Public School Teachers and Public Sector Workers have Secret Millionaire Retirements

Posted by PITHOCRATES - January 6th, 2013

Week in Review

President Obama stood firm during the fiscal cliff debate to raise taxes on the millionaires and billionaires.  To get those who can afford it to pay a little more.  The visible millionaires.  To help pay for the secret millionaires.  Public school teachers.  And public sector employees (see Millionaires, Billionaires, and Teachers by Randall Hoven posted 12/10/2012 on American Thinker).

Our President likes to use the phrase “millionaires and billionaires.” A person whose net worth is $1 million or more is a “millionaire.”

Most of us working stiffs have trouble thinking in terms of net worth; we are more used to the concept of annual salary. How does net worth translate into annual income, or vice versa? In round numbers, the annual income equivalent is 4% of an investment nest egg. So if you have $1 million socked away, consider that to be equal to $40,000 income every year…

That relationship can be turned around: if you have an annual pension of $40,000, you are effectively a millionaire, especially if that pension is adjusted for cost of living…

Now let’s look at public school teachers. In Illinois, where I live, the Illinois State Board of Education puts out a report on teachers’ salaries. The table below is a pretty good summary of that 110-page report. A beginning teacher with a Bachelor’s degree in a median school district might make about $40,000 per year. But by the time a teacher retires, she could be making $55,000 to $120,000, depending on how much graduate education she got and her school district.

And when that teacher does retire, what is her pension? If most school districts are like Chicago’s, the teacher will make about 50% of her final salary if she retires at age 55, or 75%, the maximum, if she waits until age 59…

In short, a lot of retired Illinois teachers are millionaires.

But that’s not all. Teachers who retired from the Chicago school district get 60% of their health insurance premiums subsidized. In round numbers, let’s call that a value of $8,000 per year.

Also, the above values do not include any other savings or investments made over the teachers’ careers, including home values. If they have their own 401k’s in addition to their pensions, those were not included. Social Security was not included either.

Wait, there’s more. These pensions are for life. Many or most of them are also adjusted for cost of living. Every month, for the rest of their lives, retired teachers get checks or automatic deposits of a reliable amount, indexed for inflation and guaranteed by the government. They don’t have to worry about investment risks…

The situation of the retired public school teacher is also not that much different from fire fighters, policemen, postal workers and other public employees. Nor is it that much different from a lot of other retired workers, especially union members such as General Motors retirees. If such people are getting pensions and benefits of $40,000 per year or more, not an exceptional amount, they are millionaires…

The main reason the US Post Office, the federal government and many state and local governments face unsustainable debt, bankruptcy and default is due to the costs of public employee pensions. GM went bankrupt largely due to the costs of its retirees’ pensions and benefits.

Businesses go bankrupt, governments face default and economic growth slows to a near standstill. Meanwhile, retired public school teachers, who had to work 9 months of the year during their careers, now pull in checks 12 months a year, indexed for inflation and guaranteed by the government, in amounts that often make them millionaires, maybe twice over.

So public school teachers, fire fighters, police officers, postal workers and other public employees are not the same as people who work in the private sector.  For when people retire from middle class jobs in the private sector they don’t live a long retirement like a millionaire.  They live a shorter life in retirement worrying that they may outlive their retirement savings.  Or that some illness may wipe out their retirement savings.  Forcing them to return to work in the last remaining years of their life.  Something school teachers, fire fighters, police officers, postal workers and other public employees don’t have to worry about.  As long as they can maintain a privileged class in America.  An American aristocracy, if you will.  The thing we fought the Revolutionary War to put an end to in the New World.  Old World aristocracy.

Not everyone can live like this.  For there just isn’t enough taxpayer income to tax away to pay for everyone.  Which is why the aristocracy is a privileged class.  In a ‘classless’ America.  A class that attacks rich people to pay their fair share.  So they can enjoy their millionaire retirements.  Without having the talent or ability of an entrepreneur.  The investment savvy of a Mitt Romney.  Or simply not having been lucky enough to be born into an aristocratic family.  Like a Kennedy.

And if you think these millionaire retirees have earned their good life like an entrepreneur, consider how hard they have to work for their Masters Degree.

You might notice from the table of teacher salaries that a Masters Degree with extra graduate hours can add $20,000 or more to a teacher’s annual salary. Just for fun I want to show you two course descriptions. The first one happens to describe an engineering course I teach which is for undergraduates, required of all engineering students and generally taken in a student’s 2nd or 3rd year of college.

 Engineering Mathematics: The Laplace transform and applications; series solutions of differential equations, Bessel´s equation, Legendre´s equation, special functions; matrices, eigenvalues, and eigenfunctions; vector analysis and applications; boundary value problems and spectral representations; Fourier series and Fourier integrals; solution of partial differential equations of mathematical physics.

This second course description is taken from the University of Missouri St. Louis bulletin. It describes a graduate level course in the Education school.

 The Educational Role of Play: Emphasizes play as a constructive process with applications to cognitive and social development. Special attention to facilitating play in early childhood classrooms.

Note that the first course description (the one with all of that math) was an undergraduate course.  While the second course description (all about having fun) is a graduate course in the school of education.  The person learning about fun in the classroom will live like a millionaire in their retirement.  While the odds are that the one that worked so hard to learn all of that math to help create the wonderful things in our high-tech economy will not.  Why?  Because brilliant engineers have to earn their retirement.  While the privilege class makes the engineers and other hard working Americans pay for their millionaire retirement.  Is that fair?  According to the Left, yes.

Worse, these are the people teaching our children.  This privileged class that exploits the taxpayer so they can live a longer and more comfortable retirement are teaching our kids the evils of capitalism.  To turn them into Democrat voters.  So they vote for the party that attacks those who earn their wealth.  To make them pay their fair share.  So these teachers and public sector workers can continue to live their millionaire retirements.  While most of their student’s parents struggle in their own lives because they’re paying so much in taxes to support the better lives of their children’s teachers.

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FT136: “Unions only represent those who pay union dues.” —Old Pithy

Posted by PITHOCRATES - September 21st, 2012

Fundamental Truth

The Cost of Teachers’ Salaries, Health Care and Pensions are so Costly that there is Little Left to Spend on the Children

The Chicago public school teachers’ strike is over.  And the teachers got enough of what they wanted to go back to the classroom.  Or else they wouldn’t be going back to the classroom.  Which proves the benefit of belonging to a union.  In exchange for those union dues they get a lot of political muscle.  Which they greatly leverage by having children out of the classrooms.  Suffering.  For the kids are losing out on their education.  Worse, parents are stuck with their kids longer.  And must wait longer before they get their break from having their kids home all day long.

And speaking of the children one thing you didn’t hear in the list of demands was more supplies for the classroom.  Despite good teachers everywhere dipping into their own pockets to pay for classroom supplies.  Why?  Because the cost of teachers’ salaries, health care and pensions are so costly that there is little left to spend on the children.  And that pay and those benefits are pretty generous.  Especially considering with all the time off teachers get they’re technically working part-time jobs (30 hours a week or less).  With about two and half months off during the summer and the breaks during the school year teachers work about 9 months out of the year.  Which comes to about 1,548 hours a year.  Compared to the 1,560 hours (30 hours X 52 weeks) a year a part-time worker can work.  With far fewer benefits.

But yet it’s always about the children.  Higher pay and benefits for teachers benefit the children.  At least that’s what they tell us.  The ability to retire with nearly their full salary.  And free health care until Medicare kicks in.  All paid by the taxpayers.  That’s what’s important to maintain.  So the children get a quality education.  By having their teachers live a higher quality life and retirement than these children’s parents.  Who are paying for both their own quality of life and retirement.  As well as their kids’ teachers.

Big Cities set up Generous Public Sector Pay and Benefits based on an ever Expanding Population Growth Rate

Whenever a city is having trouble paying their bills they always threaten to lay off police officers and firefighters.  As if that is the only expense a city has.  They never talk about cutting back on their health care plans or their pension plans for all city workers.  Like everyone working in the private sector has gone through.  How many times have you been told by your employer that they cannot make a contribution to your 401(k) retirement plan this year because business was down?  It happens a lot.  And that’s the retirement plan most people have today.  It’s mostly what you put away for your retirement.  Pensions in the private sector are long gone.  Only those unionized sectors with enough political clout still enjoy generous pension plans.

Recessions reduce tax dollars flowing into city coffers.  But that’s only part of the problem.  The bigger problem they have is a flat population growth rate.  All these big cities set up generous public sector pay and benefits based on an ever expanding population growth rate.  But that growth rate flattened out in the Sixties and Seventies.  Thanks to widespread use of birth control and, to a lesser extent, abortion.  Women stopped having a lot of babies.  Which means there are a larger number of people retiring than there are entering the workforce to replace them.  So you have a higher growth rate of those consuming taxes.  While you have a lower growth rate of those paying taxes.  Which means cities will pay more out than they collect unless they raise tax rates.  Which they often try to do.  While threatening to lay off police officers and firefighters if voters don’t approve a new millage.

Things can be especially hard for some city workers because of that flat population growth rate.  Not to pick on the firefighters but look at a typical firehouse.  Say a firehouse with one engine/ladder truck and one rescue squad.  That’s about 6 firefighters.  If a city has 30 firehouses that’s 180 firefighters.  If they are 24 hours on duty and 24 hours off that brings it up to 360 firefighters.  If a firefighter academy graduates 100 new firefighters a year that’s about a third of all firefighters.  Now unless each firefighter only works 3 years there will always be more firefighters than open positions.  New building technologies and fire alarm/suppression systems have greatly reduced the number of building fires.  All of this on top of a flat population growth rate makes it very difficult for anyone wanting to be a firefighter these days.  Making matters worse a lot of the old cities are actually seeing population decreases.  Which cities respond to by closing firehouses.  Which reduces the number of firefighters.  Making it even harder for aspiring firefighters.

A Union Represents those who pay Union Dues—not Children, Taxpayers or Patients

Cities collect property taxes to pay for the services they provide.  As well as other taxes and fees.  From that pot of money they collect they divide it between the various departments they have.  Such as for education.  From that money educators have to pay all their bills.  From classroom supplies.  To teachers’ salaries, health care and pensions.  They can only spend this money once.  So if they give more to the teachers there is less for the classroom.  So when teachers strike and say it’s for the children it is probably not for the children.  For the children pay no union dues.  As unions don’t represent the children anymore than they represent the taxpayers.  They represent the teachers.  Because they pay the union dues.  And it is their job to get as much of that money spent on education to the teachers as possible.

There are some moves to unionize nurses and other health care workers.  In fact, that will happen under Obamacare as health care workers will all become government workers.  And eligible to join public sector unions.  Which is why all the unions were so adamantly for Obamacare even though many of them have gotten waivers to opt out.  Because it will swell the ranks of the public sector unions.  While greatly increasing the cost of health care.  And hurt the quality of our health care system.  For if we pay nurses like government bureaucrats we will shift more health care money to these new public sector workers while leaving less to spend on patients.

It is remarkable how selfless all public sector workers are.  For they never want more taxpayer money for their own selfish needs.  It’s always for the children.  The safety of our citizens.  And when Obamacare fully kicks in, the quality of health care our patients receive.  It’s just a coincidence that while protecting the children, the taxpayers and our patients that they benefit, too.  Funny how that works.  Which is what happens when you belong to a union and pay dues.  For a union represents those who pay union dues.  Not children, taxpayers or patients.

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Public School Teachers get Paid Well because they Champion Government and Demonize Capitalism

Posted by PITHOCRATES - December 18th, 2011

Week in Review

Public school teachers make about twice as much as people in the private sector.  At least according to the federal government’s Bureau of Labor Statistics (see Dept. of Labor: Public School Teachers Are Highest Paid State Workers; Compensation Doubles the Average in Private Industry by Terence P. Jeffrey posted 12/14/2011 on CNSNews.com).

Public school teachers receive greater average hourly compensation in wages and benefits than any other group of state and local government workers and receive more than twice as much in average hourly wages and benefits as workers in private industry, according to a new report from the Bureau of Labor Statistics.

Public primary, secondary and special education teachers are paid an average of $56.59 per hour in combined wages and benefits, BLS said in the report released last week.

That is slightly more than twice the $28.24 in average hourly wages and benefits paid to workers in private industry.

…state and local government workers…take in an average of $40.76 per hour, according to BLS…

For each hour at work, according to BLS, the average American public school teacher is paid $4.78 in retirement and savings benefits alone.

The average private sector worker, according to BLS, is paid $1.02 per hour in retirement and savings benefits–or less than one-fourth the average hourly retirement and savings benefits paid to public school teachers.

It’s good to be in the aristocracy.  At least twice as good as being in the private sector.  No wonder they are protective of their collective bargaining rights.  Especially for those benefits.  Which are about 4 times better as they are in the private sector.

If you ever wonder why people are so intent on growing the size of the government this is why.  The bigger the government the bigger the taxes.  And the more wealth they can redistribute to those in this aristocracy.

When in doubt follow the money.  And if you do you’ll find the biggest piles of it at the feet of public school teachers.  The next biggest pile will be at the feet of public sector workers.  You see, the teachers get more.  Because they teach our kids that they deserve more.  And they also champion government and demonize capitalism.  That’s why young people vote Democrat.  Until they have careers and families of their own.  And get smarter.  At which point they start voting Republican.

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Liberal (lĭb’ər-əl), n., One who adheres to the social and political philosophy of (neo) liberalism.

Posted by PITHOCRATES - October 27th, 2011

Politics 101

The Single Goal of Liberalism is to Transfer as much Wealth and Power from the Private Sector

The Founding Fathers were liberals.  They believed in individual liberty.  Personal responsibility.  The Rule of Law.  And limited government.  Very limited government.  Very, very limited government.  Not something you associate with liberals today.  Which is why we must call the Founding Fathers classical liberals.  Because liberalism today isn’t our Founding Fathers’ liberalism.  In fact, it’s what they rebelled against.  Privilege.

Liberals today are a small sliver of the population.  About 20%.  And they’ve been around forever.  They’ve just had different names.  The nobility.  The aristocracy.  The planter elite.  Those born of privilege.  And who live off of the wealth created by others.  Through inheritance.  Through land ownership.  Or via taxation.  This privileged class does not work.  No.  They get others to create wealth for them.  And their tool is class warfare.

Their single goal is to make government as large as possible.  For the larger it is the more wealth and power they can transfer from the private sector.  And there is nothing more effective for growing government than pitting one group of people against another.  Rich against poor.  Employees against employers.  Labor against capital.  Consumers against corporations.  And, of course, racism, sexism, ageism, whateverism.  Whoever you are they’ll find someone who has discriminated against you.  And they’ll use that to their advantage.  To legislate a new law in Congress.  Or from the bench in the judiciary.

Liberals get us Accustomed to Living on the ‘Kindness’ of Government and Terrified of Losing the Government Way of Life

Liberals don’t see individuals.  They see the group the individual belongs to.  And how they can use one group to agitate another.  To advance their agenda.  To increase taxation.  And regulation.  To grow government.  To extend their power and influence over the private sector.  So secure their position of privilege.

They once called themselves the ruling elite.  And ruled accordingly.  Until the inconvenience of elections.  Representative government.   And a Constitution that limits their power.  Now they have to be stealthier.  And hide who they are.  What they truly believe.  And use the courts to make law that they can’t legislate in Congress.  How do they do this?  By dumbing down our public education.  Changing the meaning of words.  And by fooling us.  By hiding in a ‘benevolent’ Big Government.  A government that protects the poor.  The disadvantaged.  The little guy.  When in fact they use the poor, the disadvantaged and the little guy to secure their position of privilege.  For if they actually helped these people their work would be done.  And that’s the last thing they want.  To lose their expanding powers to regulate and tax.

So they extend their power and control over us.  While telling us it’s for our own good.  And make as many of us dependent on them as possible.  By providing generous welfare programs.  Social Security.  Medicare.  And now Obamacare.  Getting us accustomed to living on the ‘kindness’ of government.  And making us terrified of losing our government way of life.

Liberals Consume Tax Dollars and Benefit from a Growing Government that Increases Taxes and Regulations

Liberals consume tax dollars.  They don’t pay tax dollars.  The private sector taxpayers pay the salary and benefits of all politicians.  Public sector employees.  Public school teachers.  And college professors.  Via ever escalating tuition prices that no liberal ever objects to.  (Unlike rising prices in the private sector.)  Either paid for by rich parents.  Or student loans.  Once backed by the government.  Now issued by the government.

Liberals enjoy generous pay and benefit packages courtesy of the taxpayer.  In return liberals in education advance the liberal agenda.  (Ask a kid to explain global warming and capitalism and guess which one he or she will be able to explain).  Liberals in unions repay that government kindness (such as favorable legislation that restricts competition) through generous contributions from their union dues.  And agitate, organize and vote for the liberal agenda.  To keep the spigot of that government kindness open.

And then you have the guilty-rich.  People who try to assuage their guilt of inheriting their wealth.  Those who made it rich in the movies.  In music.  In sports.  As an author.  Anyone who got obscenely wealthy.  But doesn’t want to be attacked for being obscenely wealthy.  Like those on Wall Street.  And those corporate CEOs.  So they, too, advance the liberal agenda.  While sheltering their wealth from the greedy hands of government.

Then there’re the pseudo-intellectuals.  Those who advance the liberal agenda to sound smart.  Or to be included in the inner circle of the elite.  Those in the mainstream media.  And celebrities.  Who cry out desperately for affirmation.  That they are more than just someone pretending to be someone else.  Or simply someone reporting on the exciting lives of others.

Finally the young.  The uneducated.  Or poorly educated.  Who don’t understand capitalism, economics, history or public policy.  And they don’t care.  As long as they get something.  Government benefits.  Or fun.  Whether it be sex and drugs.  Or the thrill of protesting.  Anything to escape living in the real world.  Those who just don’t want to grow up.  And become responsible adults.  Like their parents.  Until they start raising a family.  Then they are exactly like their parents.  So the liberals have to get them while they’re young.  And keep them woefully ignorant about the real world for as long as possible.

The Liberal Social and Political Philosophy has the Simple Goal of Securing their Position of Privilege

The liberal social and political philosophy is simple.  Everything they believe, everything they do, has but one goal.  Securing their position of privilege.  Which explains a record of contradiction and failure.  Such as ‘working hard’ to create jobs while the economy wallows in recession due to an unfriendly job-creating environment.  Because of their high taxes.  Costly regulations.  And the great uncertainty of what will come next.

But when you understand their goal it makes perfect sense.  High taxes and regulation extends their control over the private sector.  And recession sets the stage for Keynesian stimulus spending.  Which creates more government programs.  Paid for by higher taxes.  Which is more wealth transferred from the private sector.  Further extending their control over the private sector.

Liberal policy, then, makes perfect sense.  When you understand its goal is to expand their control over the private sector.  To secure their position of privilege.  Because when you do you’ll see that this policy has never been contradictory.  And it has never failed.

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When Democrat Policies Fail and they Fall in the Polls they Scramble to Endorse Reaganomics

Posted by PITHOCRATES - October 5th, 2011

Democrats have Blamed every ill known to Mankind on Reaganomics

The Left hates Ronald Reagan.  Proclaimed the era of Reagan was over.  No more were these Reagan Republicans going to screw over the poor so the rich can live a better life.  Yes, they hated this man with a passion.  And everything he stood for.  This supply-sider of the Austrian School.  He and is unfunny Laffer Curve.  This cold-hearted tax cutter.  But now they love him.  Why?  Because he supported taxing the rich.

I’ll pause a moment for those of you who have fallen out of your chairs.  Ready?  Good.

You know Congressional Democrats are grasping at straws to promote their policies when they claim their archenemy would have supported them, too.  You know why they’re trying, though, don’t you?  If you listened to the protesters on Wall Street you should know.  With their control of public school teachers and college professors (both dependent on taxpayer money for generous pay and benefit packages), they can revise history.  And keep kids ignorant.  Hopefully keeping them oblivious of things they don’t want them to know.  Such as the true legacy of Ronald Reagan (see MILLER: Ripping off the Gipper by Emily Miller posted 10/4/2011 on The Washington Times).

Liberals are trying to twist Ronald Reagan’s words to muster support for raising taxes. House Minority Leader Nancy Pelosi’s press office sent a memo on Monday to congressional Republicans claiming they’d found evidence proving that President Reagan was the real inspiration for President Obama’s tax-the-rich “Buffett Rule.” The California Democrat posed the question: “What would Reagan do?”

The correct answer is: He would cut taxes. Mrs. Pelosi’s memo sends people over to the liberal Think Progress website, where a video montage interweaves clips of Mr. Obama and Reagan saying apparently similar things about tax rates. “We’re going to close the unproductive tax loopholes that allow some of the truly wealthy to avoid paying their fair share,” said the Gipper.

You’re supposed to think that’s just what Mr. Obama is doing, but the liberals edited out the context of the 40th president’s remarks. In a June 1985 speech at an Atlanta high school, he called for a total overhaul of the tax system. He wanted loopholes closed to lower the tax rates for everyone, for a net reduction in the tax burden. Congressional Republicans point out that’s precisely the opposite of what the Democrats are now trying to do.

You see, the Democrats can’t rely on telling the truth to pass their policies.  Because their policies only benefit those in government.  And those who live like parasites on the wealth creators.  Such as those protestors on Wall Street.  Who want the wealth of the wealth creators.  But want no part of capitalism which created that wealth.  And are too ignorant to understand that you can’t have one without the other.

Thank you public school teachers and college professors.

So they must lie.  Revise history.  To try and fool people into believing that their policies are just like Ronald Reagan’s.  And apparently hoping people don’t remember that Democrats have blamed every ill known to mankind on these very same policies.  ReaganomicsTrickledown economics.  The scourge of mankind.  But the majority of Americans apparently love the big lug so they’ll swallow back their bile and say, hey, we love him, too.  And hope that the grimace on their face doesn’t look as bad or as painful as it feels.

Fannie Mae and Freddie Mac created America’s Financial Mess, not Wall Street

So where did these Wall Street protests come from?  Where did the primary impetus come from?  Apparently Canada.  Thanks, Canada.  As if the corrupting influence of Terrance and Phillip wasn’t enough already.  So I guess we have to Blame Canada (Warning:  Blame Canada contains adult content) for this, too (see Occupy Toronto leaderless, unfocused but hopeful by Dana Flavelle posted 10/4/2011 on the Toronto Star).

The Wall Street protests were inspired by Canadian anti-consumer magazine Adbusters.

Editor in chief and co-founder Kalle Lasn said he’s been calling for this kind of protest movement for 20 years.

It’s finally happening because people are angry with the financial fraudsters on Wall Street who created America’s economic mess and largely went unpunished, he said in a telephone interview from Vancouver.

But that isn’t who created America’s financial mess.  It was government.  Specifically the government sponsored enterprises (GSE) Fannie Mae and Freddie Mac.  If it wasn’t for them buying and/or guaranteeing risky subprime mortgages there would have been no subprime mortgage crisis.

That was government policy.  Putting as many people into houses as possible.  Even if they couldn’t afford them.  That wasn’t Wall Street.  Wall Street was merely an accessory after the fact.  Aiding and abetting Fannie Mae and Freddie Mac.  By selling those toxic subprime mortgages in collateralized debt obligations (CDOs).  Promoting them as high yield yet low risk.  Because they were backed by mortgages, historically the safest loans in all of America.  So investors bought these.  Not knowing how risky they were.  But you know who knew how risky they were?  The GSEs Fanny and Freddie.  Because they bought them.  And remember what the ‘G’ stands for in GSE.  Government.

If you removed government from this equation mortgage bankers would not have approved these risky subprime mortgages.  Because that risk would have been on their books.  But when government said ‘don’t worry  we’ll take that risk off of your books’ what did they have to lose in approving risky subprime mortgages?  Less harassment from the government for not approving mortgages for the poor and minorities who didn’t qualify?  Yeah, like they were going to miss that harassment.

If these protestors want to protest those responsible they should protest government.  Not Wall Street.

Damn Canadians.  If it’s not making our kids fart and curse they’re getting them to protest the wrong people.  (Editor’s note:  We like Canada and Canadians.  And mean them no disrespect.  We’re just having a little fun with the movie South Park: Bigger, Longer & Uncut.  In which incidents lead to war between Canada and the U.S.  A premise so ridiculous that it’s funny.  For Canada and the U.S. have been the best of friends.  And will always be the best of friends.)

The more Public Sector Union Employees paying Dues the more Money is collected for Democrat Coffers

Perhaps that’s the problem.  Too much government.  The federal government has grown into a behemoth.  On top of thousands and thousands of local governments throughout the country (see Infographic: Local government by the numbers by Mary Mahling and Carla Uriona posted 10/4/2011 on Stateline).

There are 89,476 local governments in the United States. They include counties, cities, villages, towns and townships, as well as special districts that handle utilities, fire, police and library services.

That’s a lot of government.  And there’s only one way to pay for a lot of government.  With a lot of taxes.

So we have government upon government upon government.  Surely with all that government we must be getting some value for all of these taxes.

More than two centuries of American democracy have resulted in a profusion of governments at the local level, not only cities and counties but villages and townships, park districts and sanitary districts and a host of others. To those trying desperately to bring a state’s budget into balance, many of these are useless anachronisms incapable of providing any service that could not be provided higher up the governmental chain. But to the tens of thousands of people who hold office in these local entities — and to millions of citizens who live within them — multiple local governments are a crucial piece of evidence that American democracy reaches down to the grassroots level.

Apparently not.  And don’t call me Shirley.

They just provide a lot of jobs for the unemployable.  By taxing the wealth creators.  And redistributing it to people whose job is a duplicate of one at another level of government.

They do serve a purpose, though.  Being totally funded by taxpayers, they have a vested interest to keep raising taxes on the taxpayers.  Which is, of course, helpful to Democrats.  So the more local governments the better.  The more public sector union employees paying dues the more money finds its way into Democrat coffers.

Any Attempt to Quantify Human Behavior will Ultimately Fail

And then you have academe.  And Keynesian economists.  Furthering the growth of government with their government-spending Keynesian economics (see Tis The Gift To Be Simple by Paul Krugman posted 10/5/2011 on The New York Times).

To be sure, IS-LM is an attempt to squeeze a dynamic economy into a static model, which is why people like me usually cross-check our conclusions with something intertemporal. But it’s actually a pretty darn sophisticated approach — as demonstrated by the fact that economists who dismiss or attack IS-LM as too simplistic or something almost always end up making assertions that are much more simplistic than IS-LM, if not falling into outright logical fallacies. In fact, I can’t think of a single exception to this rule: every attack on IS-LM I’ve ever seen (as opposed to suggestions that we should also look at more complex models) was followed by some kind of empirical or logical howler.

I have a criticism.  Any attempt to quantify human behavior will ultimately fail.  Because you can’t quantify human behavior.

Economics belong to the branch of science we call social sciences.  That is, it’s not real science.  Because the wildcard is that human behavior can always produce some unintended consequence to government action.  Such as Prohibition giving us organized crime.  Whereas the equations of science typically don’t.  We can use science to build bridges, buildings and airplanes.  And they work pretty much as planned.  Without any unintended consequences.

You can’t represent human behavior by mathematical formulas.  We know some behavioral responses.  Such as sex in advertising gets men’s attention.  But that’s a base primeval instinct.  There’s not a whole lot of thinking going on.  Not so in a complex economy.  Where there is a lot of thinking going on.  Keynesians like to think the economy is as simple as impulse buying at the point of sale checkout aisle.  Put more candy on display and you sell more candy.  Not so with buying a house.

Everyone will like to own a beautiful home.  But people won’t buy a house on impulse.  Not when there’s record unemployment.  And talk of a double-dip recession.  Because if you learned anything from the subprime mortgage crisis it’s this.  Too much debt is bad.  And there is no such thing as a guaranteed job.  Playing with interest rates won’t change that.  Only time will.  When enough time has passed to let people feel secure in their jobs again.  Then and only then will they consider taking on debt again.  No matter what the IS-LM model predicts.  Because you can’t quantify human behavior.

The Wall Street Protestors with Student Loan Debt Probably don’t have Science or Engineering Degrees

All government policy is social science.  It’s not an exact science.  That’s why strange things happen.  Unintended things.  Whenever government tries to influence behavior.  And when government tries they have a track record of failure.  Which is why they don’t run for reelection on the success of their policies.  They run on the success of someone else’s (Ronald Reagan’s) policies.  And say that their policies are the same.  And they are except with a few minor changes.  And by ‘few’ I mean they couldn’t be any more different.  So they lie.  Or they just demonize their opponents.

But our kids are blissfully ignorant.  Thanks to public school teachers.  And college professors.  Who care more about improving their taxpayer funded pay and benefits than education.  That’s why government grows.  And why we have degrees like women’s studies.  And poetry.  Degrees that offer no hope for employment in a capitalistic economy.  For what business that relies on pleasing their customers (like Apple does consistently) need people with these skills?

No.  They need people with science and engineering degrees.  You know, the hard ones.  So the kids who took the easy route in college must depend on teaching others their worthless knowledge.  Or get a government job.  Which has a lot to do with the anger of these protestors who have huge student loan debt.  And no job.  Because if they hate capitalism you can guess what their degrees are in.

(Editor’s note:  This was written before news of Steve Jobs’ passing broke.  Our condolences go out to his family.  We decided to leave the Apple reference in as a tribute to Steve Jobs.  He was one of America’s greatest entrepreneurs.  The world is a better place because of him.  For the gifts he gave us.  And the inspiration he gave to the next generation of great entrepreneurs.)

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Obama Angers Liberal Base, Obama Record Angers Independents

Posted by PITHOCRATES - April 15th, 2011

Obama is not the Liberal Liberals thought he Was

The liberal base of the Democrat Party isn’t happy with President Obama.  He’s not liberal enough.  Even though he’s the most liberal president to have occupied the White House.  And he’s done a lot.  But not enough.  Sure, he gave them Obamacare.  But he didn’t give them the public option.  And he’s done things that just boggle a liberal’s mind.  He said he would get us out of Iraq and Afghanistan.  Then he bombed Libya.  The base is not amused (see Democrats’ Disgust With Obama by Patricia Murphy posted 4/14/2011 on The Daily Beast).

For many Democrats, the budget bill was only the latest in a string of disappointments served up from the White House since 2009, when Obama swept into office on a tide of goodwill and a platform of base-pleasing promises they say he hasn’t lived up to. On the list are his pledges to close the prison at Guantanamo Bay, pass comprehensive immigration reform, and end the Bush tax cuts for the wealthiest Americans…

Some legislative grumbling is inevitable when a party returns to power after eight years. But a number of Democrats are past protesting the president, discussing among themselves ways to recruit a primary challenger in 2012.

A primary challenger in 2012?  It’s possible.  The latest Gallup poll shows him at a 41% job approval rating.  Worse, with independents, it’s down to 35%.  And this is a problem.  If you keep losing independents, you simply don’t win elections.  So not only is Obama disappointing the liberal base, he’s becoming a liability for the Democratic ticket.  If they can’t win with Obama, why not challenge him in the primary?

The Problem Liberals have is that they’re only 20% of the Population

So independents are abandoning Obama.  Why?  Probably because he lied to them.  He campaigned as a moderate.  But governed as a liberal.  The near trillion dollar stimulus that stimulated nothing.  Obamacare that was fast-tracked through Congress.  And all the job-killing policies.  Unemployment (U-3) is still flirting with 9%.  A more realistic unemployment number (U-6) is closer to 15%.  And gas prices have broken $4 already and the summer driving season isn’t even here yet.  Sure, all good news for liberals.  More problems for Big Government to fix.  But the problem is, most of the people aren’t liberals (see In 2010, Conservatives Still Outnumber Moderates, Liberals by Lydia Saad posted 6/25/2010 on Gallup).

Conservatives have maintained their leading position among U.S. ideological groups in the first half of 2010. Gallup finds 42% of Americans describing themselves as either very conservative or conservative. This is up slightly from the 40% seen for all of 2009 and contrasts with the 20% calling themselves liberal or very liberal.

And this is why independents are abandoning Obama.  Independents aren’t liberals.  Independents and moderates bought into all that hope and change stuff because they really hated George W. Bush.  But there isn’t a George W. Bush to hate anymore.  It’s going on two and a half years.  They gave Obama a chance.  And they don’t like his record.  Or the unemployment.  It’s as simple as that.  All they need is a Reagan-like candidate to ask that question again.  Are you better off now than you were four years ago?  And whoever that candidate is, we will hyphenate his or her name to ‘Democrats’.  And these Democrats will be like the Reagan-Democrats.  Who did to Jimmy Carter what a new batch of Democrats may do to Obama.  Make him a one term president.

Unemployment still High, Inflation and Misery trending Up

And speaking of Jimmy Carter, things are really going Jimmy Carter (see Food and gas costs push consumer prices higher by Christopher S. Rugaber, Associated Press, on 4/14/2011 on USA Today).

The Consumer Price Index rose 0.5% in March, the Labor Department said Friday. That matched February’s increase, the largest since the recession ended in June 2009. In the past 12 months, the index has increased 2.7%, the biggest rise since December 2009.

Hard to read that with a straight face.  The recession ended in June 2009?  Really?  Apparently, a lot of people didn’t get that memo.  Like the 15% who can’t find a job.

Consumers are spending more, but the steep rise in food and gas prices could limit their ability to purchase discretionary goods and services. Consumer spending makes up 70% of economic activity.

Rising inflation has caused many analysts to reduce their estimates for economic growth in the January-March quarter from roughly 3% or higher to as low as 1.5%.

Gasoline jumped 5.6% last month and has risen nearly 28% in the past year. Consumers paid an average price of $3.81 a gallon nationwide on Friday according to the travel group AAA.

Food prices rose 0.8% last month, the largest increase in almost three years. Prices for fruits and vegetables, dairy products, chicken and beef all increased. Coffee costs rose 3.5%.

High unemployment.  And rising prices.  We call this inflation.  If you add the unemployment and inflation rates you get the misery index.  And the last time it was trending like this Jimmy Carter was president.  His stagflation worked magic.  It made a bunch of Democrats vote Republican.  The Reagan-Democrats that made Carter one unhappy former president. 

Farmers do a far better job than Teachers

Have you learned anything reading this?  Have you followed any of the links to learn more?  To fact check?  If you said yes to any of the above you have learned quite a bit with your visit here today.  And I’m guessing that a lot of what you learned is probably new.  You probably learned little of this in the public school system.  Even with your 12 years there.  But after some 15 minutes and a few mouse clicks you have.  Pretty amazing, isn’t it?  And it makes you wonder why your public school didn’t teach you any of this.  I mean, we spend a fortune on public education.  Employ millions of people to teach our kids.  But they keep telling us we don’t spend enough.  So we spend more.  I guess because the public schools aren’t making our kids smart enough.  It’s puzzling.  Because we spend less and employ fewer people on farming.  And farmers feed more people than our public school system educates (see Conventional Education Will Go the Way of Farming by Doug French posted 4/15/2011 on Ludwig von Mises Institute).

We have a wider array of food available to us than ever before. Created by fewer people. The division of labor continues to work wonders. Thank goodness we’re not all stuck on the farm. According to the occupational employment numbers from the Bureau of Labor Statistics, 419,200 were employed in the farming, fishing, and forestry occupations in May of 2009.

The same May 2009 report listed 8,488,740 people employed in education, training, and library occupations. So more than 20 times more people are needed to educate a small portion of the population than to grow food for everyone. But what about serving the food? Yes, food-preparation and food-serving occupations totaled 11,218,260 employees, serving the entire population of over 308 million.

Meanwhile, it takes more than 8 million to educate the 81.5 million that are enrolled in school. History and technology would say this surely can’t last. A proud father recently told me of quizzing his kids about scurvy. And while his young daughter gamely took a wild guess, his crafty teenage son ducked into the next room to google it, quickly emerging to give the correct answer that the disease that killed so many centuries ago is caused by a deficiency of vitamin C.

Public education, then, is a case study of how not to be productive.  But is there anything more sacrosanct than public education?  Public school teachers?  When Wisconsin governor Scott Walker tried to balance the state’s books by restricting public sector workers’ collective bargaining rights, all hell broke out.  Even the president sent some of his people to the state to run interference to stop that legislation.  Why?  Because he was worried about the quality of that education?

This is the information age, yet the ability to communicate is not being taught, or not sinking in. [A] college English instructor…wrote on Boston.com that few of her students had received writing instruction in high school, and that correcting student papers was so time consuming that the task was virtually overwhelming. She quotes Vartan Gregorian, the former president of Brown University, who rightly understands that “the ability to read, comprehend, and write — in other words, to organize information into knowledge — must be viewed as tantamount to a survival skill.”

That doesn’t sound like a very high level of quality from our public schools.  It rather sounds like they’re doing a poor job.  Even though we pay more and more each year.

In a piece questioning the need for colleges offering majors in business, David Glenn writes that employers are looking for “22-year-olds who can write coherently, think creatively and analyze quantitative data, and they’re perfectly happy to hire English or biology majors.”

Yes, the facts and figures are a click away. The ability to use, understand, and communicate those facts is what must be taught and currently is not. And it doesn’t take an army of 8 million and a budget of 1 trillion dollars and counting to do it.

So if the schools are doing such a poor job, why do we protect these public sector workers with such passion?  What other employees that do such a poor job are treated so well?

Well, to understand this you have to look at the money.  For money never lies.  You see, educating our children is not their primary object.  It’s funneling taxpayer money to the Democratic Party via their union dues.  And producing future Democrat voters.  Yes, they may not come out of school with useable job skills.  But a good percentage of them will become moderate/independent voters.  People that a candidate Barack Obama can appeal to.  Especially when there is an incumbent in office that they’ve been taught to hate.

Hate, Fear and Charm

Liberals aren’t happy with Obama.  Because he’s toned down his liberalness.  Because he had to.  Liberals are only 20% of the population.  The voters he fooled last time (moderates and independents) probably won’t get fooled again.  And you just aren’t going to win an election with 20% of the vote.  So he has to move towards the center for the 2012 election.  And hope that the public school system keeps dumbing down our graduates so that they’re still naïve and ignorant enough when they vote for the first time.  Because after four years a lot of people are going to forget to hate George W. Bush.  Or even know who he is (the new voters in 2012 would have only been 14-17 during the last ‘hate’ cycle in 2008.  And you know what 14-17 year olds are thinking about.  That’s right.  Not politics).  And with the misery index trending Jimmy Carter, Obama is going to need all the ignorance and naiveté he can get.

With a record of abject failure, Obama is going to have to bank his reelection chances completely on feelings.  Not fact.  Hate, fear and charm.  No substance.  The platform will be simple.  To hate and fear the Republicans.  And tell charming lies to get people to believe them despite the evidence of the past 4 years.

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Governor Scott Walker Takes on the Public Sector Unions in Wisconsin

Posted by PITHOCRATES - February 18th, 2011

40 Percent of Teachers Call in Sick…in West Bloomfield, Michigan

We start not in Wisconsin.  But in Michigan.  Another of the other Great Lakes States where the Republicans won control of their state house.  And there’s teacher trouble in one of their fair cities (see The West Bloomfield Teacher ‘Sick Out’ by Tom Gantert posted 2/18/2011 on Michigan Capitol Confidential).

About 40 percent of the West Bloomfield High School teachers didn’t show up for work on Feb. 15 in the midst of bitter contract negotiations.

Goodness, that’s a lot of teachers.  Pay and benefit packages for teachers in the West Bloomfield school district must be awful.

West Bloomfield teachers do not do any premium sharing for health insurance and do not have a deductible in their plan, Andrees said…

The total compensation of a West Bloomfield teacher grew 173 percent over an 11-year period, going from $47,346 to $129,637, according to information that was presented at a school board meeting in December.

The teacher’s salary started at $31,881 in 1999-00 and grew to $85,836 in 2010-11. Meanwhile, insurance payments climbed from $9,309 to $19,304 per year, and retirement contributions jumped from $3,717 to $16,854 per year.

Wait a tic.  Isn’t Michigan one of those states suffering from record unemployment?  Even though the federal government just spent billions of dollars to bail out GM and Chrysler to save jobs?  I mean, it’s pretty horrible in Michigan.  But I guess we need to put this aside and focus on what’s important.  There are teachers there who have been working a 9-month year for the measly compensation of $129,637.  What vicious, heartless bastards they must have in Michigan.

Incidentally, teachers get the good months off during the year.  The summer months.  How many of you would like to get paid $85,836, get $19,304 worth of healthcare insurance per year free with no deductible, retirement contributions totaling $16,854 per year AND have the three summer months off?  Not to mention all the holidays and breaks during the school year.  I dare say many people would like this.  Especially the taxpayers who pay for this while they themselves get little in compensation compared to this.  So I don’t see a mass outpouring of sympathy for these teachers.

You know, it’s good to be a teacher.  In the public school system.

Public Sector Unions Impoverishing States, Cities and their Trade Union Brethren

Public school teachers are part of the public sector.  And belong to a public sector union.  In the public sector, there is no competition.  We pay the public sector workers with tax dollars.  Unlike their counterparts in trade unions.  These people who build useful things for us are not paid with tax dollars.  The private sector pays them.  As such, they have to respond to market forces.  Unlike their brethren in the public sector (see Labor’s Coming Class War by William McGurn posted 1/4/2011 on The Wall Street Journal).

Suddenly, it’s a different world. In this recession, for example, construction workers are suffering from unemployment levels roughly double the national rate, according to a recent analysis of federal jobs data by the Associated General Contractors of America. They are relearning, the hard way, that without a growing economy, all the labor-friendly laws and regulations in the world won’t keep them working.

What’s more, “blue-collar union workers are beginning to appreciate that the generous pensions and health benefits going to their counterparts in state and local government are coming out of their pockets,” says Steven Malanga, a senior fellow at the Manhattan Institute. “Not only that, they are beginning to understand the dysfunctional relationship between collective bargaining for government employees and their own job prospects.”

They get it.  All pay and benefits come from the private sector.  Whether paid from business profits.  Or taxes on business profits.  (Or taxes on our private paychecks.)  All taxes come from profitable business operations.  But excessive taxes dampen economic activity.  And kill jobs.  Everybody knows this.  Even some union people.  So something has to change.  And some state governors are stepping up.

The signs of this new awakening are gathering. In New Jersey, Gov. Chris Christie rightly becomes a YouTube sensation for taking on his state’s obstinate public-sector unions…

Over in New York, meanwhile, newly inaugurated Gov. Andrew Cuomo faces a similar battle. Mr. Cuomo campaigned on a cap on property taxes and a freeze on state salaries, both anathema to the powerful state-employee unions…

Elsewhere, in 2005 Republican Govs. Mitch Daniels and Matt Blunt used executive orders to end collective bargaining with state employees in Indiana and Missouri, respectively. Now the incoming Republican governors of Ohio and Wisconsin—John Kasich and Scott Walker—are targeting collective bargaining for government workers in their states.

Scott Walker and Wisconsin.  But more of that later. 

In some ways, this new appreciation for the private sector is simply back to the future. FDR, for example, warned in 1937 that collective bargaining “cannot be transplanted into the public service.” In the old days, unions understood economic growth. Mr. Malanga points to AFL-CIO President George Meany’s strong support for the JFK tax cuts as an example.

These days the two types of worker inhabit two very different worlds. In the private sector, union workers increasingly pay for more of their own health care, and they have defined contribution pension plans such as 401(k)s. In this they have something fundamental in common even with the fat cats on Wall Street: Both need their companies to succeed.

By contrast, government unions use their political clout to elect those who set their pay: the politicians. In exchange, these unions are rewarded with contracts whose pension and health-care provisions now threaten many municipalities and states with bankruptcy. In response to the crisis, government unions demand more and higher taxes. Which of course makes people who have money less inclined to look to those states to make the investments that create jobs for, say, iron workers, electricians and construction workers.

Now, with that background, let’s look at Wisconsin.

40 Percent of Teachers Call in Sick…in Madison, Wisconsin

Just like in Bloomfield, Michigan, teachers are calling in sick (see Schools in Wisconsin’s capital close after protesting teachers call in sick posted 2/16/2011 on myfoxorlando.com).

MADISON, Wis (NewsCore) – Public schools in Madison, Wis., were closed Wednesday after 40 percent of the 2,600 teachers protesting a controversial budget bill called in sick.

School officials were forced to cancel classes, as there were not enough substitute teachers available to cover the absentees, Madison Metropolitan School District superintendent Dan Nerad told local newspaper the Journal Sentinel.

Though in Wisconsin they’re saying little about what their current pay and benefits are.  One can only assume they are as generous as they are in West Bloomfield.  Because if they are awful they would have told us how awful they are. 

President Obama Declares War on Ohio, Indiana, Missouri, New Jersey, Pennsylvania and Wisconsin

So how awful are things really in Wisconsin?  From the media reports it sounds like the end of world.  That Wisconsin’s governor, Scott Walker, is bringing back slavery.  Even the president is joining the fight against the elected government of Wisconsin (see Obama joins Wisconsin’s budget battle, opposing Republican anti-union bill by Brady Dennis and Peter Wallsten posted 2/18/2011 on The Washington Post).

The president’s political machine worked in close coordination Thursday with state and national union officials to mobilize thousands of protesters to gather in Madison and to plan similar demonstrations in other state capitals.

Their efforts began to spread, as thousands of labor supporters turned out for a hearing in Columbus, Ohio, to protest a measure from Gov. John Kasich (R) that would cut collective-bargaining rights.

By the end of the day, Democratic Party officials were working to organize additional demonstrations in Ohio and Indiana, where an effort is underway to trim benefits for public workers. Some union activists predicted similar protests in Missouri, New Jersey and Pennsylvania.

So much for federalism.  Thank God Thomas Jefferson didn’t live to see this.  This meddling by the executive power into a state’s affair is worse than he even feared.  Even Alexander Hamilton would not approve.  And he was in favor of a strong executive.

The Worst of the Assault on Public Sector Unions – Asking them to Live like the Rest of Us

So what is so vile, so repugnant, so evil in the state of Wisconsin?

Under Walker’s plan, most public workers – excluding police, firefighters and state troopers – would have to pay half of their pension costs and at least 12 percent of their health-care costs. They would lose bargaining rights for anything other than pay.

Well that doesn’t sound so bad.  People in the private sector often pay 100% of their retirement.  A pretty hefty share of their health-care costs.  And something like 90% of the private sector doesn’t even have any bargaining rights.  Other than quitting a job if it is so vile, so repugnant and so evil.  And, you know what?  Those jobs in Wisconsin must be pretty damn good.  I mean, to protest like that can only mean one thing.  That these jobs are the best jobs around.  For there isn’t a chance in hell they’ll find anything as good in the private sector.  Which is why they simply don’t quit those ‘God-awful’ jobs.

Beyond their short-term fiscal problems, many states face pension and retiree health-care costs that some analysts say are unsustainable. Some states already are curtailing retirement benefits for new employees, although many analysts say it will take much more to bring their long-term obligations in line.

The huge debt burdens coupled with the impending cutoff of federal stimulus aid later this year have spurred talk of a federal bailout. The White House has dismissed such speculation, saying states have the wherewithal to raise taxes, cut programs and renegotiate employee contracts to balance their books.

What?!?  Our federal stimulus paid for those fat pension and healthcare benefits?  Wasn’t that money suppose to stimulate economic activity?  Create jobs?  Could it be that it was a slush fund all along to reward loyal Democratic supporters?  Good God, can it be that Rush Limbaugh was right?

In Wisconsin, state Democratic senators staged a protest of their own Thursday, refusing to show up at the Capitol for an 11 a.m. quorum call – delaying a vote that would have almost certainly seen the spending cuts pass.

I guess elections only have consequences when Democrats win.  When Barack Obama won, he told the Republicans, sure, you can give me your ideas about how to fix the economy.  I won’t use any of them.  Because elections have consequences.  And I won.  Perhaps the Republicans should have hid during the Obamacare vote.

“Many of the companies I went by, like so many others across the state, don’t have pensions, and the 401(k)s they have over the last year or two, they’ve had to suspend the employer contribution,” Walker told Milwaukee radio station WTMJ. “So, not a lot of sympathy from these guys in private-sector manufacturing companies who I think reflect a lot of the workers in the state who say what we’re asking for is pretty modest.”

What’s good for the private sector is good for the private sector.  The public sector apparently deserves better.  And with record unemployment, I’m sure they’ll get a lot of sympathy from the taxpayers paying their salary and benefits.  Not.

Public Sector Unions and the President are trying to Maintain a Privileged Elite

FDR got it.  The trade unions get it.  And most of the taxpayers lucky enough to still have a job in the worst recession since the Great Depression get it.  If you don’t have a healthy economy there is no money for anyone.  High taxes kill economic activity.  And there is only one way to pay generous public sector pay and benefits.  High taxes. 

We have come to a crossroads.  In one direction there is prosperity.  In the other there isn’t.  The governors in New Jersey, New York, Indiana, Missouri, Ohio and, of course, Wisconsin, are trying to go down the road to prosperity.  While public sector unions and the president are trying to maintain a privileged elite.  At the expense of the ordinary American.  Who will win?  We’ll find out in Wisconsin.

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LESSONS LEARNED #44: “Liberal Democrats have to lie because there are more taxpayers than tax consumers.” -Old Pithy

Posted by PITHOCRATES - December 16th, 2010

Lying to Make Future Liberal Democrat Voters

Ask anyone some questions about the Great Depression and they’ll probably get them wrong.  Why?  Because their history teachers revised history to make government look better.  Government wore the white hats.  And business wore the black hats.  Because their teachers were public school teachers.  And the teacher unions are one of the strongest unions in the country.  The government takes care of them.  And, in return, the public school teachers takes care of government.  By turning out as many future liberal Democrat voters as they can.

So what did our teachers teach us about the Great Depression?  Evil rich people caused it.  By speculating in the stock market.  And it was their speculation that caused the Great Crash which caused the Great Depression.  Rich business people bad.

Then Franklin Delano Roosevelt (FDR) rode into Washington and saved the day.  FDR expanded federal power and went to work to fix things.  He punished the rich (raised taxes).  Created a huge federal bureaucracy to manage the economy.  And spent money like there was no tomorrow.  Public works programs.  Even gave us Social Security.  He made everything better.  Big hearted government people good.

That’s the history in our history books.  The only problem is that it’s wrong.

Tax Cuts and the Roaring Twenties

This is the story told because it favors those who favor expanding government.  Big Government wants to tell us what’s best for us.  And our public schools want to shield our children from their parents.  Because they (and Big Government) are smarter than parents.  So they revise history.  And lie to our kids.

Really?  Come on, they’re not really lying to our kids.  I mean, what reason could they possibly have to lie to our kids?  Just look at the demographics.  The far Left, those in government who like to spend money and tell us how to live our lives, are about 20% of the population.  The other 80% have real jobs and pay taxes.  And this is a problem.  How do you convince 80% of the people (who pay taxes) to pay more taxes so the government can spend it against their wishes?  All the while having the government telling these taxpayers how they should live their lives?  Easy.  You lie.  And you lie to their kids.

There was an economic boom before the Great Depression.  The economy was roaring so strong that they called it the Roaring Twenties.  And it had nothing to do with speculation.  We were building automobiles.  Electrifying the country.  Selling electrical appliances.  And building radios.  This was no speculative bubble.  It was real and strong economic growth.  And guess what kicked it off?  Tax cuts.

Higher Tax Rates Shelter Wealth instead of Creating Jobs

They don’t talk about this in the history books.  Because no public school teacher or government bureaucrat likes tax cuts.  Because economic growth created by tax cuts sends a very simple yet powerful message.  We don’t need Big Government.

Following World War I, government was a bureaucratic behemoth.  With a huge federal debt.  Fighting world wars can do that.  The Progressives, who gave us Prohibition and other nanny-state-like things, liked that big bureaucracy.  They liked activist government.  But even they knew that a high debt was not good.  And being the zero-sum economists they were, they knew only one way to reduce that debt.  Higher taxes.  And their candidate for the 1920 election, James M. Cox, promised to do just that.  And he lost the election.  Proving that Progressives don’t understand economics.  Or the American people.  Those Americans who have jobs, at least.

Warren G. Harding won that election.  And his secretary of the treasury, Andrew Mellon, understood economics.  To find a better secretary of the treasury you have to go all the way back to our first one.  Alexander Hamilton.  Mellon understood business.  And understood rich people.  High tax rates did not bring in more tax money.  Why?  Because rich people know how to shelter their wealth.  But give them a lower tax rate where they can make and keep what they earn, they’ll invest that money and create jobs.  They’ll pay more in taxes (even at a lower tax rate) because they’re not sheltering their wealth.  Their employees will pay more in taxes because they’ll have jobs.  And this is what happened during the Roaring Twenties.  People were working.  Making durable goods (cars, electrical appliances, radios, etc.).  Times were good.  Very good indeed.

Government Activism Gives us the Great Depression

The United States became an economic juggernaut during the 1920s.  The Americans were eclipsing the Europeans.  We were not a superpower yet.  But the Europeans saw the writing on the wall.  They wanted to form their own union of European states to compete against the economic powerhouse that was the United States.  We were kicking ass and taking names.  And no one could hold a candle to us.  We were unstoppable.

Then Herbert Hoover became president.  He was a progressive republican.  He liked activist government.  Hoover was a Big Government Keynesian and wanted to use the powers of government to end the business cycle.  He believed high wages meant high prosperity.  And in parity between farm and nonfarm prices.  He was everything FDR would become.  In fact, the Hoover administration started a lot of the FDR New Deal programs.

Farmers had mechanized their farms.  They plowed more fields than ever.  And grew more than ever.  With bumper crops prices fell.  Normally not a problem.  You just sold more.  But the war was over.  European farmers were farming again.  Not only did they not need our crops, they slapped tariffs on our exports to protect their farm prices.  So farmers couldn’t sell enough to make a profit at the lower prices.  Farmers went bankrupt.  Farm loans went unpaid.  Farm banks failed.  The Federal Reserve failed to provide liquidity to help other farm banks in trouble.  More failed.  This rippled into the nonfarm banks.  Which contracted the money supply.  Business started to hoard their cash because of the tight credit market.  They cut back on production.  Laid people off.  Then the Smoot-Hawley Tariff went to committee in Congress.  Business responded, knowing that that higher tariffs on imported goods they used would increase their cost of production.   They hoarded more cash.  Cut back on production.  Congress passed the Smoot-Hawley Tariff.  Other nations respond by imposing their own tariffs.  This resulted in a trade war.  Business sales fell.  Production fell.  More banks failed.  Hello Great Depression.

Tax Cuts Stimulate Economic Activity

This is the part they don’t teach you in history class.  It was government involvement that killed one of the strongest bull markets in history.  And would prolong the Great Depression.  The growth of government and the anti-business climate created great uncertainty.  And that didn’t go away until World War II.  When James Byrnes (head of the Office of War Mobilization) allowed business to make fat profits if they could deliver the vast quantity of war material needed to defeat Hitler, Mussolini and Tojo.  And they did.  The Arsenal of Democracy won World War II.  Private business doing what they do best.  Business.

But liberals like to spend money.  Our money.  And tell us what’s best for us.  To do that, though, they need us to vote for them.  And telling us that they want to take more of our money while telling us what’s best for us won’t make us vote for them.  It didn’t help Cox to tell the truth in 1920.  And no other presidential candidate since.  Because the 20% of the population that agrees with them isn’t enough to win an election.  You need some of the 80% who have jobs and pay taxes.

History has shown tax cuts stimulate economic activity.  They did when Warren Harding cut taxes.  When JFK cut taxes.  And when Ronald Reagan cut taxes.  This truth doesn’t make a good argument for raising taxes, though.  So our public schools and Big Government revise that part of history.  And lie to our kids.  Until they bleat “Business bad.  Government good.”  Like good future liberal Democrat voters.

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FUNDAMENTAL TRUTH #26: “If we need Big Government to protect us from ourselves, then our public schools can’t be the best place to learn.” -Old Pithy

Posted by PITHOCRATES - August 10th, 2010

IT’S A PARADOX.  You can’t have both.  Great public schools.  And a Big Government nanny state.  The public schools can’t be the best place to learn if we graduate hopelessly incapable of taking care of ourselves.  You cannot reconcile the two.  It is impossible.  The need of Big Government is an indictment on public education.  It sucks.  It sucks so bad that our only hope to survive is by a dependence on government.

The Founding Fathers did NOT want a Big Government nanny state.  So they tried to limit its money and power.  The nation’s capital ended up in a swamp because Thomas Jefferson wanted to keep it out of the big cities (such as New York and Philadelphia).  History has shown that wealth (the big cities) and power (sovereign authority) combine to make the worst of governments. 

And they believed in the importance of education.  A real education.  History.  Math.  Science.  Architecture.  Engineering.  Economics.  For they believed an educated constituency was the greatest protection against Big Government.  They knew it.  Just as well as the proponents of Big Government knew it.  Know it.

So is it a coincidence?  That the rise of Big Government corresponded with a fall in the quality of public education?  If we need Big Government to be our nanny, we obviously are not well educated.  Otherwise, we could take care of ourselves.  Like we did for the first century or so of our existence.  So, did our poor public school system give life to Big Government?  Or is it the other way around?  Did a growing Big Government protect itself from the danger of a well educated constituency?

STUDENTS GRADUATE TODAY without being able to do the most simple of tasks.  To point to Australia on a map.  To identify the three branches of government.  To name a current member of the U.S. Supreme court.  The current Speaker of the House.  To identify the allies during World War II.  Or even tell us who’s buried in Grant’s tomb.

Few can define compound interest.  Or calculate it.  Few can make important investment decisions for their retirement.  But they can tell you how Christopher Columbus raped the indigenous people in the New World.  How America ruthlessly expanded westward, stealing land from the North American Indians.  How we cruelly enslaved a race to build a nation predicated on liberty.  You’ll find these in the curriculum.  And in the schools’ libraries.  But you won’t learn much about how Martin Van Buren created the Democrat Party to prosper on political spoils and patronage.  Or that the Democratic Party was the party of slavery.  The party of the KKK.  The party of Jim Crowe laws (the legal segregation of blacks after the Republicans ended slavery).  That it was the Democrats who enacted Prohibition because they knew what was best for us.

No, instead, students today learn about the importance of being sensitive to other people’s feelings.  That we should be our brother’s keepers.  That Big Government is good.  Important.  And necessary.  We teach them that FDR’s New Deal programs ended the Great Depression.  That massive government spending on make-work government jobs restored the economy.  It didn’t.  They learn that LBJ’s Great Society ended racial discrimination and poverty.  It didn’t.  These programs failed.  As many Big Government programs of compassion do.  But that’s not in the curriculum. 

Worst, most students haven’t a clue about economics.  What makes economic activity.  What hinders it.  The consequences of monetary and fiscal policy.  So they haven’t a clue about how all those compassionate programs of Big Government often lead to unemployment and recession.  So when they are old enough to vote, they are compassionate.  They approve of expanding the nanny state without any idea of the economic impact.

WE SPEND A fortune on public education.  Per student expenditures are among the highest in the world.   But the money we spend is never enough.  They always ask for more.  For the children.  So, to help the children, they raise taxes (property, sales, etc.).  For the children, they get the poor to gamble away what little they have (the lotto).  More money than ever before is collected.  For the children.  But it’s still not enough.  Which begs the question, where is all that money going?  Clearly, it isn’t to the children.

And because the children are so precious, they’re good leverage.  There’s nothing like a good strike at the beginning of the school year to get a better contract.  Why, they even have our precious children carry picket signs.  Because it’s all about the children.  Of course, unions protect dues-paying members.  And the last I heard, children don’t pay union dues.

But the teachers are underpaid and overworked, aren’t they?  If they are, they are the only union workers that are.  It’s why you join a union.  For leverage.  For negotiating power to get better salary and benefit packages.  And they do.  Your typical public school teacher does better than your typical salaried worker.  And they work less to get it.  Oh, they talk about ‘non-compensated’ hours worked after school.  That means approximately anything more than an 8-hour day.  The real world typically pays a salaried worker for only a 40 hour week when they often work 50 hours or more.  And they often don’t get the Friday after Thanksgiving off.  Or a Christmas break.  Or a winter break.  Or an Easter break.  Or the 3 months of summer off.   When you factor in the actual time worked and the benefits, they do very well.  Far better than private school teachers.  And private school students outperform public school students.  Hell, some of the most stalwart defenders of public education send their kids to private school.  Because they can.  The poor do, too.  When they can.  When they have access to school vouchers.  Everyone, when given the choice, chooses private school over public school.  If that ain’t an indictment on the public school system, I don’t know what is.

So where does all that money go?  To the teachers.  Their unions.  And the public school bureaucracy.

WE SPEND MORE money on public education.  But private school students do better than public school students.  And private school teachers make less than public school teachers.  So when we pay more we get less.  A more poorly educated student.  So what conclusion can we draw?  We are spending more money than we need to on public education.  And if we’re spending too much right now, spending more money sure isn’t going to make anything better for the children.  The teachers, perhaps.  But not the children.  Because the truth is this.  It’s not about the children.

The public schools are not educating.  They’re indoctrinating.  They’re producing good liberal democrats.  Because Big Government knows that an educated constituency is the greatest threat against their power.  So they control education.  They take care of the union teachers who, in turn, teach the students to love Big Government.  It’s rather Orwellian, really.  Elites taking care of elites.  At the expense of the children.  And our future.

Conspiracy?  If it wasn’t so much in the open, perhaps.  But the Democratic Party hasn’t changed much since the days of Martin Van Buren.  It’s about getting power.  And keeping power.  And you do that with patronage.  And dependency.  Big Government has given us Social Security, Medicare, Medicaid, unemployment benefits and numerous welfare programs.  And now the holy grail of them all.  National health care.  The larger these programs, the greater the dependence.  The larger the dependency, the greater number of loyal Democrat voters. 

SO IS THERE a paradox?  It depends on your point of view.  From outside of the public school system, yes.  If you think it’s about the children, yes.  But from inside the public school system or from inside of Big Government, no.  Because, there, it is not about the children.  It’s about well paid teachers.  And an uninformed electorate.  And the systems in place work very well in achieving these goals.

So, no, our public schools are not the best place for children to learn.  But it’s a pretty good place to indoctrinate them into loving Big Government.

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