online.wsj.com
I think that this will be the model for the future, but a state levels.
It may not seem fair to change the rules on public employees, but effectively the rules have changed for private employees because the economy at federal, state, local, and personal levels will keep getting worse.
When I was younger, I worked with techs working for the federal government and they received much lower salary, but a retirement. Now, they tend to make equivalent salaries and have more job security. I am as disgusted with unions lobbying Congress as I am with corporate lobbyists.
"Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available."
http://abcnews.go.com/Politics/federal-workers-earning-doubl...
However, we can still reach interesting conclusions from the data. For example, I would expect that regardless of the salary of the job, benefits such as healthcare insurance would be fairly constant for employees anywhere, and that in the private sector, healthcare is probably the single largest chunk of benefits. With this observation, we'd have to conclude that whatever salary you're making, the government is throwing in a pretty significant amount of extra value into their employee's benefits, whatever that employee's job might be.
If only.
http://www.bls.gov/news.release/pdf/ecec.pdf
(On page 3 is a comparison of % spent on different benefits for public- vs. private-sector; not sure what conclusions can be drawn from it.)
1) Orange County went bankrupt by cooking the books. After the scandal broke, their treasurer went to jail.
2) The Republican administration turned a blind eye to the Democratic treasurer's malfeasance because it was allowing them to keep taxes very low, which was making their government very popular.
3) The government refused to raise even a temporary tax to avoid bankruptcy, as that position was highly unpopular among the wealthy residents of the county. At various points the county insisted that it should receive bailouts from the California state and federal government, which drew anger from across the nation as Orange County is among the wealthiest places in the nation.
4) In bankruptcy, Orange County cut $200 million from its budget by clawing back commitments to its low level employees who had no part in the high level corruption, as well as through layoffs and reduced services. The OC bankruptcy, from the perspective of the average person, is like a minified version of the bank bailouts. It was a "heads I win, tails you lose" bargain between the wealthy people of OC and the average people who were hurt most by the layoffs and reduced services.
The low level employees didn't vote for and join unions which helped that Dem treasurer to get elected? They didn't push for overly generous pensions and non-transparent accounting?
They must have behaved very differently than contemporary unions.
Those low level employees do a job under a contract which was supposedly negotiated in good faith.
Now because you don't like "unions" or "government" it's ok to stiff people who perform a public service for a previously agreed upon wage and benefits? What, because highway workers weren't doing financial due diligence on the multi-hundred-million dollar county's books? It was their responsibility to do this? I thought that was the responsibility of the guy who got thrown in jail for cooking the books.
This is what that professor was talking about when he was apologizing. Everybody wants to cut taxes and make public servants work for free, whether it's out of simple selfishness or a more highly evolved ideology (aka fancy selfishness).
In any case, no one wants unions to supply labor for free - all anyone is advocating is that the government pay it's suppliers market rates or below. I.e., the politicians should look out for the taxpayers, not government suppliers.
As I've pointed out to you before, most liberals get strongly outraged when there is even a hint that a military contractor might have gotten a sweetheart deal. And yet, there is a strong defense of Big Labor when they get a similar sweetheart deal. Why is that?
I've negotiated union deals from the government side. I negotiated fairly, in good faith, and nobody attempted to bribe me with campaign contributions or do 1/10 of the stuff that regularly happens in Washington with military contractors.
Your assumption that the deal must be crooked because it's paying workers is ridiculous. How about the fact that they were out of money because they were cooking the books? How come the workers have to pay for that screwup?
Policemen get paid a lot of money where I live. (http://sf-police.org/index.aspx?page=1655). Personally I think an entry-level pay of $80k for someone with only a high-school diploma is pretty good. There are other areas in the Bay where pay is even higher, like Oakland.
I can't speak to highway workers.
But, neither of our single data points says anything about the situation. I'm assuming most people on here took statistics and understand that both are meaningless. We need the average, and the standard deviation at a minimum to say anything meaningful.
We were talking about policemen and road workers, but now that you mention teachers, we can talk about them too. Among other things, it's almost impossible for them to get fired and their raises don't seem to be connected to performance. They also get to take three months off during the summer, bringing their annualized salary up to about 70k. If you throw their pension plans into the mix, it is actually very profitable compared to most employment pursuits available to liberal arts majors.
Also, it's hard to compare the deal they are getting versus the one you are getting, because unlike yours, the price on teachers' labor is not set in a market environment. You might also say that the labor of a construction worker or fast food cook is more back-breaking and intensive than yours, but ultimately that is not the criterion on which wages are decided. The same goes for level of education and experience. None of these are the sole factors that determine what an individual's labor is worth.
Earlier, you were claiming that teachers are getting a raw deal because you are paid so much better as a programmer. To put the previous paragraph in completely unambiguous terms, let me ask you this: "If programming is so great, why isn't your wife working as a programmer?" Does that really sound like a reasonable or relevant question to you?
Edit: as it turns out, I can't, so you'll have to make do with my apologies. :)
I'd love to know what factors actually set programmer or ceo pay. Saying, "market factors" is just hand waving.
Now on to the specifics. According to this article they probably aren't going to get the pension they were promised since it's insolvent. They don't get 3 months off, exaggerating won't help your point. It's closer to two months. I get 3 weeks off.
So I'm still failing to see the posh deal. An insolvent pension, and an extra 5 weeks of vacation is traded for a loss of 60k of money right now. That's a pretty lousy deal if you ask me.
I'm not sure why you think teachers take a loss of 60k right now - most teachers are low human capital individuals and would not be earning $100k/year right out of college.
And yes, most programmers pay is related to their performance. Rock stars quickly get paid more, either at their current job or they quit and move on. If they suck, they get fired (a concept teachers may find somewhat foreign). That's what "market factors" means. In contrast, teacher pay is set by politics and longevity.
Also, most teachers get early retirement (at 55, vs 65 for the programmer) on a defined benefit pension. Maybe it's insolvent, but most likely the rest of us will be forced to pay. In contrast, if my 401k tanks, I'm fucked.
I didn't earn 100k a year right out of college, your trying to change the facts of the comparison.
"And yes, most programmers pay is related to their performance."
It really isn't, it's based primarily on years of experience, who you know, and how outspokenly confident you are (regardless of whether the confidence is deserved). Every company I've ever been at has had programmers there were twice as productive as other programmers. They never got paid twice as much, and there was no correlation at all really, even it it isn't linear.
Every programmer I know with 5-10 years experience gets a salary within a narrow range.
"If they suck, they get fired (a concept teachers may find somewhat foreign)."
No they don't. I get the distinct impression that you have an ideal in your head that isn't remotely close to the reality. If you are at a company of any size it's very hard to fire someone.
Just curious, how old are you?
I got the number $100k from you: a teacher makes $40k, and when one takes a job as a teacher, "an extra 5 weeks of vacation is traded for a loss of 60k of money". Then I used fancy mathematics.
As for programmer pay, I'll just tell you the range from the last time I looked for a job. My lowest offer [1] was about 40% of my highest offer, but they weren't seeking great developers. I also happen to know of someone considerably better than me making 50% more (at the same level of experience).
As for firing the incompetent, I don't know what company you are talking about. Plenty of people get fired. In NYC, until very recently, they were paid to show up to rubber rooms for years.
[1] Not technically an offer, but salary was discussed.
They work in a city where it's difficult to buy a home for less than a million dollars. Contrary to your assertion, further highly specialized education beyond a bachelor's degree is required to be a police officer (hint: http://en.wikipedia.org/wiki/San_Francisco_Police_Department... ). Also contrary to your assertion, it appears starting pay is no higher in Oakland than SF (hint: http://www.opdjobs.com/ ). They perform a very important service and risk their lives doing it. They deserve every cent IMO.
Yet Starbucks baristas still get paid the same as anywhere else (modulo some minor cost of living adjustments) and don't get to retire at 50 with 90% of their last year's income (which should be a good deal more than the starting salary).
> further highly specialized education beyond a bachelor's degree
You should say "separate from," since all that is required to join is a high school diploma: http://sf-police.org/index.aspx?page=1646. Then, I suppose, you must attend police academy, but it's not clear from your links exactly how much time you have to spend there. Given that the mayor cancelled two thirds of their classes, either the force must have cut hiring by 66% or those classes are not required for all kinds of police duty. That "hint" bit was rude, I should know since I troll occasionally too, but you'd be better off avoiding it if you want people to listen to you.
> Also contrary to your assertion, it appears starting pay is no higher in Oakland than SF.
I believe my claim was about overall pay, not starting pay, for Oakland. That said, I don't have numbers to back that up. I can only say, "I heard it from Michael Krasny on Forum." Being that he seems to lean left, I don't see any reason for him to exaggerate the pay of unionized government workers, but it's possible he got it wrong or I am not remembering correctly.
> They perform a very important service and risk their lives doing it. They deserve every cent IMO.
Being a policeman is not really that risky. http://en.wikipedia.org/wiki/Police_officer#Line_of_duty_dea.... Pizza drivers are at greater risk of death and you don't see them getting paid six figures for their work. Politicians beholden to unions is a much better explanation. I do believe they deserve to get paid something, but I don't think their jobs are so hard that they should have money thrown at them the way they do.
It's fine for you to "feel" the way you do, but to my eyes you haven't provided much rational justification for it.
Lots of people risk their lives. I risk my life every day driving to work.
Did you know that policemen don't even make the top 10 list of most dangerous jobs? http://money.cnn.com/2005/08/26/pf/jobs_jeopardy/
Garbage men, BTW, perform a very important service and risk their lives (#5) doing it, and are paid much much less.. They deserve every cent IMO.
$400,000.
Cops and some prison guards and firemen in most of New York, New Jersey, Massachusetts, California, and other poorly managed jurisdictions with public unions average $300,000 to $500,000 in total compensation. To be fair, the job does require a bachelor's degree and not just a high school diploma. And you usually need a good friend who can pull strings to get you hired, obviously.
The mid career base salaries are about $150,000 and the pension plan usually are full final-year pay and benefits retirement at 45 or 50. That pension plan costs more in present value than the salary according to sane actuarial assumptions. Furthermore, there are effectively eight weeks of paid vacation, a short work week, generous overtime pay, and pensions are usually calculated based on final year pay including overtime and vacation cash-out so they can be well over official salary.
State highway workers get paid considerably more than the market rate paid by contractors but not as much as cops.
http://www.nytimes.com/2005/03/08/opinion/08krugman.html?_r=...
The workers pay for the screwup just like any other creditor would. It's not as if OC bondholders were paid off but workers were not.
In general, I assume a deal is crooked when one party gets consistently above-market rates for their product, when there are laws on the books explicitly giving one party massive advantages, and when the political interference of one party is plain to see for anyone with a TV.
FWIW I live in Orange County but what really matters is what city you live in within OC.
The theory is that you can so overload the government that it simply can't stand up anymore (like the USSR I suppose). It crumbles, and that gives you the opportunity to erect a new one in its place, doing away with all those things that stand in your way, like Constitutional restrictions on the government.
UPDATE: the name is "Cloward-Piven" (http://en.wikipedia.org/wiki/Cloward%E2%80%93Piven_strategy#... ), see my follow-up below.
I finally found a reference, it's called the Cloward-Piven strategy.
http://en.wikipedia.org/wiki/Cloward%E2%80%93Piven_strategy#...
>>Cloward and Piven’s article is focused on forcing the Democratic Party, which in 1966 controlled the presidency and both houses of the United States Congress, to take federal action to help the poor. They argued that full enrollment of those eligible for welfare "would produce bureaucratic disruption in welfare agencies and fiscal disruption in local and state governments" that would "deepen existing divisions among elements in the big-city Democratic coalition: the remaining white middle class, the white working-class ethnic groups and the growing minority poor. To avoid a further weakening of that historic coalition, a national Democratic administration would be constrained to advance a federal solution to poverty that would override local welfare failures, local class and racial conflicts and local revenue dilemmas."
For what it’s worth, I think starve-the-beast is empirically a bad strategy. But it’s not a logical fallacy, as people sometimes seem to think.
Unfortunately, principles do not win elections. The ones who actually win are the ones who want to deregulate business and regulate morals.
So there is a left wing version of playing chicken with the budget as well, but it doesn't have a catchy phrase to describe it. Maybe "Binge the Beast"?
It's possible this has happened some places, but not at any major companies I know about. Companies that have phased out defined-benefit pensions have generally not done so retroactively, but only closed them to new hires. Phasing them out retroactively would be a breach of contract, since the employee performed work for you under the expectation that you'd honor the employment contract they signed, including the pension terms. Pension is a kind of remuneration, so you can't decide not to pay it after receiving the work.
Much easier legally to simply stop making those pension promises to new employees, but not breach the ones you already made.
Either you only know private tech code monkeys or have found the highest paying federal agency that no one has ever heard of.
Also, the private employees when they retire get no health benefits and have to fund their own retirement from a 401k, whereas the federal employees have guaranteed health care for life and a guaranteed pension. The health care and pension alone are worth at least a few million if you live to a decent age.
Private: Can make it rich. Really rich, And on average probably make more money while working, assuming the same type of work. OTOH, if you don't make it rich your retirement may not be as nice as you'd like.
Public: Will never be rich. You can solve P=NP, factor large numbers in constant time, and create a revolutionary new UI that every loves, and you'll still get paid as a GS-13, but you'll get a level bump next time your promotion comes up. But when you retire, you'll be comfortable.
It's kind of like the same deal judges get. Almost all federal judges would make a boatload more money as attorneys. But they take the lower pay with job security, salary for life, and a different kind of prestige.
Or don't take chances. It's very common for bureaucrats to retire to become lobbyists, working for private industry at comfortable salaries in order to exploit the regulatory system for others.
Where? Serious question.
But even non-founders, those in purely technical roles. People like David Cutler or Jeffrey Dean or Amit Singhal. At virtually ever major tech company you'll find a continuum of these.
Go to the federal gov't and you'll see much flatter pay structure. I don't care how rockstar you are in the Air Force, you are never going to see Sergey or even Jeff Dean type of money. Never.
Obviously Gates and Sergey have a visionary/uber-architect role. Others like Sweeney, Cutler and Carmack are hairy-chested devs who checkin just as much code, if not more, than your typical senior dev.
And of course there's the gamut in-between.
And for a lot of these people, they don't even consider it a lot of money. I had a friend who made $10M after an IPO. I asked how it felt and he said, "For what? To become Silicon Valley middle class?"
You're forgetting that govt is a monopoly. GM can promise anything it wants to its retirees, but if its customers decide to buy Toyota, GM won't honor those promises (unless the govt bails them out).
If San Jose makes promises, folks who had nothing to do with those promises are forced to make good.
That's why public employees and public works projects (SJ Arena, light rail, pro-sports facilities) should be on a pay-as-you go or collateral basis. That way, the stadium failure won't be a burden on future tax payers.
If you think that such things are a great idea, buy the bonds. If you're correct, great. If you're wrong, you get to foreclose.
I generally agree with the governor, but I also tend to believe that the state has to make good on past obligations -- especially when real people have planned their lives around those obligations. The 55-year-old retiree with fat benefits is a political straw man, but reality is much less clear.
In addition when you know an employee is going to cost you a lot of money in pension, the incentive to reduce the work force as much as possible is high.
You end up in a situation where your budget is used to pay for the retired employees and you have nothing left for active employees.
One of the reasons you are there is that it's pretty tempting for someone in command to offer a lot in pension. Under his command the budget remains clean and the employees are happy. That has got to ease elections!
One way to avoid that would be to change the way the yearly budget is computed so that it includes "known future expenses" clearly.
Don't any of these places have accountants? Surely, there should be some requirement to recognize the future costs being taken on, properly discounted for net present value?
Or am I just naive?
I'm afraid public employee compensation reform probably loses on both counts.
Defined contribution 403(b) and 401(k) programs have to have their deposits made soon after each year end. Defined benefit plans are more complicated, but there are big federal fines for companies that fail to deposit the increase in expected value of future payments each year. There are extensive (but imperfect) actuarial rules in the US Code to make the actual minimum contribution match the needs of the pension fund. Big funds need to buy insurance, too, in case things go wrong.
States and municipalities are immune from the federal standards. That's why they're ignoring the consequences and just promising to pay pensions without depositing enough money according to their own actuarial computations. A private company would have had to cut back on promises or pay the full current cost of future benefits.
Heck, even the Federal Government is keeping up with employee pension planning. The trouble is all in states and municipalities.
The states know they are doing this; actuarial science is not a mystery. But governors and legislators figure that public employee unions must be satisfied. And the problem won't explode until they're out of office and then it's someone else's problem.
And we voters who don't hold them responsible are ultimately at fault. Public employee unions couldn't hold politicians captive if we were willing to vote out pols who kowtow to irresponsible demands.
Anyway, the whole point of representative democracy is to not have to consult the electorate for every little thing. Voting on pay is too nitpicky. The best alternative I can think of is that no one bargaining contract can run longer than 5 years, but that just swaps one set of problems for another.
When they look at their tax bills, reduced 401k benefits, layoffs and uncertain retirement dates, damn straight they will. http://blogs.forbes.com/digitalrules/2010/06/01/the-milliona... http://walnutcreek.patch.com/articles/walnut-creeks-100k-plu...
Approval rating seems ok:http://www.washingtonexaminer.com/opinion/blogs/beltway-conf...
Where we differ is in our belief over whether California voters would actually pass such an initiative at the polls. On past forms, I think campaign slogans would beat out economics or critical thinking. I do think ballot initiatives are a good thing in general, but as a state we have also passed some very foolish laws, whose long-term impact was not appreciated at the time. 'Three strikes' leading to life in prison is the most obvious example.
1. Increased promises to the public sector workforce.
2. The need to make up shortfall in the funding due to market declines.
3. The need to make up shortfall because the funding was insufficient to begin with, owing to accounting ... creativity.
4. The boomers are just now hitting retirement, so the number of people retiring in a given year is increasing (Actually, it'd be interesting if somebody could pull out some hard numbers on this - I've heard this spoken of anecdotally a lot lately).
5. Retirees are drawing on their pensions for longer because they have longer lives.
1) Many pensions are underfunded. The state has to play "catch up" because they weren't putting enough money in the fund in the past.
2) Pension funds play the stock market. In a recession, the fund needs more money because the market is down.
3) (I'm not sure this is the case for California, but it's definitely the case for the federal gov't) The gov't often guarantees pensions issued by bankrupt companies. The gov't just takes on the extra debt, and often bankrupt companies don't keep up with their pension contributions.
But the Berkeley professor is still right in a way. Every single dollar in future retirement pay or health benefits for a public employee was negotiated in good faith in exchange for lower pay right now, this year, so we can balance the budget. Throw in term limits and a little demagoguery and politicians have every incentive to cut a deal that balances the budget this year while kicking costs down the road.
So when the Prof mentioned that for the last 30 years, our society has been taking out a loan for our kids to repay, he was still correct, especially when looking at these graphs.
Basically, yes - pensions are a problem. But the graph on the number of California gov't employees that lost their jobs vs. private sector employees may be misleading because we _need_ the public sector employees to service basic needs in the state, and California employs one of the lowest number of public sector employees per capita of any state.
People need to learn that you pay as you go, that's why 401ks are great the total cost of an employee is understood completely.
Taking debt in someone else's name, which is what essentially all government debt is, is fundamentally immoral and shouldn't be allowed. It causes people to be reckless since they're not the ones paying for it.
Over the last year I've begun to wonder if people aren't going to start feeling like the deal is off. If granddad elected somebody who made so much of a debt obligation that my taxes can't fix the roads? Why does granddad get to leave me his debt? He's not even around anymore. How can dead people vote to make living people 100 years later poor? In some ways this was the exact same problem the colonies were having with Great Britain -- taxation without representation. One bunch of people making the rules and taxes, and another bunch of people having to live it. (And yes, I'm aware of the counter-argument that current voters can change the budget at will, but for all intents and purposes, practically speaking these things are our "legacy" code. We're stuck with them by default. It takes great upheaval to change even the smallest of things in these matters)
I don't think we're there yet. But we're not far off.
Interesting idea. The American Revolution dealt with geographical representation. You're making an argument for temporal representation as well.
This seems worth some pondering...
This isn't true. There is no definitive way to determine the total amount of the future burden of a matching 401(k) plan because:
1) You don't know how long the employee will continue working there. 2) You don't know the interest rate at which to discount this future liability. 3) You don't know what future voters are going to change in the current matching system.
In fairness, determining the funded status of the future liability of a retirement pension is a lot more difficult than determining the expected cash flows for 401(k) plans.
There is no future liability. The money has been paid to the employee in it is in their hands now, and their retirement becomes their responsibility.
I think you might be thinking of some other type of retirement plan.
My opinion has changed drastically since then, and I find myself proud to have him as our governor.
I guess you've never heard of Ronald Regan:)
Note that I say "when", not "if". I say that because significant investments were made in private equity funds during their spending spree a few years back. There is every reason to believe that those investments are going to blow up.
It is worth noting that this is the second time that private equity went on a big spending spree. The previous time was in the late 80s, and the big investors were the savings & loans institutions. Google S&L crisis for more on how poorly that turned out. Then note that the recent spending spree was over an order of magnitude bigger.
I'm slightly shocked that the WSJ would print it (the graph, not the article).
Job losses June 2008 to June 2010
State government
Statewide: -8,800 / -3.3%
County government
Statewide: -18,500 / -5.1%
City government
Statewide: -14,100 / -4.9%
Private sector
Statewide: -1,200,000 / -9.3%
Via
http://www.signonsandiego.com/news/2010/aug/23/government-jo...
Plus, it's fairly reasonable that there would be such a difference between private / public job loss rates.
Employment rates in the operations department of most companies I've worked for are relatively flat during both boom and bust times, when the rates of the rest of the organisation fluctuate wildly. In boom times you need IT/HR/Facilities/Finance... and in bust times you do, too. Sales? R&D? Maybe not so much.
I can imagine that most public services are more on the Ops side and less on the Sales side.
The University tried to freeze hiring but a few new buildings were entering operation, they had to keep getting more janitors/grounds keepers etc.
That statement is in agreement with the graph.
The comparison itself seems odd. If the state's private sector loses 1.2M jobs, should the public sector shed a proportional number of employees i.e. teachers, firemen, policemen, prison guards, etc?
It's hard for me to come up with a good reason for that particular choice of graph other than "political spin". One of many reasons I've switched to reading The Economist rather than the Wall Street Journal for economics-meets-politics news, since the Economist makes a more conscientious effort imo to avoid slanting their data or infographics in the direction of their editorial line (and they do take roughly the same free-market editorial line).
They've settled on a conclusion before they even looked at the data, let alone read the article. Given how difficult it is to collect all the necessary data for actual objective analysis and how little that ultimately influences any party policy, I'm not even sure you can blame the readers.
You can rest assured that each party-line talking head is going to present skewed justifications that inevitably support their own preconceived conclusion. So what does anyone gain by reading through it? It's not like you can change the mind of a talking head by pointing out oversights, contradictions, or flat-out errors in their argument.
I mean, does anyone honestly expect a party politician might sit down to analyze some data and come away with a policy that goes against the party philosophy? Any Californian politician knows whether they should solve the budget crisis with cuts or taxes long before they even knew how big the problem was or where the money went.
Anymore, I'm fairly certain the only data involved in policy decisions are poll numbers.
If mutual funds and hedge funds are not permitted to guarantee returns, then neither should pension funds.
roughly 80 cents of every government dollar in California goes to employee compensation and benefits
So that's salaries as well as pensions (and salaries will be making up the lions share of the 80%).
To quote Felix Dennis "Overhead walks on two legs".
Hypothetically what would happen if the state decided to reform these pensions, slashing them right back to something they could realistically afford?
With your example, if California tried that before declaring bankruptcy, there would be court challenges that California would lose. Even if contracts going forward were amended, that wouldn't help the structural problems from what has already happened.
Therefore California requires either bankruptcy or extraordinary assistance. And the Obama administration has indicated that no extraordinary assistance will be forthcoming.
It is worth noting here that California is one of the few states that pays more into the federal government than we get out, and the amount extra we have paid in over the years is more than enough to rescue the state government.
From: http://www.leginfo.ca.gov/.const/.article_4
Const., Art. IV, Sec. 12 actually stipulates
" (d) No bill except the budget bill may contain more than one item of appropriation, and that for one certain, expressed purpose. Appropriations from the General Fund of the State, except appropriations for the public schools, are void unless passed in each house by rollcall vote entered in the journal, two-thirds of the membership concurring."
It's exactly like how the banks are keeping their 1+ years worth of "shadow" housing inventory off the market, so as to keep a floor on prices and prevent everyone from panicking and running for the exits at once.
And just like how the Federal bailouts were passed through back channels(i.e. Maiden Lane I & II, reserve swaps with foreign central banks, etc), and arcane accounting tricks that no congress-critter can comprehend, and the biggest political smoke & mirrors America has ever seen, so too will it go for the bailing out involvent states. It won't be Obama handing Schwarzenegger an oversized $30 billion dollar check on TV like a grinning Ed McMahon. No, it'll be a thousand tiny accounting tricks to prop up California, and keep the markets in perpetual doubt about the overall fiscal status of California.
Our entire Federal fiscal and monetary policy is a waiting game. They don't know what will happen, but the thinking is if we can all just hang on long enough for everyone to adjust to the economic new normal, then we can at least avoid an outright national collapse. Nobody on the planet can even know if this will work, but there are zero alternatives.
I simply don't understand how anyone could justify retroactive gutting of plans. Can we do retroactive taxation on those that went without the pension as part of their compensation plan?
Elimination of pension going forward -- perhaps. I'm curious to see how recruitment of these positions works... likely, the Government won't be able to attract as good candidates as it might otherwise.
Indeed, I decided I'm going to bow out of politics conversations. It's relevant tangentially, but it adds noise and friction. I'd rather connect cooperatively with like-minded people in entrepreneurship and technology, I don't want to get into arguments, build bad will, etc. with people here. Like Delirium says, at this point the argument quality isn't even particularly insightful.
At the same time, many current and aspiring startup founders have embraced the cultural shift to learning about traditionally non-technical areas such as sales and marketing. And rightfully so; this is after the previous shift (or "great opening up") to learning about design and a good user experience.
We've done all this because there's no escaping the cold, hard reality that the success of our companies depends on getting the word out and selling people on our ideas. Good code is not enough.
The skyrocketing cost of public pensions in California affects the solvency of the state government. When the state government is desperate and must make ends meet, tax hikes are the first and most obvious options, and are always taken into consideration. When you're thinking about starting a company and setting up shop in Silicon Valley, the tax burden is a huge factor to take into account.
As things stand today, the benefits of the personal network, concentration of talent, and the established tech ecosystem in Silicon Valley are still more than enough to outweigh the comparatively high tax burden for those who wish to start and operate a successful company. "Political" articles like this are of interest to us because they tell us about important future changes in the formula we use to calculate where we want to set up shop.
But I agree... Data, data, data! Or keep your political bias out of here!
Here in Chicago, there have been a few layoffs of city personnel, but mostly furlough days. City workers are forced to take 24 unpaid days this year. So our public/private graph probably looks the same.
Comments reflect my personal views and not my employers, etc.
And what about Arnold's refusal to tax offshore drilling the same way red states like Alaska do?
Yes there need to be cuts in spending but refusing to raise a single tax is simply absurd. Both things need to happen to balance the budget.
The real problem is the need to have a 2/3 majority to pass a budget in the legislature. That is simply absurd.
Best proposition ever!
* Arnold Schwarzenegger, a former bodybuilder champion now politician
* Governor of nearly bankrupt California
* A state scammed out of 40 to 50bn by Enron and pals
* AS career was supported by Enron (from Forbes)
* Writing an opinion column on Fox owned WSJ against state pensions
These are the sorts of allegations that one would typically see in a political forum populated by partisans and hacks. Downvoting is just HN's way of saying this sort of discussion belongs elsewhere.
Also I assumed everybody knows it was Davis who allowed that to happen, well before Schwarzenegger was elected.
http://www.cbsnews.com/stories/2005/02/03/eveningnews/main67...
Enron also pulled power out of states like California, causing emergency conditions to worsen.
"Sorry California," an Enron trader says. "I'm bringing all our power out of state today. I moved out six — over six hundred megawatts."
The "shut downs" and "pull outs" triggered sky high power prices.
"We're just making money hand over fist!" one voice is heard saying on the tape.
And when states complained, the guys at Enron seemed to have a response.
"Get a f clue," one says. "Yeah," another chimes in. "Leave us alone. Let us make a little bit of money."
"Exactly," says another trader.
EDIT: I retract my statement that it's an ad hominem. I think the parent has a reasonable point.
If I mentioned his lack of credentials it would've been ad hominem. His credentials being bodybuilder champion, action hero actor, and marrying into a well connected family. Ouch, now I did it!