What a collapsing empire looks like | Hacker News Reader

What a collapsing empire looks like

salon.com

43 pointsajg197732 comments

Nonsense; this is local and state governments that spent like drunken sailors during the boom now having to cut back, and doing a poor job of it. They made stupid choices in years past, like not paying down debts, lavish pension terms, lots of staff, etc. Now they don't want to cut those, and in some cases can't. So they're making panicky choices.

That IS the point of the article though. The past few booms were WallSt./FED-inflated anyway. Combine the concept of public service / public property (ie ill-defined or merely formal/shortterm-administrative rather than heart-felt/longterm-invested ownership responsibilities) with easy credit and decades of cultivating debt as a life-style choice and this is what the return trip looks like.

True, and the trend of questionable spending at all levels of government will likely continue as long as lobbyists are able to pay politicians to make these choices.

Well if the system of politics doesn't bubble those of highest integrity and uncompromising, "un-bribable" characters to the top, is that the "lobbyists" fault or isn't the system at least partially flawed in itself?

The system ain't great, but it doesn't excuse the lobbyists.

You should analyze your statements against what the article said. Oh, and also reality.

Edit: But it is brilliant that this comment would be by someone named CapitalistCartr, what with the class war looming and right v left being an anxious distraction. I can't see how anything other than copious amounts of fear will keep the class war staved off--xenophobia, war, and culture changes surrounding the religious do the job nicely though. Pretty easy to summarize the sources of power.

I don't have much expectation that people will feel played, so looming but maybe not likely. Fox is famous for Fox New at the same time as Family Guy, The Simpsons, and American Dad, and hardly anybody pauses at that; quite a prominent mix of Right v Left right there by an ideologue like Rupert Murdoch.

The very wealthy purchasing power and profiteering on fear. How is the plain obviousness of the corruption even defensible? sigh

What on earth are you on about? He said they did not save during boom times, so it is a human mistake, not some collapse of empire ( I didn't know America is an empire btw, I thought it was a country.)

You didn't know that America is an empire? The most powerful country that has ever existed? The one by which every other major power measures themselves? Time to do some reading I think, TV rots ur brain ;)

What you need to realize is that a minuscule percentage of economists will agree with your "saving during boom times". The money system just doesn't work like that.

As I said, my second part was reactionary to his moniker in relation to his comment, his comment is populist rhetoric and is completely incorrect from a strictly capitalist view.

People who call themselves capitalists should at least bother to get it.

I thought an empire is created when you occupy other countries and impose your system upon them. Like Rome was an empire because it stretched way above the borders or rome, or Mongolia, or persia, though maybe I have a wrong definition of empire.

But it seems that wikepedia agrees with me:

"Politically, an empire is a geographically extensive group of states and peoples (ethnic groups) united and ruled either by a monarch (emperor, empress) or an oligarchy. Geopolitically, the term empire has denoted very different, territorially-extreme states"

Ahaha so it's about semantics. lol, take your time, then go read some Fukuyama and a few state department statements.

Its not about semantics, it is about connecting a word to reality. America is not an empire. It is perhaps the most successful country on earth, it has great influence, but it is just a country. It might however be trying to become an empire with all those invasions, but it is hardly there yet.

I honestly don't get it. State governments are floundering trying to cover their expenses. It seems like people need to make a choice: do we want these public services or not? If so: RAISE TAXES. God forbid we actually pay for the services we want.

A lot of that floundering is all about their big losses...Wall St, over-resourcing for the housing bubble, budgeting based on bubble math, widespread corruption and backroom dealing, oh, and there's that huge army fighting a couple big wars with a budget larger than the military of rest of the world combined.

That's a false choice. We can get the same level of public service for less by cutting public sector compensation.

He paints a picture of local/state governments declining and the federal government ascending. This is, in fact, the birth of an empire.

Only if it's sustainable. Corruption on the scale here is a known destabilizer of empires.

What's sad is that the US could really afford these things. It's just a matter of seriously misplaced priorities.

This is what deflation looks like - very bad for any person, business, or government in debt. Quantity and velocity of money decreases, leaving less revenue to service and pay down debts, forcing cuts and austerity across the board.

This is what Bernanke is trying desperately to prevent, even at the cost of devaluing the currency by overprinting. Whether it will succeed is arguable, depending on whether the idea of Diminishing Marginal Productivity of Debt is accurate and applicable:

http://market-ticker.org/archives/2130-On-Deficits-And-Debt-...

They missed a big one:

> Salaries and benefits — for identical jobs — are 30 percent to 40 percent higher in the federal government than in the private sector. Claims that this dramatic discrepancy in compensation is warranted because of government workers’ high skills are unjustified, as this study shows. Equally unjustified is the fact that federal workers can rarely be fired, no matter how poor their job performance. Congress should align federal salaries and benefits with market rates—a simple, and fair, move that could save taxpayers nearly $47 billion in 2011.

The original article is about budget problems at state and local levels, so salaries of federal employees aren't really relevant. Aside: the Heritage study gives a premium of 22% when controlling for education level; the authors have not controlled for experience level and have no way of controlling for intangible skill differences which might legitimize the discrepancy.

State and local employees make less then private sector employees (on average) when controlling for education, experience, and so on[1]. This is not to say that each and every municipality has been managing its budgets well; clearly many haven't, and outlying salaries seem to be part the problem[2] in specific situations.

[1] http://www.slge.org/vertical/Sites/%7bA260E1DF-5AEE-459D-84C...

[2] http://www.bloomberg.com/news/2010-07-20/california-official...

Accidental downmod. Excellent comment.

Good comment. I just did a quick google for the government employee premium - I was thinking specifically about California since that's the state economy I know most about. Their spending on salaries, benefits, and pensions was crazy. Lots of good analysis about California's problems - Heritage wasn't actually the link I was looking for, I saw a different specific analysis but that one came up in Google first and was close enough to give a general idea.

Edit: Also, the article mixes federal and state spending. Their examples of high spending they think are wasteful are all federal - bank bailouts, assuming private debt like General Motors, and wars are all federal spending.

For some reason I don't see discussion of federal spending in the Salon article or the cited NYTimes article, except for a few offhand comments in the former which seem suggestive, not substantive (e.g. rumors about what the Deficit Commission may propose 4 months from now). Why am I missing them?

I agree about California; there seems to be plenty of evidence of exceedingly high salaries and pensions. Administrators might reasonably claim that they raised comp in order to hire top talent (for example at the UCs) and that they were successful in doing so. But they ratcheted up way past levels that could be sustained in a downturn, and at this point it seems short-sighted to the point of crazy.

The real big one would be the wars in Iraq and Afghanistan, which the article does highlight. That's order of $1000B.

Things must have changed since the 80's and are probably based on particular market segments/disciplines. Back then, science/engineering pay grades were below private industry - the stability of govt. made up for it. I've got no clue now, but I can't see how, for example, govt. pays more than pharma.

That's obviously not from the article so who are you quoting?

It's an abstract from a Heritage Foundation report:

http://www.heritage.org/Research/Reports/2010/07/Inflated-Fe...

I'm not disputing the facts and don't really have the time to look it up right now, but the Heritage Foundation isn't really nonpartisan.

Founded in 1973, The Heritage Foundation is a research and educational institution—a think tank—whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense.

What's your source for that? It's obviously not from the posted article.

It is from the neutral Heritage Foundation (yeah, the one Rush Limbaugh gives donation information for nearly daily); their methodology in determining what public/private sector jobs were directly comparable was no doubt squeaky clean.

Limbaugh has a piece praising the report, behind his paywall:

http://www.google.com/search?hl=en&q=Inflated+Federal+Pa...

Salaries and benefits — for identical jobs — are up to 5-10 times higher than the developing world... even adjusting for purchasing power parity and the cost of living.. this is too large a difference... and is becoming increasingly unsustainable.. leading to all kinds of job losses. maybe just a little bit of lifestyle downgrade in the developed world is the need of the hour

Just because others are worse does not mean we should follow their example.

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