

What a collapsing empire looks like - ajg1977
http://www.salon.com/news/opinion/glenn_greenwald/2010/08/06/collapse/

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CapitalistCartr
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.

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mcantelon
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.

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dualogy
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?

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Ardit20
The system ain't great, but it doesn't excuse the lobbyists.

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Locke1689
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.

~~~
madair
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.

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

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

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

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SkyMarshal
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-...](http://market-ticker.org/archives/2130-On-Deficits-And-Debt-
Financed-Government.html)

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lionhearted
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.

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aamar
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...](http://www.slge.org/vertical/Sites/%7bA260E1DF-5AEE-459D-84C4-876EFE1E4032%7d/uploads/%7b03E820E8-F0F9-472F-98E2-F0AE1166D116%7d.PDF)

[2] [http://www.bloomberg.com/news/2010-07-20/california-
official...](http://www.bloomberg.com/news/2010-07-20/california-
official-s-800-000-salary-in-city-of-38-000-triggers-protests.html)

~~~
lionhearted
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.

~~~
aamar
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.

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k3dz
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

~~~
Ardit20
Just because others are worse does not mean we should follow their example.

