Politics of Pension Reform

The Manhattan Institute released a report today on reforms in public pensions since the Great Recession which, according to njspotlight,  cited New Jersey as an example where there has been meaningful pension reform.  It’s not.

The third paragraph of the executive summary got it right:

On the surface, it seems that state politicians did not, in Rahm Emmanuel’s now-famous dictum, “let a serious crisis go to waste.” However, many observers believe that few of the aforementioned reforms fully addressed states’ long- term fiscal problems. Most of the changes apply only to new hires, not to existing employees or those already in retirement. Therefore, the savings from these plans will take decades to materialize. That even passing mild pension reforms proved contentious reflects powerful political alignments that militate against retrenchment. The key players in pension reform have strong incentives to push costs into the future and avoid tough choices in the present. Consequently, most states did just that.

But then the next paragraph takes us seriously off the rails:

But a handful of states took more dramatic action, genuinely trying to do something about their pension systems with a view to the long term. States where major reform did occur stand out: they include (but are not limited to) Rhode Island, Utah, Virginia, and New Jersey. These few states offer lessons about when and why pension reform can work. They point the way toward successful political strategies for serious pension reform that might be emulated elsewhere.

I can’t speak to the other three states but the New Jersey reforms have made the situation far worse in that:

  • Changes in the benefit formula and retirement age DID only apply to new hires.
  • The COLA elimination was illegal and will need to rely on getting at least four New Jersey Supreme Court justices to be addled enough not to see that in order to sustain.
  • The rush to fund the plan entirely through investment earnings has left the trust highly susceptible to this next crash we are now experiencing.
  • The false sense of accomplishment manufactured by the 2011 reforms has wasted another four years of NOT getting real reforms.

83 responses to this post.

  1. Posted by Porgie on September 2, 2015 at 10:51 am

    Taking the increased employee contributions to lower the accrued liability (lowering employer contributions) did not help either.

    Reply

  2. Posted by Greg Lamon on September 2, 2015 at 10:52 am

    The Manhattan Institute is funded by the Arnolds and other pension reform advocates to churn out material in line with their reform views. Accuracy as to cause-effect of municipal budget and pension issues is not a theme of their writings, and apparently this one is no exception. While the reformers tout the Manhattan Institute products in the “I told you so” category, readers would be well-advised to not just accept what the Institute publishes. Bury is to be commended for pointing out the inaccuracies in this one.

    Reply

    • Posted by S Moderation Douglas is Wrong Again on September 2, 2015 at 1:04 pm

      “The Manhattan Institute is funded by the Arnolds…”

      LOL…this clown is such a…well clown! Every time a respected actuary/Think Tank/Economist brings out the truth some yahoo like this moron claim they are operatives of the;

      “…Koch Bros./Arnolds/(insert hated foe here).”

      Oh, and they “hate the middle class/working Americas/teachers/FF/Cops (insert trough feeder job here).”

      Go hime chump, you have been slapped to the curb TOO many times…

      Reply

  3. Posted by Tough Love on September 2, 2015 at 11:01 am

    What I find so frustrating is that while EVERY element of PUBLIC Sector pensions (the formulas, the young/unreduced retirement ages, the more generous definition of “pensionable compensation”, the under-priced early retirement factors, the absurdly easy-to-meet definitions of “disability” retirement, and though now suspended in NJ, the existence of COLA increases) is FAR more generous than the same elements of PRIVATE Sector Plans, such a fuss is made when one (just ONE ….. the COLAs) is addressed, and then only on a TEMPORARY basis.

    Earth to anyone listening ….. Private Sector Plans NEVER include annual COLA increases …… and while suspending them was financially material, there never was any justification for their taxpayer-funded existence (i.e., better benefits than their Private Sector counterparts) in the first place.

    Private Sector taxpayers have been so greatly financially “mugged” by the insatiably greedy Public Sector Unions/workers (and our enabling elected officials) that we are supposed to be giddy when things that were NEVER justifiable start to be addressed.

    A REAL “fix” means doing what the NJ’s Pension Commission recommended …. a freeze of these grossly excessive DB pension Plans of all CURRENT NJ State and Local Public Sector workers, and material reductions to their “Platinum+” TAXPAYER-FUNDED healthcare.

    Reply

    • Lol!!! Oh boy TL…….. Such a long post for spewing the same old crap. Give it up.

      Reply

      • Posted by Tough Love on September 2, 2015 at 1:26 pm

        Sorry BH, but I will continue to strongly advocate to reduce the Pensions & benefits of all CURRENT State AND Local workers ALL THE WAY down to a level NO GREATER THAN those typically granted Privater Sector workers.

        Got a problem with EQUAL ?

        Reply

        • Posted by Charles on September 2, 2015 at 1:57 pm

          I was paid about 2/3 of private sector pay for 40 years. If I had been paid the difference over those years and invested it in T bills I could forget about the pension and health insurance.

          Reply

          • Posted by Tough Love on September 2, 2015 at 2:56 pm

            Hi Charles (a retired CA Engineer),

            As we have discussed before, most Public Sector workers (when it come to compensation comparisons) like to compare their compensation with the best-of-the-best in the Private Sector ……. e.g., if you were an IT tech worker, with the Apples, Facebooks, and Googles of the world.

            While I don’t know you (or your talents as an engineer) I would guess that few in the Public Sector are of that caliber and deserving of that level of compensation.

            In fact, the Apples, Facebooks, and Googles of the world seek to employ risk-takers with an entrepreneurial bent where working 12 days with PASSION to beat the competition to market is simply considered a challenge. Compare that to the mindset of the typical Public Sector worker…… out the door the minute the clock strikes 5PM ( or 4:30 ?), demands for overtime for a minute over 40 hrs/wk, and a cradle-to-grave “pension/benefit security” mindset.

            Who know, perhaps YOU were a superstar and deserving of higher cash pay, but I’d bet not many in the Public Sector do.

          • Posted by S Moderation Douglas on September 2, 2015 at 6:32 pm

            Charles ain’t talkin’ Google.

            Charles was an engineer when Hector was a pup.

            Long before Google was a company or a verb.

            He is not comparing salaries to Google or Yahoo. California engineer salaries were below the “average” engineer pay, not Googlepay. In the early 2000s, California had problems keeping or hiring engineers. The Department of Personnel Administration did a salary survey and, over a three year contract, increased engineer salaries over 30%.

          • Posted by Tough Love on September 2, 2015 at 7:35 pm

            S Moderation Douglas ….. we are all entitled to our own “opinion” of whether “professionals” working in the Public Sector are of the same caliber as those working in the Private Sector.

        • Posted by Anonymous on September 2, 2015 at 2:09 pm

          come up with something new, you are boring, no effort even change the words.

          Reply

        • You’re advocating to 6 people…. Cool

          Reply

          • Posted by Tough Love on September 2, 2015 at 2:58 pm

            BH, Only those riding the Public Sector pension/benefit gravy train support you ….. and I’d bet that many of them privately think that if you REALLY believe what you post, that your off-the-wall nuts.

          • Posted by Anonymous on September 2, 2015 at 6:08 pm

            TL is advocating to many many more than six people.
            TL is right on in everything he/she writes. Too bad you are unwilling to learn.

          • I’m just sick and tired of the complete ignorance to the fact that regardless if people think it’s enough or not… The way public workers get paid in all facets has changed. Go back 5 years ago and compare what is going on now to then. Clearly there has been reforms and givebacks. Whether you feel enough was done is irrelevant to that simple fact. There was change!!!! And I’m not here to go down TLs “equal to or better” list. Because it’s stupid!!!!!!! She cannot make a police officers job as safe as any private sector job. So until that happens anything she claims is irrelevant. Like I said…. Make their jobs as safe as yours and we can talk equal and fair.

          • Yes..anon…
            There’s literally 6 of you here. A bunch of no name crap talkers who are clueless and a few jealous deadbeats. That’s all. Nothing really to concern anyone.

          • Posted by Tough Love on September 2, 2015 at 8:34 pm

            BH The 10 most dangerous jobs with fatality rate per 100,000 workers and their typical salaries:

            1. Fisherman (116) $27,800
            2. Logger (92) $38,600
            3. Airplane Pilot (71) $115,300
            4. Farmer & rancher (41) $65,960
            5. Mining machine Operator, (39) $39,950
            6. Roofer (32) $37,800
            7. Sanitation worker (30) $34,310
            8. Truck Driver & Delivery Man (22) $35,500
            9. Industrial Machine Repairman (20) $45,700
            10. Police Officer (18) $55,620

            Do you see Police Officer on that list, I don’t. And while their cash pay is likely less than that of only ONE of the 10 (Airplane Pilots), those pilots don’t get anywhere near the pensions & benefits universal to all Police Officers.

            Police Officer risk is simply BOGUS but the Police officer’s overstuffed pensions & benefits are very REAL and unjustifiably strangling Private Sector Taxpayers everywhere.

          • Yeah….. Number 10!!! Really????
            I’ve already posted a different article showing they are….ugh!!!!
            But you really can’t have an opinion about fact. Makes no sense.
            Not willing to do a search…. Here ha go numbnuts!!
            Certainly don’t see accountant or financial person who thinks they know it all on that list!!!
            http://money.cnn.com/galleries/2011/pf/jobs/1108/gallery.dangerous_jobs/11.html

          • Posted by S Moderation Douglas on September 3, 2015 at 1:50 am

            Do you see Police Officer on that list, I don’t.

            Whuh?

            LOL

          • Posted by Tough Love on September 3, 2015 at 2:37 am

            Correction…. yup, Police Officers came in at #10 …… big woop

          • Posted by S Moderation Douglas on September 4, 2015 at 11:20 pm

            “Do you see Police Officer on that list, I don’t.”

    • Posted by dentss dunnigan on September 3, 2015 at 6:16 am

      Is this the fate of New Jersey ….Emanuel set to call for largest property tax hike in modern Chicago history…http://www.chicagotribune.com/news/local/politics/ct-rahm-emanuel-property-tax-hike-met-0903-20150902-story.html

      Reply

  4. Posted by skip3house on September 2, 2015 at 11:38 am

    Sure do hope this gets on ‘NJSpotlight’, which has disappointed so far on pensions and cruel school property taxes.

    Reply

    • Everyone in this state is well aware of the issues. Trust me!! But luckily the citizens of this state have a very bad taste in their mouth called Chris Christie. As long as he is around…. Nothing will get done. Nobody trusts him. And anything he pushes for will be met with contempt. He lost the state.
      You all have a better chance screwing the public workers with a Democrat in office. But until then….. Keep bashing away!!!!
      Like trying to make a hole into a granite wall with cotton candy. Good luck with that.

      Reply

      • Posted by S Moderation Douglas is Wrong Again on September 2, 2015 at 1:05 pm

        But luckily the citizens of this state have a very bad taste in their mouth called Chris Christie.

        But luckily the citizens of this state have a very bad taste in their mouth called public pension scams/fraud.

        Fixed 🙂

        Reply

      • Posted by Tough Love on September 2, 2015 at 1:29 pm

        Bh, You are so full of crap. The “Christie” issue is a red herring ………..

        The Pope could be NJ’s Governor and you and your Unions would still not willingly give up more than a minuscule share of the HUGE advantage that you have now.

        Reply

        • They have already given back their share.
          Cola suspended..
          No more “boat checks”
          Capped this,, capped that.
          Must work for many more years….For far less
          Paying into healthcare while employed …..into retirement.
          Higher pension contributions.
          No social security..
          And on and on…….
          It’s time you got off your soap box and realized there’s been significant change and givebacks on behalf of the workers!!!!
          But you won’t be happy until you bring everyone down to you!!!!
          Equal to TL!!!!! That’s the answer.

          Reply

          • Posted by Tough Love on September 2, 2015 at 3:02 pm

            Really? Shall we do an apples-to-apples comparison of TODAY’s promised Public Sector pensions & benefits with those typically granted comparable Private sector workers ?

            EQUAL ….. but not better.

          • Posted by Anonymous on September 2, 2015 at 6:35 pm

            Yes wake up TL , your hero and mentor Christie stated in 2011 that he saved the pension system and we would thank him. Now why arent you thanking him, you ungrateful person.

          • Posted by Tough Love on September 2, 2015 at 7:50 pm

            Anon,

            Those who really understand pension funding and design were well aware that the 2011 changes were woefully inadequate, primarily by not VERY materially reducing the future service pension accruals of all CURRENT workers. It is no coincidence that the NJ pension Commission has recommended a FREEZE (ZERO future growth) to the DB pensions of all CURRENT State and Local Public Sector workers. Doing less won’t work …. NJ’s Plans are WAY too far in the hole.

            Thee ONLY change of material financial “value” was the COLA suspension, and that is currently being challenged in Count right now.

          • No change means anything until collection age for all PS drones is increased (immediately) to 66. After that, max out annual giveaway to $60K and the sun will shine again on NJ pensions.

    • Posted by Anonymous on September 3, 2015 at 12:56 pm

      Modify GIT in the referendum to address TL’s health care savings concern and your property tax concern, ie special GIT assessment and/or sales tax increase to handle any funding shortfalls

      Reply

  5. The problem is far more demographic than political or mathematical. The math is easy..a simple spreadsheet with variables. However by my count at least 15% of workers in this state work for government or public education. However if the majority of the 15% are married to “private sector” workers you have another 10% of private sector workers supporting increased govt benefits or 25% of the working population. The working population is only 60% of the voters so the other 40%(retirees, welfare, etc) who strongly support increase govt solutions combined with the 25% of the working pupulation(or 15% total) bring you to over 50% supporting the status quo. Most lawyers I know are married to teachers..many nurses to fire/police men so those supposed non govt workers support and benefit from increase govt expenditure. Cristie says the right things but there is no appetite to do more because of the demographics. If you go to Alabama, Georgia, TExas etc with huge manufacturing plants and smaller govt/school systems the number who support govt spending is not 1/2 but maybe 1/4 because there are more private sector workers(as a percent) and smaller govt/ed .

    Reply

    • Posted by Tough Love on September 2, 2015 at 1:39 pm

      Some truth to what you have stated, but you are off the mark assuming the entire 40% (retirees, welfare) support the grossly excessive Public pensions/benefits.

      Many of the retirees are NOT from Public Sector worker families and are hurt by this structure. And while welfare recipients like free gov’t services, THOSE service are NOT Public Sector pensions & benefits, and lower THAT, and there might be MORE for them.

      I am of the opinion that the bigger problem is VERY high Public Sector worker family voter turnout vs LOW turnout for Private Sector worker families. But I believe the latter will increase markedly as they get more “educated” as to the enormity of the decades-long financial “mugging” that has been perpetrated upon them by the insatiably greedy Public Sector Unions/workers.

      Reply

      • You ain’t changing voter turn out TL!!!
        Bigger issues have faced this state and this country and people don’t show up at the polls!!!! People simply don’t care. Sure, the 6 people who continually bash Publuc workers may go out to vote. But I’d be willing to bet out of the 6 of you….. One doesn’t bother!!!

        Reply

    • Posted by S Moderation Douglas on September 2, 2015 at 1:43 pm

      No offense, but in these parts, that thar is what we call “TL math”, or GIGO.

      First, of the public sector workers, typically only a little over half are married. So even if they were all married to private sector workers, that’s 8%, not 10.

      Second, these public workers do NOT vote as a bloc. In voter registration, they not far off the Rep/Dem split in the general population. And, I can’t give a percentage on this, but a significant number of public workers I have talked to would not vote for any tax increase, even if you paid them to.

      Reply

      • Because all are tax payers as well. A fact TL fails to realize. These workers live in this state too. It’s not like they are some strange out of state subplanted species. Or illegal immigrants living off the taxpayers while paying no tax themselves. Or welfare abusers making $800 a month per baby…free rent and cell phones too. Or crooked politicians who’s sole purpose is to make them and their friends rich off people just like us.
        They live in your communities. Shop at the same stores and have the same struggles as everyone else.
        Equal to TL!!!! Let’s bring em allllllll down. Lower the bar so we are all equal. Everyone gets a trophy. What a crock of sh*t. This is why we are so frail and weak as a country. The bullys now run the show.

        Reply

        • Posted by Tough Love on September 2, 2015 at 3:10 pm

          Quoting ….. “The bullys now run the show.”

          Now THAT’s amusing ….

          Public Sector Unions are the biggest “bullies” …….. everywhere …. and a CANCER inflicted upon civilized society.

          Reply

        • Posted by S Moderation Douglas on September 2, 2015 at 4:34 pm

          And,

          Most “public sector workers” are ….not…. public sector workers. Only about 20% of public sector retirees worked anywhere near a “full career” in the public sector.

          The average length of service for retirees is about 20 years. Which means they spent a good deal of their careers, at some point, in the private sector. And about half of all workers don’t even stay in the public sector long enough to vest in a pension; usually five years.

          When recessions hit, there are quite a few “private sector” workers who are happy to take public sector jobs, at least until private jobs start to recover.

          We have met the enemy, and he is us.

          Reply

          • Posted by Tough Love on September 2, 2015 at 8:50 pm

            The length of service is irrelevant to the grossly excessive nature of NJ Public Sector pensions vs their Private Sector counterparts. The problem is driven by the MUCH greater PUBLIC Sector formula factors and the MUCH more generous “provisions (the young/unreduced retirement ages, the more generous definition of “pensionable compensation”, the under-priced early retirement factors, the absurdly easy-to-meet definitions of “disability” retirement, and though now suspended in NJ, the existence of COLA increases).

            ———————————
            Quoting ….”Only about 20% of public sector retirees worked anywhere near a “full career” in the public sector. ”

            Yea, even those on the clock FOR A FULL CAREER.

            And fromm personal observation ….. many rarely “work” a full day even though PAID for a full day.

  6. Posted by Anonymous on September 2, 2015 at 2:18 pm

    General observation, the P&B reforms are not enough of an issue (yet) to sway majority vote and control from the D’s to the R’s in either house and probably the next Governor as well. The GOP “platform baggage” that comes along with voting them into majority power is not in sync with NJ’s majority viewpoints.

    Reply

    • Posted by Tough Love on September 2, 2015 at 3:12 pm

      I agree …….. but regardless who becomes NJ’s next governor, there will never be sufficient money to fund the currently promised pensions and benefits.

      Reply

      • Posted by Anonymous on September 2, 2015 at 3:50 pm

        Then logically wouldn’t it make sense for both parties in the Senate and Assembly to work it out now? I know each party has their own constituent pressures to overcome; but given the current path and dwindling options each could position it to their favor?

        Reply

      • The local plans are just fine!!!!!

        Reply

        • Posted by skip3house on September 2, 2015 at 7:48 pm

          The cruel property tax is not progressive, and not in any way based on ability to pay. Come up with a system that overcomes that regressive aspect, please.

          Reply

        • Posted by Tough Love on September 2, 2015 at 7:58 pm

          BH,

          With a mid-60% Local Plan funding ratio (using Moody’s current methodology in it’s Municipal Gov’t creditworthiness analysis, or the methodology/assumptions REQUIRED by the US Gov’t of Private Sector Plans …. NOT the absurdly liberal methodology NJ uses in it’s Gov’t Plan valuations) The LOCAL Plans are one notch above dead-as-a-door-nail.

          Private Sector Plans MUST restrict Lump Sum payouts when the funding ratio drops below 80% and must FREEZE the Plan completely(Zero future growth) when the funding ratio drops below 60%.

          So much for you BS that the LOCAL Plan are “fine” (with or without the 5 exclamation points).

          Reply

        • Posted by Anonymous on September 2, 2015 at 8:23 pm

          And when TPAF financial responsibility shifts to Local?

          Reply

          • Posted by Tough Love on September 2, 2015 at 8:42 pm

            If the NJ pension Commission Plan were to be adopted as proposed, Local Taxpayers MUST be “guaranteed” that the savings from active and retiree healthcare reductions OFFSETS the cost of pensions assumed ….. with any shortfall (measured annually) automatically becoming a STATE obligation.

          • Posted by Anonymous on September 2, 2015 at 9:06 pm

            It’s going to be one heck of a referendum. Usually their short and sweet but to insure all stakeholders interests this one will have to be a short story?

          • Put the tpaf boat anchor from their sinking ship in another boat. Local plans are sustainable because they are funded properly. Don’t come to steal their monkey because you failed to pay foe decades. The jig is up. Sorry broth!!!

          • Posted by Anonymous on September 2, 2015 at 11:19 pm

            Ok let’s see privates and now PERS State & TPAF are under the bus so how’s the vote going to go?

          • Posted by Tough Love on September 2, 2015 at 11:35 pm

            Quoting BH ……… “Local plans are sustainable because they are funded properly.”

            Either you missed (or are choosing to ignore) my earlier reply to you on this point, so I’ll repeat it:
            —————————

            With a mid-60% Local Plan funding ratio (using Moody’s current methodology in it’s Municipal Gov’t creditworthiness analysis, or the methodology/assumptions REQUIRED by the US Gov’t of Private Sector Plans …. NOT the absurdly liberal methodology NJ uses in it’s Gov’t Plan valuations) The LOCAL Plans are one notch above dead-as-a-door-nail.

            Private Sector Plans MUST restrict Lump Sum payouts when the funding ratio drops below 80% and must FREEZE the Plan completely(Zero future growth) when the funding ratio drops below 60%.

            So much for you BS that the LOCAL Plan are “fine” ….. or “sustainable”..

          • Posted by Anonymous on September 2, 2015 at 11:36 pm

            Forgot to mention SPRS, JRS, and State P&FRS (ie, POPF). Do you really think P&FRS Local are going to be carved out and treated differently? Or do you think SPRS, P&FRS, and possibly JRS should be treated differently to even though they’re State (not) funded?

          • Posted by Anonymous on September 2, 2015 at 11:48 pm

            P&FRS Local better funded indeed b/c of State mandated Local pension contributions exempt from the 2% property tax c(r)ap – really come up with something better than that.

          • Posted by Tough Love on September 3, 2015 at 2:41 am

            BH,

            Broth, the jig is up …… Taxpayers are coming to steal their monkey !

          • Posted by Anonymous on September 3, 2015 at 7:43 am

            “Don’t put off until tomorrow what you can do today”.
            @Benjamin Franklin

          • Posted by S Moderation Douglas on September 5, 2015 at 3:45 pm

            “Never put off till tomorrow what may be done day after tomorrow just as well.”
            ― Mark Twain

  7. Posted by Anonymous on September 2, 2015 at 6:36 pm

    Democratic governor will reinstate millionaires tax and raise taxes as well. get ready TL you are gonna lose quite of bit of money shortly

    Reply

  8. Posted by S Moderation Douglas on September 2, 2015 at 6:36 pm

  9. Posted by Michael S Polish on September 4, 2015 at 5:30 pm

    John, have you noticed that one guy on your blog posts almost all the comments ? 20 posts on this topic. At what point do you have to consider the lack of usefulness for your blog. Rarely is anything posted on here that we haven’t already heard. In all honesty those of us that work meaningful jobs,families and have comitmittments in the real world just can’t waste our time on a blog that brings nothing new to the table. I feel bad that your blog has been relegated to such a state,but you have allowed it to spiral to this point. It obviously wasn’t a very popular blog to begin with,but it is almost unreadable for anyone interested in decent dialogue.

    Reply

    • Posted by Tough Love on September 4, 2015 at 7:28 pm

      John, Clearly Michael S Polish is referring to me (Tough Love). I don’t shy from controversy nor am I intimidated easily.

      But just a reminder lest you forgot. Michael S Polish is a Police Officer (active or retired I don’t know). He has quite an unusual mindset for ANYONE, let alone a police Officer. He posted several comments on your Blog this past May as follows:

      In your 5/10/15 post titled … New Jersey Pension Payment (NJPP) Case 1: The Endgame …. he posted:

      (1) “In all honesty most private sector positions are not needed.” , and

      (2) “As for my pension you will take it in the a$$ before I do in the form of tax hike.”

      .” In your 5/15/15 post titled …. Christie’s Pension Spiel …. he posted:

      “A clerical worker like you has never received the same compensation and benefits of a person who protects lives. Not in the Roman times,not during the Great Depression and not now. You don’t deserve equal to me, you work in an office and provide nothing of value for society.”
      ——————————————————————————

      At the time I questioned his fitness for the position as a Police Officer. My opinion has not changed and hopefully he is not currently employed as such.

      Reply

  10. Posted by Michael S Polish is right on September 5, 2015 at 2:56 pm

    “In all honesty most private sector positions are not needed.”

    I wouldn’t go quite that far, but …protestant work ethic aside, probably thousands, or hundreds of thousands, of private AND public sector workers could stay home full time, or spend much fewer hours at work (or greatly reduce retirement age) with NO discernable reduction in our standard of living*

    Unionwatch recently had an article on increased robotics and automation reducing the availability of jobs. Of course, they gave it an anti-union spin, but in reality, isn’t that a GOOD thing?

    http://unionwatch.org/the-robot-revolution-how-union-backed-policies-destroy-jobs-for-humans/
    _________________________
    As discussed in this blog several times, a greatly simplified tax code (ala Christie and others “file your taxes on a postcard, in fifteen minutes) would thousands (millions?) of private and public sector workers out of a job. That would not decrease one iota the supply of food, clothing, housing, entertainment, or services that we consider our “standard of living”*

    What do we do with those who “work in an office and provide nothing of value for society”?
    Or the burger flippers and order takers replaced by machines? Or anyone else replaced by technology?

    One idea came from Milton Friedman, the “economist’s economist.”

    http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

    “Gone would be the intrusive and costly welfare bureaucracy, the pernicious distinctions between “worthy” and “unworthy” recipients, the perverse disincentives for work effort and family formation.”

    Gone would be the welfare bureaucracy; meaning, gone would be hundreds of thousands of “public sector” jobs whose only purpose is to distribute money to the poor. Those displaced employees, or many of them, would join the ranks of those they used to distribute the money to.

    *
    Wherever you see an asterisk above, stating that eliminating certain jobs would NOT decrease our standard of living, it’s actually a twofer. Eliminating unnecessary jobs would actually INCREASE our aggregate standard of living. Whether you are a tax accountant or a burger flipper, you use energy and resources to travel to and from work, and infrastructure and energy on the job.
    If just 10 to 20% of workers were replaced by automation or tax simplification or elimination of welfare bureaucracy, imagine what your commute would look like. Imagine the energy savings. With Friedman’s negative income tax, less traffic and less poverty could also mean, guess what? …..fewer cops needed.

    If you don’t produce, transport, or distribute goods or services, or if your job can be done better, cheaper, and/or more safely by automation, it makes no sense for you to waste precious and limited resources commuting and doing something a machine or computer can do better and cheaper.

    It also means you don’t get thrown on the trash heap. The goods and services are still there, and you still get your share.

    Reply

    • Posted by Tough Love on September 5, 2015 at 4:09 pm

      Wow, quite a draw-down from your aggressive posture exhibited in your comments last May. Other commentators besides me chimed-in that you were unfit for Police work. Perhaps you had a revelation …. or perhaps you realized that if your employer found out about your true mindset, you might be on the unemployment lines.

      By the was, the California non-partisan Office of Legislative Services recently stated that CalTRANS (which runs their trains) has 3500 unneeded Engineers.

      I supposed that you would now advocate for them being fired. Is that correct ?

      And all those office workers (engineers, architects, accountants, lawyers, actuaries, researchers, authors, etc) that you still seem to think provide “nothing of value” ….. are the source of the tax revenue from which your wages and overstuffed pensions and benefits are paid. Still think they are unnecessary?

      Reply

      • Posted by S Moderation Douglas on September 5, 2015 at 6:10 pm

        Nowhere Man; Just sees what he wants to see.

        “By the was,” The Department of Finance, which vets the agency’s funding request each year, said that the Legislative Analyst’s Office was wrong about overstaffing.

        These aren’t train engineers, they are civil engineers who prepare and oversee construction projects. The agency was projecting money for new projects would go down 40 percent overall beginning in 2014, so the LAO said let them go. CalTRANS and Dept of Finance said some of those were still needed to prepare future projects. But as a rule, yes. If you have more engineers than you need, let some of them go.
        —————————————-
        Engineers and architects are producing usable goods and servicing.

        Specifically, tax preparers are providing a very valuable service, for which they deserve to be properly compensated. I normally calculate my own, but used a local preparer because of a one time occurrence of capital gains on some stocks. Money well spent. She seemed like a very nice lady. Competent and efficient, and worth every penny I paid.

        But.

        If.

        One of the current contenders could pass a fair, simplified, income tax, wouldn’t we all be better off? (except Maria {the tax lady}) Maria’s income taxes are part of the source of my compensation, true. Are you saying we should eschew tax simplification, just so Maria can continue paying my pension and benefits?

        I will overlook the “overstuffed” remark, since it’s common knowledge you’re a puerile ass without the benefit of minimum social grace.

        If you haven’t kenned it yet, you were not responding to Michael S Polish.

        Yours truly is “Michael S Polish is right”, aka S Moderation etc. with my apologies to the real Michael Polish.

        ————————————–
        PS: Do you even read some of these posts before answering with your cut and paste knee jerk drivel?

        Do you even read you own? ….”Do you see Police Officer on that list, I don’t.” You crack me up.

        Reply

      • Posted by Tough Love on September 5, 2015 at 6:59 pm

        Ooophs…. I thought I was responding to “Michael S Polish”, but it wasn’t him.. It was “Michael S Polish is right”. Well that explains my initial reaction, where I said …”Wow, quite a draw-down from your aggressive posture exhibited in your comments last May.”

        It never happened…. and he likely still is, in my opinion, unfit to be a Police Officer.

        Reply

        • Posted by S Moderation Douglas on September 5, 2015 at 7:08 pm

          And we all know what your “opinion” is worth.

          Reply

        • Posted by S Moderation Douglas on September 6, 2015 at 4:07 am

          Ooophs……..

          What about my tax lady? Are you okay with putting Maria and a few (hundred) thousand out of jobs, if it will be better for the country as a whole?

          Reply

          • Posted by Tough Love on September 6, 2015 at 4:47 am

            Wow, 4 comments in a row with nobody paying any attention to you ….. must be frustrating, huh?

            Maybe you need to double up on your meds……..

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