The Latest

This Is Not A Technical Problem!!!!

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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…

My Economic Guess

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I expect that (absent a black swan I’m not expecting) things will stop getting worse soon in the aggregate, but will get no better on that basis until 2012. The reason is that while some aspects of the economy may improve, others will get worse. What 2008 was to the financial markets and 2009 was to the job market, 2010 may be for commercial real estate — unless the participants postpone the inevitable by “extending and pretending.”

Always postponing the inevitable while making it worse, is government, particularly the State of New York. Expect disaster for public services and taxes, due not only to the recession but also to the greed of the past, in revenues taken from the future, costs deferred to the future, up-front (if unconstitutional) debts, pension sweeteners, and inadequate pension contributions. The disaster is due late this year (after the election) or in 2011.

The Math Says Someone Has Been Cheated; The Only Question is Who

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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?

Long Term Care: What if Neither Business Nor Government Can Be Trusted?

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I just read an article that indicated part of the health care reform bill is automatic enrollment in long term care insurance, unless a worker opts out. It doesn't say if this will be a government program, or private insurance. Either way, in the era of Generation Greed leading up to an institutional collapse (public and private alike), a scam is possible if not likely.

Insurance businesses could make optimistic assumptions about returns on investments and future costs, paying campaign contributions to allow those assumptions to be made, allowing more profits and executive bonuses — but leaving no money available to pay for long term care when younger generations, who had paid in, need it. As in private pensions. Governments can use the same assumptions to pay out plenty to today's seniors while charging them less, to become popular. This would leave today's middle aged and young with a choice of either forgoing benefits they had been promised, and facing deprivation in old age, or taxing their children into poverty. As in public employee pensions, and Social Security.

Local Government Employment in 2008: Education and Health Care

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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.

Hypocritical, Intellectually Dishonest, Right Wing Whore Award Winner (Trophy Retired)

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TODAY’S QUESTION: Is skillful political horse-trading the mark of a hero or a villian?

POINT (IT IS HEROIC): “The word "courtly" was created to describe Bruno's polite and generous manner. His image as a tough-guy boxer was accurate only until it suggested he was combative by nature. Then it couldn't have been more wrong.

He was in truth a compromiser by instinct. His negotiations weren't aimed at winning as much as creating a win-win situation. He wanted his share, and was happy to give you yours..”–Michael Goodwin in the New York Daily News (6/24/08) commenting on former NYS Senate Majority Leader Joe Bruno (a convicted felon)

Local Government Employment in 2008: Census Bureau Data

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So it has come to this. Bad financial reporting by local governments elsewhere has so delayed the release of final local data from the finance phase of the 2007 Census of Governments that local government employment data for March 2008 has been published first. I’ve compiled it for New York City, the rest of New York State (by subtraction), New Jersey and the United States, along with some related and relevant private sector data, in the attached spreadsheet for those interested. Far more geographic detail was available from the employment phase of the 2007 Census of Governments, and little changes from year to year in New York’s relative priorities as evidenced by the data. Data and a discussion of the employment of states for 2007 is in this post. A very detailed spreadsheet for local government employment in 2007 is here, with a comparison with 2002 here, and other comparisons here, here and here. The rest of this post is a discussion of how the 2008 data was compiled (mostly copied from a post on a similar exercise for the March 2006 data). I’ll write an analysis when I can, but reading over the 2007 posts will almost certainly do as well.

The Federal Stimulus and NYC Schools

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Comptroller DiNapoli is reporting that the end of the federal stimulus program in FY 2011-2012 will mean the NYC schools lose 5.7% of their budget, as reported by Capitol Confidential. A large share of the so-called school budget, however, goes to debt service, pensions and retiree health care, not schools. And that share is set to soar in FY 2011 — 2012, as more of the cost of the 25/55 pension deal and the investment losses of recent years are admitted to. Therefore, expect funding for actual schools to fall by at least 10 percent and possibly much more than year, even if city and state funding does not fall further. That will be after whatever cuts happen in FY 2010-2011, the worst of which will probably not occur until after the November 2010 election. And I wouldn't expect any recovery in city and state funding until FY 2013-14.

Bottom line, a return to the 1970s for the city's school is scheduled for September 2011, 15 months after the MTA goes back in time. This time many other schools will join them, despite soaring taxes, unless those debt, pension and retiree health care costs somehow go away.