Posted tagged ‘Public Pensions Default’

Must Reads For The Week 4/21/18

April 22, 2018

GOVERNMENT CENTRAL PLANNING DESTROYS COMPLEX SYSTEMS

Why Systems Fail, by Charles Hugh Smith, at oftwominds.    Excerpt from the article: 1) “Systems are accretions of structures and modifications laid down over time. Each layer adds complexity which is viewed at the time as a solution.”

“This benefits insiders, as their job security arises from the need to manage the added complexity. The new layer may also benefit an outside constituency that quickly becomes dependent on the new layer for income.”

“In short order, insiders and outsiders alike habituate to the higher complexity…….. Few people can visualize alternatives, and any alternative that reduces the budget, payroll or power…..is rejected as “unworkable.”

“In this set of incentives, the “solution” is always: we need more money. But increasing the budget can’t fix what’s broken….. As a result, new layers rarely replaces previous layers; the system becomes more and more inefficient and costly as every new layer must find workarounds and kludgy fixes to function with the legacy layers.

2) “The organization is incapable of instituting deep reforms due to organizational sclerosis…… The structure itself has lost the feedback loops and accountability needed to radically restructure a failing organization.”

These dynamics can manifest in both private-sector corporations and public-sector agencies….All of this contrasts with self-organizing networks which lack the hierarchy necessary for sclerosis, self-serving insiders and fatally blinded management. Since “this is the way the system works,” we have a hard time imagining how public agencies and corporations might be obsoleted by self-organizing, opt-in transparent rules-based networks.”

“Since failing systems are incapable of structural reform, collapse is the only way forward. Unfortunately collapse doesn’t guarantee success; if the rot is deep enough, the wherewithal to assemble a new more sustainable system may be lacking.”

EXAMPLES

Kentucky Teachers Want A Taxpayer Bailout, by Troy Vincent, at mises.org. Teachers unions and Government bureaucracies are examples of what is talked about above. Teachers unions are incentivized to get as much money for its constituency group as possible. That constituency is not the students it is the teachers. Politicians and bureaucrats cave in to these demands because the future fiscal problems that will arise, because of their decision, will be the problems for future politicians. And even if they are still in office, no one will remember that the previous decisions were responsible for the current fiscal problem. In this case the  feedback loop for politicians comes from the voters. But if voters are not informed enough to know what caused the problem, they can’t exercise their power. Ultimately voters will bear the fiscal burden of the decisions made by teachers unions and politicians. But voters have only themselves to blame for the problem because they were economically ignorant voters in the first place.

The War Between Public Pensioners And Tax Donkeys Is Heating Up, by Charles Hugh Smith, at oftwominds.com. Many State public pension systems are underfunded. Raising taxes is the only solution because we know the teachers unions will never give up anything. And politicians will always cave to the unions. Unfortunately someone will have to give something up. And that means tax payers will have to give up more of what they have produced. At some point this will come to an end. Because if you continue to consume more than you produce, at some point there will be nothing left.

US Budget Deficit Hits $600 Billion In 6 Months, As Spending On Interest Explodes, at zerohedge.com. And this: US Deficit To Soar Over 40% In 2019, Exceed $1 Trillion By 2020, at zerohedge.com. This debt is unsustainable. There will come a point where this debt can’t be paid off. We may have already passed the point of no return. Politicians and bureaucrats will never shrink the size of their fiefdoms, so collapse may be the only solution.

Californians Flee The State In Droves Over Taxation And Housing Costs, at zerohedge.com. Politicians have caused this problem. The solution is going to be forced on States like California when enough people leave. Where will the revenue come from when enough people leave. The scale will be tipped in the wrong direction. You can’t confiscate money from people who don’t exist.

Illegal Immigrants Shielded From University of California Out-Of-State Tuition Hike, by Keil Huber, at thecollegefix.com. If they are lucky they will spend more so the collapse can happen sooner.

LA Is Painting Some Of Its Streets White And The Reasons Why Are Pretty Cool, at cbsnews.com. Do the environmental crazies think there is no cost to their policies. $40,000 a mile adds up quickly. I hope this happens so California has to face economic reality sooner rather than later. It will be less costly.

Revealed: Mueller’s FBI Repeatedly Abused Prosecutorial Discretion, by Mollie Hemingway, at thefederalist.com. The legal system is important if a country is to function properly. But the rule of law has been in the process of breaking down for decades. When the rules don’t apply equally, and prosecutors are above the law, you no longer have a legal system.

What Attorney-Client Privilege?, by Andrew Napolitano, at lewrockwell.com. You may think this is OK because it is happening to Trump. But what is going to stop  prosecutors from doing this to you. Or rights are being trampled on. This is another example of the erosion of our the legal system.

More Hilarious Facts About Tesla From A Hedge Fund Shorting The Stock, at zerohedge.com. Government has been subsidizing the purchase of electric cars. This allows the waste of scarce resources to continue long after this waste would have been stopped under normal market conditions. Losses are just as important as profits in transmitting information to producers. Producers need to know what, and how much, to produce. When Government tries to pick winners, they usually fail miserable. And once again taxpayers get caught without a chair when the music stops.

WHERE SOLUTIONS COME FROM

Solutions Only Arise Outside The Status Quo, by Charles Hugh Smith, at oftwominds.com. Excerpt from the article: “…Institutions are fundamentally incapable of responding effectively or reforming themselves. The universal solution of failing institutions and hierarchies is throw more money at the failings in the doomed hope that doing more of what’s failed will magically solve the systemic problems. We see this dynamic in all the major public-private structures or our economy/society: Higher education (solution: make students borrow even more trillions, or have the government borrow more trillions); Healthcare (government needs to borrow more trillions), and national defense/security (government needs to borrow more trillions).”

“As a result, solutions are only possible outside these ossified, self-serving centralized hierarchies.”

“When faced with fiscal crises, central states/banks inevitably succumb to the temptation to print/borrow currency in whatever sums are needed to fill the shortfall of the moment. This….seems to be magic at first…..but eventually gravity takes hold and the currency’s purchasing power declines, as the real economy the production of goods and services) grows at rates far below the expansion of currency. Even the greatest empires in human history have been unable to resist the “easy” solution of devaluing currency…….

“Existing systems optimized for bygone eras and maximizing the security and wealth of insiders are doomed to fail…… Solutions will only arise outside the control and boundaries of existing systems, as all structural solutions threaten to obsolete or replace existing structures, displacing all the incumbents and insiders who benefit from the continuing failure of the institutions they manage and control.

Institutions like markets, money and law were created by spontaneous order. Government central planning did not create them. Since people don’t understand that these came about spontaneously, they also don’t understand that Government central planning has created all the problems with these institutions. Allowing solutions to come from the spontaneous order created by individuals making decisions, is the only way these problems can be solved. Government central planning can’t solve the problems it created, because it has no incentive to do so. Taking decision making power away from centralized Government, and returning it to individuals, is the only way this ends well.

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Must Reads For The Week 4/22/17

April 22, 2017

Busting The “Free College” Myth, Jonathan Newman, at mises.org. The cost doesn’t go away when something is labeled “free”. For the student, free means a new scholarship program. For the college, free means they can increase their prices. For us the tax payers, free means we’re screwed. Free means shifting the cost to someone else. To me free means the professors would teach for…….”free”.

ASU Class Holds Protest Instead Of Final Exam, by Conner Borgelt, at azcentral.com. Tax payers! Would “free college” make the present situation in our college education system better or worse?

Has A Rothbardian Infiltrated The Department Of Education, at targetliberty.com. This is a good thing

San Diego’s Experiment With Higher Minimum Wage: 4,000 Fewer Restaurant Jobs, at reason.com. This doesn’t surprise anyone, does it?

Run For Your Life: The American Police State Is Coming To Get You, by John Whitehead, at rutherford.org. Click on some of the examples in this article. You will be shocked at the abuses of power by Government officials.

Private Equity Sets Its Sites On New Funding Victim: Mom and Pop 401k’s, at zerohedge.com. Private Equity companies have destroyed many of the largest defined benefit pension plans. Now they want to try their hand at destroying defined contribution retirement plans, your 401k. They need a new source of money to fund their skimming operations.

Frederic Bastiat Is Right (Again), by Jeff Thomas, at mises.org. Protective tariffs don’t work. Bastiat told us this in the mid 1800s. The Smoot-Hawley Tariffs (along with other government interventions) helped turn the stock market crash of 1929 into the great depression. Trumps desire for tariffs on foreign goods is a bad idea.

GM Says Venezuela Has Seized Its Car Plant, at cnn.com. Venezuela’s incremental movement toward socialism over the years is almost complete. Since there are no property rights in a total socialist system, this seizure of property may be the final goose step in Venezuela’s march toward economic destruction.

Fannie And Freddie Finally Wake Up, by Doug French, at mises.org. These bad mortgages should have been liquidated (sold at a loss) when the housing bust happened in 08.

How Mises Converted Hayek From Socialism To A Supporter Of The Free Market, at economicpolicyjournal.com.

 

CELEBRATE EARTH DAY

On Earth Day, Let’s Celebrate The Benefits Of Fossil Fuels! This is my Earth Day post from two years ago.

GEORGE CARLIN- Can We Destroy The Planet?

Earth Day 2016, at austrianaddict.com.

Must Reads For The Week 9/12/15

September 12, 2015

Is There Really A ‘War On Cops’? Data Shows 2015 Will Likely Be One Of The Safest Years In History For Police, by Mark J. Perry, at carpediemblog. These facts show how media coverage can drive perception about reality. If I said at the present rate there will be 35 police officers killed by fire arms this year what would you think? Your first thought should be that 35 is a number without a context. 35 is one of the lowest numbers of police deaths by fire arms from a peak of over a hundred in the early 70’s. The lesson is don’t be swept along by the media current, and always put every number in context.

Over The Last 20 Years, Annual Fires In U.S. Have Decreased By About 50% While Career Firefighters Has Increased More Than 50%, by Mark J. Perry at carpediemblog. You might think that the decrease in fires is caused by the increase in firefighters. But there is no causation because firefighters put out fires after they are started not before they are started. Local firefighter unions have been able to grown the number of their members as the number of fires has decreased. Public sector unions see public tax payer dollars as easier to extort than what they can extort from the private sector.

Happy “$15 Dollar Minimum Wage” Labor Day From McDonalds, at zerohedge.com. Do the central planning do-gooders who raised the minimum wage care enough to look at the consequences of their benevolence and lack of knowledge about economics? You can’t raise the cost of labor above what it produces.

Canada Enters Recession, at zerohedge.com. Is this isolated? Or does it mean more if you also look at what is happening in China, Greece, Japan, Brazil, Venezuela, and Puerto Rico?

Paul Krugman Is “Really Worried” That He Might Have Screwed Up Japan, at zerohedge.com. Does Krugman have any memory of what he has said in the past. Or like an Alzheimer’s patient is every day a new beginning.

Common Core Or “Communist Core“, at zerohedge.com. Lily Tang Williams, a mother of three who grew up in communist China, says common core reminds her of the oppressive statist nature of her childhood education.

Tax, Tax, Tax: Is Rhamaland About To Get The Largest Property Tax In Modern Chicago History? (And that’s just for starters). at economicpolicyjournal.com.  Government officials all over the country, not just in Chicago, have promised more than what their tax slaves payers can produce. At some point there is going to have to be a restructuring or a default on public pensions.

New App For Politically Correcting Your Language, at reason.com. This app alerts you about possible microagression on your emails, texts, blog posts, and articles before you send them out. I don’t think I’m going to download this app. No one has a right to not be offended.

uBeams Wireless Technology Aims To Kill The Power Cord, at entrepreneur.com. From the article, “uBeam has developed technology that transmits ultrasonic waves…that are translated by devices as a microscopic quiver; this vibration is converted back into an electrical charge to power anything with a battery, no wires or wall plugs required.

Kerry Picks Clinton Donor To Be State Department’s “Email Czar“, at zerohedge.com. You can’t make this stuff up! When I saw the headline I thought it was an article from The Onion.