"The American Federation of State, County and Municipal Employees is one reason California's government employees — their numbers grew 24 percent between 1997 and 2007 — are the nation's most highly compensated. And why California's economy is being suffocated by the weight of government. And why the state's budget has little left over for [UC] Berkeley."
The problem is asymmetry, (the lack of reversibility) the State cannot reform without crashing. Property taxes go up easily, but go down with great effort. Lifetime pensions are handed out with ease, then taken away with municipal bankruptcy,
Solution? Make the bankruptcies go a little faster and smoother. If more cities in California took the bankruptcy plunge, then the economy will build a production system to move these bankruptcies with speed. This may sound nihilist, but the laws of economics dictate this solution. There are simply not enough jobs for poor Mexican immigrants who have to pay the lifetime salaries of well off government workers.
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