Author: Larry Littlefield

My bad, he’s a Dem. I ought to stick to what I know. I do think it’s telling, however, that all these pols keep showing up from out of state. I think they sense the shortage.

that the deadline to make certain changes to New York State educational policies (such as liberalizing restrictions on Charter Schools) in order to qualify for federal funds is a phony deadline. Just like the deadline to enact congestion pricing. And for some in the media to repeat that assertion with a straight face.

If you want to know the reason why the New York State legislature, controlled by the public services producer interests and hostile to the needs of public services consumers, will not make the changes being demanded by the Obama Administration, re-read this post. And remember, it was written before the take home pay of future teachers in NYC schools was cut by 5 percent (for starters). No one could have seen that one coming, right?

In a piece in the New York Times Magazine, Roger Lowenstein, author of several books on financial issues, argues underwater homeowners should walk away from their mortgages, and not feel guilty about it. After all the wealthy and their financial institutions make similar strategic, self-interested decisions all the time. "Morgan Stanley recently decided to stop making payments on five San Francisco office buildings. A Morgan Stanley fund purchased the buildings at the height of the boom, and their value has plunged. Nobody has said Morgan Stanley is immoral — perhaps because no one assumed it was moral to begin with." In some cases homeowners are trapped because they also purchased at inflated prices at the height of the boom. In other cases they had previously purchased at fair prices, but borrowed against their home equity to live large, spending the proceeds of loans they now can't pay back.

Lowenstein is also the author of While America Aged, about the coming public employee pension disaster, a good read. The question I have for him is this. Why should younger generations sacrifice (higher taxes, diminished public services, lower pay and benefits as future public employees) to pay the unfunded portions of those pensions, and other public debts, to ensure older generations get benefits they promised themselves but didn't pay for, and that younger generations will never see, based on decisions younger generations never made?

So I have my complaints about Generation Greed, and believe we are heading for an institutional collapse, as discussed once again in my previous post. But is it the case that in the whole range of public policies, there are none that provide myself and my family with unearned and unfair privileges? No, I wouldn’t say that. And isn’t it the case that I have been relatively fortunate in my life? I have. So what am I willing to give up? For state and local government, since my epiphany at the moment that Eliot Spitzer signed the 25/55 pension plan for New York City teachers dooming the schools, the easy answer is nothing. That was proof positive that the more people put in, the more existing interests will go to Albany and take out, leaving things (after a period of cost deferral) worse than before.

But I don’t think that makes me a hypocrite, just a disappointed and increasingly cynical idealist. Looking to what I had said before that date, and to the federal government where the Obama Administration for the moment gives me a little bit of weakening hope, I have called (among other places on this blog) for the following:

I just came across yet another article pointing to bad ideas and theories as a cause of the trouble we are in, in this case economic ideas and theories. But our problem is cultural, not technical. In past eras people built institutions, public and private, in the expectation of leaving a positive legacy going forward. In the recent era, on the other hand, those who have gained control of them have exploited institutions, public and private, in the search for a better deal for themselves right now. Others, the majority, have allowed this to happen, as shareholders and citizens, because of their own laziness, indifference, or willingness to believe all is well because the consequences were deferred to the future. A future of institutional collapse. And in their own lives, people have completely given themselves over to “I want for me now” regardless of the future consequences for themselves, selling themselves out through debt when given the opportunity. In the United States, it seems that everyone was given this opportunity, once the bankruptcy laws were modified to allow them to be placed in perpetual serfdom once their party was over, or so the financial industry apparently believed. The issue is cultural, the culture of Generation Greed. For the rest of us, the dilemma, as the sold out future arrives and the bill come due, is this…

Governor Paterson claims the new Tier V pension and other changes will save New York taxpayers $35 billion. That means it will cost future public employees $35 billion. I've looked at 2008 data from the Governments Division of the U.S. Census Bureau to figure out how much that would be per employee. Assuming SUNY and CUNY are not affected (I believe they have a 401K), the MTA is not affected, and New York City workers other than teachers are not affected, a total of 865,800 full time equivalent workers are in titles that are affected by the change. Their replacements' total compensation would be $40,425 lower as a result of Tier V if Paterson is correct. So what does this mean?

In my previous post, I presented a spreadsheet of local government employment and payroll data from the U.S. Census Bureau, along with some related private sector data from the Bureau of Labor Statistics, and explained why and how it was compiled. In this post, I will once again go through some of the highlights showing how New York City and the rest of New York State compare with the national average and New Jersey, in this case in health care and education employment. Once again I stress that just because something is the national average doesn’t make it right, but substantial deviations need to be explained and justified. Here in New York, they are not even admitted. That is because state government, which created many of the priorities seen in local government data, is completely dominated by producers of public and publicly funded services, and has enacted one policy after another to ensure that less is received in exchange for more.

Why local government? The federal government collects the most money, but it sends most of it right out again in payments to the health care industry, aid to states, Social Security, and interest on the debt, and actually does little other than national defense and the Post Office. Direct services provided by states are limited, primarily state prisons, universities, mental hospitals, parks and unemployment and workers compensation insurance. Local governments and certain government-dependent private industries do most of the work of government, but under rules set and with substantial funds provided by state governments. So while the data is on local government, the issues are in large part state issues.