Let the Lights Go out so Long as the Pensions Are Paid

From Theodore Dalrymple:

Last night the streetlights in my pleasant little English market town were switched off at midnight. In fact they’ve been switching them off at midnight for two months, but I have not been here to notice it. However, in this little development (or is it a reversal of development?) may be seen all the economic troubles of the whole Western world.

The lights are switched off as a cost-saving measure, not because of the aesthetic and cultural advantages of darkness (which, in my opinion, do actually exist), or because there is anything wrong with the electricity supply. Private houses are unaffected. You can still burn the midnight oil if you want to.

But why do costs need to be cut? A brief description of some of the town’s finances might be helpful. Its most highly paid official receives in emoluments nearly 20 percent of the town’s income through local taxation. The payment of pensions to past employees, which are completely unfunded and must be found from current income, consume another 20 to 25 percent of that tax revenue. Two years ago a former employee took the council to a labor tribunal for wrongful dismissal, and the council spent 66 percent of its income in that year on legal fees. (The employee’s complaints against the council were not upheld, but that was scarcely of any comfort to the taxpayers, for the costs were not recoverable—even though natural justice required that she should be driven into penury and made homeless for the rest of her life to pay for her legal action, which was both frivolous and dishonest.)

Even if it provided no services at all, the council would still run at a deficit if it continued only with its essential business, which is to pay the salaries and pensions of those who work in it, and the various parasitical rent-seekers, like employment lawyers, who live at its expense. And so the bureaucracy (and its hangers-on) does not exist to serve the public, but the public exists to serve the bureaucracy. In the past, the council had reserves to meet its deficits, but these have been run into the ground, and it has therefore had to appeal to other, larger sources of public funds for help, which themselves run on the same great pyramid-principle as that of the town council. Indeed, the whole country, the whole continent, the whole hemisphere is run on that principle.

But what cannot go on forever will not go on forever. The music, if it has not yet stopped completely, is slowing down and growing fainter. The town council finds it more and more difficult to run a deficit, and since it must continue to pay its salaries and pensions or lose its primary purpose altogether, the only option that remains to it is to cut services such as lighting and rubbish collection (already down to once a fortnight, so that many people find themselves not only paying the council for rubbish collection but disposing of their own rubbish).

The curious thing is that the suppression of services has occasioned no public outcry. Why not? The first thing to mention is that a large proportion of the population pays no local taxes—it is too poor, too handicapped, too unemployed, too ill, too unwilling, too dependent on the state already—to do so. Such people feel no outrage because in their hearts they know, as Lear put it, nothing will come of nothing.

As for the taxpayers, they have had a long schooling in low expectations from their taxes: they may pay 40 per cent (80 per cent within living memory) of their income above a certain level in taxes, as well as taxes on everything that they buy or do. But they would not be so foolish as to conclude that therefore their children will be properly educated by the state, or that they will be well looked-after when they are ill. That would not be the case even if they paid 100 percent of their income to the state. So it doesn’t surprise them that the council will do anything rather than reduce payments to its staff and hangers-on. They are resigned to it, and to the council’s motto adapted from the old Roman one. Not “Let the heavens fall so long as justice is done,” but “Let the lights go out so long as the pensions are paid.”

How have we arrived at this situation, which might seem bizarre to a Martian arriving on Earth for the first time? I think the root cause of it is fiat money, the conjuring of currency out of nothing by the central banks. Fiat money has accustomed governments to the idea that they can go on borrowing and spending money forever without ever having to pay it back. This alters their attitude to deficit spending, which is not as the occasion requires (as Keynes envisaged), but permanent, the way we live now. And it alters the whole character of the citizenry as well. For them prudence becomes foolishness and foolishness prudence; speculation is necessary for all who do not want to end up impoverished, and there can be no such thing as enough, even for those who are not greedy by nature, for money is no longer a store of value. More, more, more is necessary, if you want to keep what little you already have.

It was the First World War that taught modern governments to spend in order to pursue ends that they could not afford, in this case mass slaughter lasting four years. Sir Edward Grey, the British Foreign Secretary, said on the eve of war that “The lamps are going out all over Europe, we shall not see them lit again in our life-time.” He did not foresee that, just over a century later, the lamps would go out in my little town, because the town adopted the same way of financing its activities as that in which the First World War was financed, with the results that we all know only too well.

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In Michigan, Reality is Unconstitutional

From Mark Steyn:

By the time Detroit declared bankruptcy, Americans were so inured to the throbbing dirge of Motown’s Greatest Hits — 40 percent of its streetlamps don’t work; 210 of its 317 public parks have been permanently closed; it takes an hour for police to respond to a 9-1-1 call; only a third of its ambulances are driveable; one-third of the city has been abandoned; the local realtor offers houses on sale for a buck and still finds no takers; etc., etc. — Americans were so inured that the formal confirmation of a great city’s downfall was greeted with little more than a fatalistic shrug.

But it shouldn’t be. To achieve this level of devastation, you usually have to be invaded by a foreign power. In the War of 1812, when Detroit was taken by a remarkably small number of British troops without a shot being fired, Michigan’s Governor Hull was said to have been panicked into surrender after drinking heavily. Two centuries later, after an almighty 50-year bender, the city surrendered to itself. The tunnel from Windsor, Ontario, to Detroit, Michigan, is now a border between the First World and the Third World — or, if you prefer, the developed world and the post-developed world. To any American time-transported from the mid 20th century, the city’s implosion would be literally incredible: Were he to compare photographs of today’s Hiroshima with today’s Detroit, he would assume Japan won the Second World War after nuking Michigan. Detroit was the industrial powerhouse of America, the “arsenal of democracy,” and in 1960 the city with the highest per capita income in the land. Half a century on, Detroit’s population has fallen by two-thirds, and in terms of “per capita income,” many of the shrunken pool of capita have no income at all beyond EBT cards. The recent HBO series Hung recorded the adventures of a financially struggling Detroit school basketball coach forced to moonlight as a gigolo. It would be heartening to think the rest of the bloated public-sector work force, whose unsustainable pensions and benefits have brought Detroit to its present sorry state (and account for $9 billion of its $11 billion in unsecured loans), could be persuaded to follow its protagonist and branch out into the private sector, but this would probably be more gigolos than the market could bear, even allowing for an uptick in tourism from Windsor.

So, late on Friday, some genius jurist struck down the bankruptcy filing. Judge Rosemarie Aquilina declared Detroit’s bankruptcy “unconstitutional” because, according to the Detroit Free Press, “the Michigan Constitution prohibits actions that will lessen the pension benefits of public employees.” Which means that, in Michigan, reality is unconstitutional.

So a bankrupt ruin unable to declare bankruptcy is now back to selling off its few remaining valuables, as I learned from a Detroit News story headlined “Howdy Doody May Test Limits of Protecting Detroit Assets.” For those of you under 40 — okay, under 80 — Howdy Doody is the beloved American children’s puppet, in western garb with a beaming smile and 48 freckles, one for every state, which gives you some idea of when his heyday was. The Howdy Doody Show ended its run on September 24, 1960, which would have made sense for Detroit, too. The city’s Institute of Arts paid $300,000 for the original Howdy Doody puppet — or about the cost of 300,000 three-bedroom homes. Don’t get too excited — you can’t go to Detroit and see him on display; he’s in storage. He’s in some warehouse lying down doing nothing all day long, like so many other $300,000 city employees. Instead of selling him off, maybe they should get him moonlighting as a gigolo and sell it to HBO as Hungy Doody (“When you’re looking for the real wood”). What else is left to sell? The City of Windsor has already offered to buy the Detroit half of the Detroit/Windsor tunnel, perhaps to wall it up.

With bankruptcy temporarily struck down, we’re told that “innovation hubs” and “enterprise zones” are the answer. Seriously? In my book After America, I observe that the physical decay of Detroit — the vacant and derelict lots for block after block after block — is as nothing compared to the decay of the city’s human capital. Forty-seven percent of adults are functionally illiterate, which is about the same rate as the Central African Republic, which at least has the excuse that it was ruled throughout the Seventies by a cannibal emperor. Why would any genuine innovator open a business in a Detroit “innovation hub”? Whom would you employ? The illiterates include a recent president of the school board, Otis Mathis, which doesn’t bode well for the potential work force a decade hence.

Given their respective starting points, one has to conclude that Detroit’s Democratic party makes a far more comprehensive wrecking crew than Emperor Bokassa ever did. No bombs, no invasions, no civil war, just “liberal” “progressive” politics day in, day out. Americans sigh and say, “Oh, well, Detroit’s an ‘outlier.’” It’s an outlier only in the sense that it happened here first. The same malign alliance between a corrupt political class, rapacious public-sector unions, and an ever more swollen army of welfare dependents has been adopted in the formally Golden State of California, and in large part by the Obama administration, whose priorities — “health” “care” “reform,” “immigration” “reform” — are determined by the same elite/union/dependency axis. As one droll tweeter put it, “If Obama had a city, it would look like Detroit.”

After the Battle of Saratoga, Adam Smith famously told a friend despondent that the revolting colonials were going to be the ruin of Britain, “There is a great deal of ruin in a nation” — and in a great city, too. If your inheritance includes the fruits of visionaries like Henry Ford, Walter Chrysler, and the Dodge brothers, you can coast for a long time, and then decline incrementally, and then less incrementally, and then catastrophically, until what’s left is, as the city’s bankruptcy petition puts it, “structurally unsound and in danger of collapse.” There is a great deal of ruin in advanced societies, but even in Detroit it took only six decades.

“Structurally unsound and in danger of collapse”: Hold that thought. Like Detroit, America has unfunded liabilities, to the tune of $220 trillion, according to the economist Laurence Kotlikoff. Like Detroit, it’s cosseting the government class and expanding the dependency class, to the point where its bipartisan “immigration reform” actively recruits 50–60 million low-skilled chain migrants. Like Detroit, America’s governing institutions are increasingly the corrupt enforcers of a one-party state — the IRS and Eric Holder’s amusingly misnamed Department of Justice being only the most obvious examples. Like Detroit, America is bifurcating into the class of “community organizers” and the unfortunate denizens of the communities so organized.

The one good thing that could come out of bankruptcy is if those public-sector pensions are cut and government workers forced to learn what happens when, as National Review’s Kevin Williamson puts it, a parasite outgrows its host. But, pending an appeal, that’s “unconstitutional,” no matter how dead the host is. Beyond that, Detroit needs urgently both to make it non-insane for talented people to live in the city, and to cease subjecting its present population to a public “education” system that’s little more than unionized child abuse. Otherwise, Windsor, Ontario, might as well annex it for a War of 1812 theme park — except if General Brock and the Royal Newfoundland Fencibles had done to Detroit what the Democratic party did they’d be on trial for war crimes at The Hague.

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Obscene

From SFGate:

Alameda County supervisors have really taken to heart the adage that government should run like a business — rewarding County Administrator Susan Muranishi with the Wall Street-like wage of $423,664 a year.

For the rest of her life.

According to county pay records, in addition to her $301,000 base salary, Muranishi receives:

– $24,000, plus change, in “equity pay’’ to guarantee that she makes at least 10 percent more than anyone else in the county.

– About $54,000 a year in “longevity” pay for having stayed with the county for more than 30 years.

– An annual performance bonus of $24,000.

– And another $9,000 a year for serving on the county’s three-member Surplus Property Authority, an ad hoc committee of the Board of Supervisors that oversees the sale of excess land.

Like other county executives, Muranishi also gets an $8,292-a-year car allowance.

Muranishi has been with the county for 38 years, and she’s 63. When retirement day comes, she’ll be getting a lot more than a gold watch.

That’s because, according to the county auditor’s office, Muranishi’s annual pension will be equal to the dollar total of her entire yearly package — $413,000. She also has a separate executive private pension plan, for which the county chips in $46,500 a year.

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Greece is coming to its senses as well

From Mark Landsbaum at the Orange County Register:

The word in Athens is that Greece “took a big step toward overhauling its debt-plagued economy” Thursday with a pension law to “sharply pare down the country’s welfare state by increasing the retirement age and reducing benefits.”

So says the New York Times, which as we all know must find that a tough pill to swallow, enamored as the paper is with welfare statism.

The bill “represents the beginning of the end of the cradle-to-grave state compact” Greeks have embraced since the early 1980s. Gulp.

This is our passport out of hell,” proclaimed economist Yannis Stournaras, advisor to “past Socialist governments,” the Times reported.

Indeed, the changes in pensions are astounding. An end to retirement before 50, but now 65 instead. Pension payouts based on lifetime income, as opposed to a worker’s highest pay. Wow. Try to sell that in Sacramento. Or Washington.

Which brings us to the point of this piece. Even socialist Spain, beginning to feel the inevitable bankruptcy of its tax-and-spend policies, has sense enough to fashion a “passport out of hell.”

How about the U.S. of A. under socialist-and-chief Obama? When Obama recently tried to persuade European leaders to follow his deficit-spending mania, what was the reaction?

European Union President Czech Prime Minister Mirek Topolanek said Obama’s stimulus and spending policies are “the road to hell.”

The European socialists recognize economic hell when they see it. Obama would drive us even further down that road to perdition.

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