Economic fraud in California's public sector system

AEI: The California Public Employee Retirement System (CalPERS) issued a report in July claiming that its benefit payments to retired government employees in 2013-2014 “supported 104,974 jobs throughout California and generated more than $15.6 billion in additional economic output.”

Through an economic “multiplier effect,” in which pension benefit checks are spent and re-spent throughout the economy, CalPERS claims to have generated over $387 billion in sales tax revenues and $328 billion in property tax receipts.

To reduce pension benefits for public employees, the study implies, would harm the overall California economy.

One would expect a study like this to gild the lily a bit. But the CalPERS economic stimulus study goes far beyond that: It is a cost-benefit analysis that doesn’t include any costs. This study is nothing short of propaganda that wouldn’t get a passing grade in a freshman economics course.

The study, titled “CalPERS Economic Impacts in California,” is nothing new. For several years, public employee retirement systems around the country have published “pensionomics” studies claiming that the benefits that they pay stimulate the economy and create jobs.

The logic of these studies is simple: Retirees spend their CalPERS benefits on, say, food, housing and medicine. The grocers, homebuilders or health care providers who receive retirees’ money re-spend it, and so on down the line.

CalPERS claims that thanks to this “multiplier effect,” a single dollar of pension benefits creates $2.02 in total economic activity. CalPERS uses an economic model to track these purported economic gains by industry and county so everyone can see how much they benefit.

But for all the seeming economic sophistication, the CalPERS study lacks one important component, called “counting both sides of the equation.” It needs to count economic costs as well as economic benefits.

This is of course the absolute bullshit one would only expect from UC Berkeley.  The California public sector system has done more to prolong the recession then any other institution.

Here is the California unemployment rate.  Why is unemployment longer and more prolonged in California?   Simple, the pension laws require that cities and counties lay off public employees when the stock market crashes. This is one bonehead idea that Kanosian idiots favor in public pensions. So we get the double whammy when the recession hits, a negative feed back, otherwise known as the stupid Kanosian multiplier less than one.