this week, I read an interesting comment by Damien Hoffman, Are
Private and Public Employees Headed for War?:
Institute President Arthur C. Brooks might be an emerging leader of
the intellectual side of the Tea Party movement (Cf. the emotional
side). He raises an interesting point I have been hearing a
lot lately by people in states with massive public pension
liabilities: “The disparity [between public and private sector
benefits] is so large and so unfair, a day of reckoning is coming.”
I was recently visiting family in New Jersey, all they could discuss
was their animosity toward police officers retiring in their 40′s with full
pensions, teachers receiving 4% a year raises despite the economic
recession, and politicians who keep signing contracts for more
unsustainable and unfundable public sector compensation programs. Given
the anger coupled with their very reasonable insights, I could easily
see how this issue will reach an ugly head.
However, one thing
Brooks and many private sector employees fail to also consider are the ~10 million private pensioned people lobbying hard
for a government bailout. And I don’t think anyone has yet
forgotten the Trillions in liabilities we are all sharing for the private
finance sector bailout in 2008 and 2009.
Thus, I don’t think
this is a public versus private sector issue as much as an issue of
people incorrectly believing that 1) there are guarantees in
capitalism, and 2) taxpayers can sustain irrational retirement benefits
for public sector retirees.
There are NO
Guarantees in Capitalism
I repeat: there are no
guarantees in capitalism. If the US is to recreate one of the greatest
economies in the world, we must end the practice of aiding businesses
and programs which would otherwise go bankrupt without government
subsidy. Once guarantees are offered to a privileged group of people, a
society ends up in the current tit-for-tat gameplay currently reaching
elevated heights in the US.
Of course, there must be exceptions
for certain programs which provide legitimate social value for the
statistically small percentage of people who genuinely need it. But
insofar as guaranteeing survival in the private marketplace or
irrational retirement benefits in the public sector, the government
must end these practices now before we follow the same path as ancient
The death spiral is as such:
First, public sector
employees see private sector companies receiving generous taxpayer aid
for all types of unfair reasons. Then, the private sector sees public
workers retiring after 15-20 years with full pensions at insane rates
based on trickery (e.g., padded time sheets with unnecessary overtime),
paid-up medical with zero to infinitesimal worker contributions, and
other outrageous benefits which seem like they were added to the public
budgets during a real life trip through Tim Burton’s Alice in
After that, the private sector lashes back
because there’s no justice in using tax dollars to provide one set of
workers with a better standard of living than another set of equally
deserving workers. This game goes back and forth until the parents step
in and quash the childish nonsense.
Cannot Sustain Irrational Public Sector Benefits
addition to getting back to Adam Smith’s authentic version of
capitalism — not crony capitalism or corporate socialism — the public
sector must recognize that 1 + 1 = 2. Therefore, public budgets must be
based on realistic tax burdens. No one I know debates whether we need
teachers or police officers. However, they do question whether a 40-year
old police officer really needs so much tax payer support as to have a
Hummer, live in the wealthiest neighborhood in town, etc.
there is a major problem with military officers marrying friends
simply so the tax payer will send benefits to the new “spouses”. Anyone
who has spent any time around the military knows there is a huge
cancer of scams such as this being perpetrated against the taxpayers.
Rather than nickel and dime our nation’s protectors, let’s take care of
the honest ones more generously while rooting out those who are
stealing from the system.
Those Are Fighting
Arthur C. Brooks’ new book The
Battle: How the Fight between Free Enterprise and Big Government Will
Shape America’s Futureis gaining a head of steam.
If the anger continues to spread on both sides, I would agree that our
nation’s workers are on a path to war.
share many concerns raised in this article, let me also present the
flip side of this capitalistic view of retirement benefits that you will
never see in mainstream media.
Guns & Butter had another
outstanding interview with Michael Hudson on Europe's
Financial Class War Against Labor, Industry and Government:
Financial Class War Against Labor, Industry and Government" with Dr.
Michael Hudson. Economic crisis in Europe created by predatory
lending; European Central Bank stranglehold on the Eurozone; the Euro;
foreign banks decimate Greece's social structure; Marx's industrial
capital versus fictitious capital; Latvia as a model for the rest of
Europe; Hudson's financial and fiscal plan for Latvia; the Cold War and
its ruinous effect on progressive economic thought.
the time to listen to Michael Hudson below. There are few people in
this world who understand the new financial class war more than him. I
don't agree with everything he says, but his analysis is devastatingly
brilliant. An absolute must listen interview.
and Butter - June 16, 2010 at 1:00pm
listen (or download)