization of educational and public resources, and stated on numerous occasions that the “party of the people” is being destroyed by going along with decisions made by the president and “democrats” in Congress. For decades the Democratic party was the “party of the people”. Well, the push back over the past three plus years has been that I am naive, I don’t understand politics and Obama’s eleven dimensional chess, just give him time, I must be a racist, the Republican party forces him to make these decisions (apparently he is too stupid to make his own decisions), or that I’m a conservative or Republican otherwise I wouldn’t bring these issues up.
So, here we are with a president who always puts the interests of the wealthiest and most powerful first, a two party system without two actual parties and certainly no one representing the interests of “we the people”. The only “message” and propaganda being heard represents the interests of the wealthy and powerful, and the majority of citizens are doing nothing about it. Do the citizens even care anymore that we were founded as a “Republic” with the power to be represented by the citizens. Or is it that people in this country really don’t care about their neighbors or community at large anymore? Why did we as a country accept Ronald Reagan’s message that the poorest amongst us and union members (people trying to collectively bargain in order to live with dignity) were somehow a “problem”? Maybe I expect a level of humanity that doesn’t exist (apparently not in this country). Bottom line…as Matt states, both legacy parties now represent an opposition to economic justice. Perhaps the majority of people just don’t care.
You just gotta admire the way people will vote against their interests. Union members vote Republican (including Scott Walker). Progressives vote for Obama.
If Stoller is right, and Obama has trashed the “liberal” brand, then there’s a huge political vaccuum on the left begging to be rebranded and filled.
Hear! Hear! Your comment wins the thread. I have read enough of Stoller’s work to know that he gets this as well – but he is still struggling within the confines of the Democratic Party, perhaps for professional reasons (like getting his next job on the Hill), but he has clearly described how the party and its leaders have abandoned populism wholesale. The proper term is democratic socialism, but that last word, socialism, sticks sideways in the throats of most who are politically astute. It carries connotations of Father Joe (Stalin) and Chairman Mao, bread lines, and economic failure. It is as if Sweden doesn’t exist, nor Finland, Norway or any other country that leans socialistic. They’re afraid to use the word. Hell, even leftist is too radical for them. We’re populists, not socialists. Given the strength of the “capitalism is good” meme, Matt is likely risking his career pointing out its warts. I imagine that around the institute where he currently works, one never hears the words Roosevelt and socialist in the same sentence. Heaven forbid.
The core political problem is Duverger’s Law. The only ways to make progress with something which is not accepted within the current two-party system are:
(1) have a revolution which institutes proportional representation (no, IRV is not good enough)
(2) kill one of the existing Major Parties, perhaps one region at a time (wipe Republicans out of Vermont as a start, perhaps), so that there is “room” for a second party (like the Vermont Progressives) to take root and grow.
(3) co-opt one of the existing Major Parties.
This is all a consquence of single-member districts with first-past-the-post elections — thanks to Duverger’s Law.
If you want to reform anything, you have to first deal with that.
In the last 36 hours I have been called perfect, utopian, anarchist, republican, alien from another galaxy with an old ford pickup which has warp drive…. all of these things by Democrats because of my dogged advocation for public campaign finance. This on a blog which most of us have frequented for many, many years… they know I am none of the above – though I would like that ford they mention… all in response to a petition for a ballot initiative which basically gives discounts to oligarchs (high cap limits) which would still be high enough that only a top few percent would be able to afford. In other words the fix would still be in. It also has the effect of people who vote for it are voting to maintain a bribe based political and electoral system.
Not one Democrat in these discussions has even hinted they agree with a public campaign finance idea.
If there is one thing I have to thank the O term for.. it is a repeat of the lesson Clinton gave the country about the D party years ago. And this time the aristocrat party defenders are being forced to face their hypocrisy more than ever before.
Public campaign finance can’t be done without a constitutional amendment to overturn Citizens United — or alternatively replacing the Supreme Court members who approved Citizens United.
Which means that we have to go at this from a different angle rather than trying to start with public campaign finance.
I want to be completely clear on this: Elections in San Diego are completely messed up. There is no guarantee that any of the votes are counted accurately. Irregularities are rife, chain of custody is terrible, and verification is nonexistent. This has been a problem for over a decade now.
I don’t hold any trust that a *San Diego* election reflects the will of the voters.
San Jose is more likely to be a real result.
A concise and brillaint analysis, Matt. A perfect metaphor: “…public sector unions supporting Obama like turkeys cheering on Thanksgiving.”
I can’t help but recall Sarah Palin symbolically pardoning one solitary turkey, even while dozens were being bloodily decapitated behind her on live TV in a grisly contraption worthy of a Saw movie. What is happening to public unions is similarly surreal, and so many poeple are oblivious to their own role in it, thanks to propaganda.
This whole devolution of American society into a Ugandan worldview reminds me of another metaphor used by Herb Cohen, author of “You Can Negotiate Anything”. Paraphrasing: “good negotiating is not extracting the gold out of your neighbor’s teeth; it’s extracting the gold out of your neighbor’s teeth and having him thank you for it.” An odd metaphor for a Jewish author I must say, but it does fit our current paradigm perfectly.
Wisconsin, I’d like to thank you for a job well done!
It’s good to see people facing up to austerity and the need for cut backs, beginning with public sector unions.
Next project…
Next, we’d like all of you to contact your elected representatives and let them know you want to eliminate Social Security, Medicare and shut down the Post Office and the public library.
This should be done immediately, because the country’s running out of money.
Do this, and we’ll send each of you a coupon for 20 percent off a Burger King Triple Whopper, including three flame-broiled beef patties topped with juicy tomatoes, fresh cut lettuce, creamy mayonnaise, crunchy pickles, and sliced white onions on a soft sesame seed bun.
Served with a small side of piping hot, thick cut French Fries or golden Onion Rings and a small fountain drink of your choice to make it a meal.
Or, if “vote to eliminate Social Security and Medicare” is too much of a tongue twister for ya’, and you’d rather leave it to the experts to deal with the budget crisis, then let’s make this real simple: Vote for Obama in November, and he’ll take care of all the hard stuff.
And yes, you’ll still get 20 percent off a Burger King Whopper, including fries and a drink.
I forgot one thing….
Let them know that you’d like all the money saved by eliminating Social Security, Medicare, the Post Office, Public Library, etc to be donated to the Lloyd Blankfein and Jamie Dimon’s Banker Bailout Fund, er, I mean the Job Creator Fund.
Of course, all the money will go there anyway, whether you vote for it or not, whether you like it or not, so you might as well go along with this.
If we vote for Romney, do we get something from McDonald’s or Wendy’s?
If Barrett was indeed an austerian Walkerite in keeping with the New and Improved Democratic Party, then what actual choice did the Wisconsin Recall voters even have? Each candidate supports destruction of worker rights and destruction of public worker pensions and so forth. So apparently the Barrett-Walker rematch was no more than a personal grudge match over who would be the public face of austerian Walkerism . . . the honest Walkerite Walker or the stealth Walkerite Barrett.
I suppose the real choice was excercised by the Wisconsin DemPrimary voters when they voted for Barrett the Walkerite over that pro-worker woman whose name I forget. But how many non-Milwaukee DemPrimary voters even knew that Barrett is a Walkerite? I bet lots of them listen to NPR.
I don’t live in Wisconsin and I don’t know that NPR’s local affiliates say in Wisconsin, but I would not be surprised if
the Republican-penetrated-and-subverted NPR said nothing about Barrett’s Walkerism ever even once.
Going back into the time machine to the collapse of the Great Fraudocession, public pensions took a major hit because of securities fraud. “The public needs to remember that much of the current pressure on the retirement fund is not a result of overly generous benefits, it’s a result of the Wall Street collapse in 2008 and the greedy schemes that led to it.” “Companies that scammed New York taxpayers should be held accountable.” (Politicker)
The passage of NY’s Institutional Investor Recovery Act would have allowed the Attorney General to seek damages and recoveries when public pension funds suffered losses due to securities fraud. Currently, the Martin Act gave the Attorney General broad powers to prosecute securities fraud, but Here’s the kick in the pensioners nuts– it does not allow the State to recover losses on behalf of public pension funds. Congress and the courts have systematically eroded the ability of defrauded investors – including pension funds – to bring civil cases to recover their losses.
It ain’t the miserable serf pensioners that are the cause of calamity, no siree Bob. It was and still is the limo chauffeured, champagne swilling, jetsetting, Martha Vineyard coke snorting limp dick Wall Street Gang along with their carry-on back pocket Renfields (Master! Master!–Dracula’s side-kick) politicians that sucked the oxygen outta of the pensions.
Secondly, if public pensions are invested in Wall Street, and Wall Street is IV’d to pension wealth extraction, what’s the domino effect if public pensions are dissolved?
The Unions were greedy, they failed to acknowlege that retiring at well before 65 often getting a 2nd job at that time and with longevities increasing according to the latest actuarial tables, wasn’t going to fly anymore, especially given strained finances at the local and state level.
especially given strained finances at the local and state level. Conscience of a Conservative
That’s the only real problem and it is an artificial one seeing as how real resources are lying idle for mere lack of money.
“retiring at well before 65”
I don’t know what planet your visiting from, but many people don’t retire before 65, they can’t afford to. Instead, between the ages of 45 to 55, dependent upon the job, they are fired, laid off, loss of positions either by companies canceling out jobs and then renaming the position for less money thus forcing retirement, and finally the mergers and acquisitions strategy of dissolving a company’s workforce by half as the pension is raided in the takeover.
The fact of the matter is there are not enough full-time living wage jobs for the adult population of the USA. Age discrimination is a feature of capitalism, not a bug.
And secondly, A 65yr old human body that has endured hard physical labor does not have the endurance, strength, and agility to perform. Instead they suffer from the debilitating effects such as arthritis from performing for 30 years, 5 days a week plus many hours of overtime the same rote process that has worn out the skeletal and muscular structure of the human body. Geez, you’d probably kick your grandmother down the stairs for not moving fast enough.
Conscience of a Conservative must’ve either been a Pyramid whip wielding slave driver dragging the blocks of stone over the weakened underfed egytpian bodies. Or a master of a southern plantation.
Fun Facts: The Prefrontal Cortex is a fairly recent addition/evolution of the human brain, and one of the last regions of the brain to reach maturation. The so-called “executive functions” of the human prefrontal cortex gives an individual the capacity to exercise “good judgment,” and problem solving. Foreseeing and weighing possible consequences of behavior. Ability to balance short-term rewards with long term goals. Impulse control and delaying gratification. Inhibiting inappropriate behavior and initiating appropriate behavior…..
Unfortunately, for the more highly evolved critical–analytical thinkers of humanity, they will have to wait for the underdeveloped humans (see Wisconsin voters, politicians, and Wall Street scumbags) to catch up or be phased out by human evolution.
Not long ago, I read up on the different personality types and realized that only 5%-10% of people look farther than 5 years down the road.
And our current system expects the majority to plan for 80.
The Private world has moved on to 401-k style plans. The public sector should do like-wise. A good compromise here would be for localities to do some matching of funds.
The private sector has moved to nothing except “Money, Now!” Only imbeciles invest in 401Ks, people who enjoy the sensation of being robbed.
The public sector is moving back to graft, which is both how they will receive compensation in the future and the kind of people that public sector jobs will attract in the future (people who want to go after graft, rather than boring people who want security in compensation). (On the plus side, by being grafters they will simply be miniature versions of our elected “representatives” and will be better protected against the vicissitudes of “the taxpayer” than they would be if they were earning an honest living.)
In fact, this is already happening, since people have seen the writing on the wall. It’s just going to speed up.
Is there polling evidence to suggest this somewhere? I certainly don’t trust the Democrats to do this, but are my views typical among likely Democratic primary voters?
in an early episode of Miami Vice a pre Pretty Woman Julia Roberts plays the girl friend of a mobster
she says to Crockett
“I like dating hoods. They are more honest in their treachery”
such explains the success of the Republicans with the 99%
besides haven’t you heard
the private sector is doing fine
always wonder no body ever points out the obvious. Pensions and 401k, and IRA’s are truly funded the same way. returns on investments. while pension maybe funded by employer contributions only (that is very rare now. in private or public pensions. what is probably driving the envy we private workers have is that public workers still have them. we on the other hand have seen them go away some time back. and now we have teh 401k is place of it. and it hasn’t worked as advertised. but then it was only advertised that way by those wanted to remove the pensions. for employees. while keeping those for executives. care to guess which of those was really really underfunded? if you said employees, you would be wrong. its the executive one. which is so underfunded to start, because salaries are so high, and time in job are so low. so to fix that, executives transferred the money from employees to excutives
May I thank most posters for the dialogue they have had this evening – as a straw poll, and with the exception of a few regular right of centre types – it would seem many of you are awakening to the fact that you have been duped.
Further, you seem aware of whom is doing the duping and where their power, wealth and political clout comes from.
With this in mind, and having been some what dismayed at the election result in my own country in 2010 where the government now in power was not actually voted for by the majority – may i encourage you to abandon the two party oligarchy that calls itself a democracy and embrace more humanist political/community groupings that actually care for their fellow man.
Alternatively, just vote Republican to force the house of cards to collapse sooner than it would under the Democrats – I’m confident a better society can be moulded, even if it does mean executing a few of the perpetrators of the great fraud you have lived under.
Great site! love most of comments…but one thing. Has most everyone you know read Retirement Heist?? A must read when anyone brings up the phrase ‘underfunded pensions”.
Though I agree management level cops and firefighters are becoming ‘millionaires’…in SF anyway……that is absurd.
Keep posting Matt. Every time you do, you seem to hit a real nerve. Speaking truth to power always hits a nerve.
If you want to suffocate Wall Street, winding down DBs is a good start.
“There is no longer any hope in the ballot box.”
sure… but what are the ways out? I can see two:
a). Start a mass movement that will force the hand of those in power.
b). Start a revolutionary movement that will overthrow the constitutional order and create something new.
Option (a) is still about the ballot box. Option (b) is so horrendous it’s hard to even contemplate, but I’m afraid is growing increasingly likely. But to be successful either of them requires a far worse crisis that the one we’ve had. I wish I knew where the hope is.
(a) is usually a prerequisite to (b) anyway, at least if you want to have any decent sort of revolution rather than a palace coup.
I haven’t read all of the comments so I apologize if what I have to say has been covered. . I do not have a pension. I did work in the area ( as a legislative analyst drafter) for many years. Pensions are deferred compensation. they are a deal that was made some time ago. Going back on them has implications beyond what “Can be afforded”. Suppose someone from the private sector a person worked for showed up and said “you know that money you earned before? ” we decided we can;t afford it. Give x percent back. ”
There would be hell to pay.
I have heard 2 canards I would like to question, One has to think that Bloomberg is lying or financially illiterate when he started that “unrealistically high rate of return expectations” bit.
First, actuarially, one has to assume a rate of return on funds that are in trust to pay future obligations. Insurance companies do this all the time.
Second at the time 7 or 8 % (most statutory rates these days) was assumed , it was a CONSERVATIVE rate of return. ( pick up any finance or econ text book of the 90s- stock market historically returned 10-11% per year)
This would speak volumes to the financially literate i.e. pension investments should be a mix, but generally more conservative than the market. Of course dismal returns force them into riskier investments.
Second- this “people are living longer” which is also used against social security. Measured from when? From birth , you bet. But take a gander at from , say age 10- not longer enough then to be significant. And the analysts know this. And I can reasonably guess that 10 year olds that have passed away are not included in actuarial tables.
The problem is the market since the collapse.few folks were complying about this pre 2007.
As for the Wisconsin voters, they remind me of the farmer who a genie appeared for and said “You can have anything you wish, but whatever I grant you will be given to your neighbor double.”
The farmer thought for a while and said “Put out one of my eyes”.
There is no longer any hope in the ballot box.
It’s the rich we can no longer afford, NOT the Jane and Joe six pack pensioners. The miniscule monthly pension checks are spent in their communities, pay property taxes that support schools, libraries, streets and san, parks, local services, etc….On the otherhand, the jetsetting global rich offshore their stolen untaxed wealth. Mom and Dad did a piss poor job in not teaching them to “share” with the other kids.
“Can you afford to bailout the rich?” should be a referendum on the November ballot with a Yes or NO checked off by the voter.
“It’s the rich we can no longer afford,”
Indeed. The 0.1% are a luxury which a grossly wealthy country could afford; with resource limitations like global warming arriving, we can no longer afford them.
So. We’ve got to endure Obamney for 4 more years. Then, likely, another 4 to 8 years of Scott Walker. And then, circa 2024, there’s our chance.
In order for us to get an Alex Tsipras, things have to get at least as bad as Greece. That’s obviously going to happen eventually, but is it in 5 years or 15? And who says a Tsipras will come to power and not a Viktor Orbán or Adolf H.?
Sure, things may change, and very quickly… but only in a big crisis, and not necessarily for the better. War got things from pretty good to very bad in Russia between 1913-1917, and it stayed very bad for the next 70+ years. I’m genuinely afraid something like this may happen here.
Previous round of globalization led to World War One, and previous depression to World War Two. Not looking good.
Yeah, Obama talked about Hope (TM) being such a beautiful thing that it would spread throughout the land. Each progressive victory would lead to the next progressive victory . . . like a case of herpes.
We were supposed to be out there ‘making Obama do it’, ‘holding his feet to the fire,’ and fighting the Republicans to keep all the goodies Obama promised in Obamacare yet it’s obvious to all but the most loyal party hack that the Democratic voters have been suckered.
Now the very idea of subsequent or near-term liberal victories is laughable. The Democrats are set up to crush Hope, not realize it.
So yeah, there is very little hope of getting a cool president. The masters have that position locked up pretty solid.
It just saddens me so many people are still getting suckered by these Charlatans. Obama the mass murderer fascist still gets support from good people. Yuck. Saw a nice looking older woman driving a Prius with a brand new Obama sticker over her old 2008 sticker . . . . and was just floored by the mad juxtaposition between her, presumably, liberal beliefs and the fucking sticker she was sporting.
The good thing is more and more of these people are starting to see through the cognitive dissonance.
“That’s obviously going to happen eventually, but is it in 5 years or 15? And who says a Tsipras will come to power and not a Viktor Orbán or Adolf H.?”
What studying history taught me is that there is no way of predicting the timing of social revolutions.
Everyone knows it’s going to happen, then everyone says “Well, it didn’t happen yet, I guess maybe it’s never going to happen”, and then suddenly it happens.
Regarding who will come into power, there are no guarantees. That is why we must fight *now* to make sure that someone like Tsipiras is considered a credible alternative by the general public, so that they don’t all run to someone like Orban.
That’s what the fight right now is really about. It’s about winning hearts and minds — who the people will run to when the current government collapses. Will they run to fascists, or to social democrats?
You need to correct the post. Sanders is Republican. San Diego is hardly “deep blue”; a thin band along the coast votes Democratic; inland is solidly Republican.
Wow, the delusion that voters don’t like Democrats because they’re not liberal enough, that’s why they vote for the ever more right wing Republicans is breathtaking in its butt headed refusal to accept reality: the American electorate is not liberal, not left wing, not progressive.
I’m from Madison, WI which is ground zero in the recall effort. I was amazed by the tone deafness of the many activist types around here who couldn’t see that vilifying Walker for ending collective bargaining for public workers was a losing political message. Nobody on the left or among the Democrats came up with anything else that offered a compelling vision for wi voters to get behind.
Walker got up in the debate and said most Wisconsinites supported his “reforms” and he was right.
I am truly worried that Romney has a chance this fall. Whatever his many failings as President are, Obama at least has real political skills, and IMO is the best we are going to do in the US barring some kind miracle shift to an enlightened populace.
For those who think there is no difference between the Dems and Repubs, look at how the Supreme Court justices have ruled based on who appointed them. At this point, is there any real chance of the Citizens United ruling being overturned?
It’s true; the focus of the campaign should have been on Walker’s *other* atrocities (and there were a lot, starting with his gratuitous, expensive, and vindictive cancellation of the paid-for, job-creating train to Madison.)
Walker’s attacks of public servants were simply not the thing which was going to inspire people; after all, most people are used to being abused by their bosses and figure “why shouldn’t public servants be abused too”?
The secret email network Walker organized in order to have state employees do campaign work on public time and money — which is at the core of the John Doe probe — should really have influenced people, but like I said, half of Wisconsinites didn’t even KNOW about.
The John Doe probe *accidentally* uncovered the theft of tens of thousands of dollars intended for veterans’ charities, and a high-level Walker employee soliciting underage girls for sex using his (government) office computer. Those were just things they happened to run into while investigating the campaigning on public time.
But much of the Wisconsin public didn’t know about that.
“These pension cuts and the victory of Scott Walker-like candidates are consistent with the overall trend of liberals losing or throwing in the towel nationally. ” I don’t agree with this as a primary reason behind the defeat of workers this week. In my view, these losses are the fault of the unions for failing on messaging. The fact that the anger with union and public workers for being overpaid compared to private sector workers is what prevails in the debate is crazy. Private sector workers should be angry with their own employers for forsaking proper compensation for the bottom line. They should not be attacking organized labor, they should be organizing themselves. Why don’t the unions come out with a viral online campaign making this case?????
Because that messaging would fail. What is needed is leadership not messaging. You have to give people a reason to follow you. With the Republicans you know what their principles are (whether you agree with them or not) and with the Democrats you don’t. You see this on the state
and federal levels.
“Once a majority of the voters believe they are entitled to something that is “too good to be true” (housing market bubbles, entitlements that pay 10X what is paid in, etc.) then they will refuse to accept its demise. But that which is unsustainable will go away, one way or another; keep changing the rules to avoid failure and what happens is the “too good to be true” system brings down the entire State, economy and nation.”
— Charles Hugh Smith, oftwominds.com
— http://charleshughsmith.blogspot.com/2012/06/is-capitalism-incompatible-with.html
I personally believe this applies across the board, from Public Union Pension Funds to TBTF. We are all responsible.
We are all responsible. JCC
No, we’re not. Speak for yourself.
The money system is at fault – usury for counterfeit money, so-called “credit”.
And what a pompous, pious, presumptuous quote from Charles Hugh Smith!
The banks have caused this mess and no one else!
And the solution is not hair-shirts all around but a universal bailout with new fiat and a ban on further credit creation.
@JCC
Here’s a good read about the real issues that went on with the San Diego pension plan.
http://www.amazon.com/While-America-Aged-Bankrupted-Financial/dp/B001JQLN7I/ref=sr_1_1?ie=UTF8&qid=1339359305&sr=8-1
It is convenient to blame all of todays issues on the banks (which they are to blame for a great many things) but these issues were around long before the credit crisis. The net of their problem was years of Republican administrations that refused to raise taxes in collusion with the labor unions. In order to balance their budget without tax increases or cuts to services the politicians worked with the union bosses to cronically underfund pension obligations. But in order for the union bosses to accept this arrangement (regulations prohibited funding from falling below a certain percentage) the politicians had to agree to greater and greater benefit levels because the unions were assumuing greater risk. It was a giant accounting fraud to cover up the true cost of the benefits and the true level of funding. You scratch my back and I’ll scratch yours. The pensions never got funded, the accounting fraud got harder and harder to cover up, and the promised benefits weren’t financially feasible. Now its either screw the taxpayer or screw the public sector employee. But atleast in this case people did go to jail.
You know F. Beard, I used to te be angry at the banks. I worked for a big one and was told that since I have the opportunity to be part of the elite, I should just shut up and enjoy the ride. It did not feel right and I left to rethink my career.
I tried to warn those around me about “the system” but they would look at me and tell me that if I knew what I was talking about I’d be rich. In their eyes, I was a loser since only losers contest the system.
That’s when I realized that it takes 2 to tango. Our entire system is so out of whack, most of the population does not even realize it has been passively brainwashed. Bankers included. This has been going on forever and it will go on forever, even after resets.
IMO, there is one coming up but the reset won’t clean anything up, it will just create a new paradigm, a new mirage that will go on for a few decades. And in this new setting, there will loads of structures I will still deplore.
For the last few years, I have been reading a lot on neurology and philosophy… have some problems with the old Greek ones who liked to ramble on about the good life when all the work was done by slaves… also have trouble with their lack of scientific knowledge which skews their reasoning.
Anyhoo, it took me 5 years to find inner peace. I don’t want to go there again. My biggest dream is not material but psyschological. I do not want to a bitter old person no matter what happens.
So now I just do what I like and what I believe to be right.
I do not want to a bitter old person no matter what happens. Moneta
Why should you be? Not being rich in a crooked system is no shame and probably an honor.
There was a small city with few men in it and a great king came to it, surrounded it and constructed large siegeworks against it. But there was found in it a poor wise man and he delivered the city by his wisdom. Yet no one remembered that poor man. So I said, “Wisdom is better than strength.” But the wisdom of the poor man is despised and his words are not heeded. Ecclesiastes 9:14-16 New American Standard Bible (NASB)
Bitter… not about money, about life not going the way you want it to go.
It’s a good thing for me that things DID NOT go the way I wanted.
Eccelesiates is fun. One of the more “contrary” books of the Bible, and I mean that in a good way.
I agree.
I was suggested this blog by my cousin. I’m not certain whether this put up is written via him as nobody else recognise such particular approximately my trouble. You are wonderful! Thank you!