Tag Archives: California

Promises They Can’t Keep

What do General Motors, Greece, and California all have in common?  Yes, they’re all broke.  More specifically, they all went broke because of unfunded pension obligations.  This is a pernicious moral hazard, especially in government.  It allows politicians to make big promises that come due years later.  Huge promises – about $500 billion, in California.

New Jersey’s $30.7 billion unfunded pension liability makes it the seventh-worst funded system in the country, while the unfunded liability for retiree health benefits is $56.8 billion, according to Moody’s Investors’ Service.

A “defined benefit” pension is nothing more than a promise that the money will be there when you retire.  If you recently retired from General Motors, it wasn’t.  A prudent company will keep track of its pension obligations, and put money aside.  They are required to track how much this money will cover.  Pension funding of 80% is considered good.  That’s for companies.  Governments have lower standards.

If your employer offers a “defined contribution” plan, or puts money into a 401(k), then that money is really there.  Otherwise, you should be very concerned about your funding ratio.  Instead of honest negotiations over wages, management can promise a fat pension and then never fund it.  This moral hazard is even worse in government, because – the workers are also voters!  The politicians will be long gone when the bill comes due.

The solution is to fully fund all pension obligations and charge them against current income, just like wages.  No big promises, no moral hazard.  Now, who do you suppose has the world’s biggest unfunded pension liability?

See also:  Privatize Social Security

Advertisements

Leave a comment

Filed under Finance

Schoolchildren Held Hostage

Warning, this video contains material you may find offensive – second graders in California, forced to write letters of protest to the governor.   Are they protesting global warming, perhaps?  No.  Their teacher, one Jody Hoffman, has the little tykes protesting cuts to the school budget.  No self-interest there …

You will make our teachers, and other people that are poor, lose their jobs.  So, please don’t make them lose their jobs.

A real educator would have helped the kids to understand the challenge facing Governor Schwarzenegger – and how to pronounce his name.  Why does the evil Snort-a-Jigger want to cut our beloved music program?  Why can’t he cut the fire department instead?

It’s hard to blame Ms. Hoffman.  She is a product of this same educational system, with its socialist mindset.  Daddy government can always find the money, if only we cry hard enough.

Leave a comment

Filed under Education

Prop 8 On Trial

Jeremiah’s view on gay rights is a pragmatic one.  Gays are productive members of society – that’s the “P” in GDP – and they should have the same rights as anyone else.  This, plus a cursory reading of the Constitution, is why we were dismayed to see gays disenfranchised recently in Maine.

Now, a challenge to California’s Proposition 8 looks like going to the Supreme Court.  In California, as in Maine, gay marriage was denied by popular vote.  As we wrote then, popular vote is not a legitimate way to settle rights issues.  California may allow its citizens to vote away civil rights, but the United States does not.  According to the 14th Amendment:

No State shall make or enforce any law which abridges the privileges of citizens of the United States.

The Amendment says that our rights as U.S. citizens supersede state law, and that we all have the same basic rights.  An individual state might conceivably grant more rights, but not fewer.

Furthermore, says the plaintiff’s lawyer, since marriage is supposed to be good for America, we should want more of it.   Theodore Olson is a conservative, and other conservatives should heed this argument.  If gay people want to pull together as a family, and pay their taxes, we should let them.

Leave a comment

Filed under Civil Rights

Bashing Democracy in Maine

Tuesday’s vote against gay marriage was a setback for democracy.  The Wall Street Journal’s boast that gay marriage “has yet to win a popular vote” is especially dangerous.  Anyone with high-school civics knows that America is a representative democracy for a reason.

Popular vote is basically mob rule, and means that any minority can be disenfranchised.  So-called “direct democracy” has made California ungovernable.

Culture warriors on both sides are guilty of venue shopping.  This issue must be settled by the states, using the legislative process according to each state’s constitution.  The “patchwork” of state laws is not a reason for federal intercession.

America should expect to endure a period of pro- and anti-gay laws at the state level, until experience at that level settles into consensus.  In the meantime, state legislators must stand up and be counted.

Leave a comment

Filed under Civil Rights