Posted tagged ‘Going Galt’

Last, for now, to Galt’s Gulch. A Libertarian Commenter Proves Mah Point…

February 3, 2010

Jim K., in this comment thread takes issue with my claim that anti-tax glibertarianism is (a) one of the root causes of Colorado Springs’ current predicament and (b) is powering a potentially deep decline in American wealth and power.

The issue, he says, is not the shortfall in taxes, but the “abomination” — his word — that city employees are overpaid,  excessively well-benefitted, and inflexibly secure in their jobs.  This labor greed and rigidity, and not the collapse of tax revenues in the context of anti-tax politics is to blame for the loss of police and fire jobs, the darkening of city streets and so on.

In Mr. K.’s words:

The argument that folks like me (who are apparently wrecking the American way of life) have is not with government provision of services per se but the fact that a great proportion of the dollars we are paying into the government these days is going to support unsustainably high compensation schemes for government employees.

To demonstrate how iniquitous is this burden, he offers some numbers:  a presumed final salary after 40 years of work of $75,000 that would, he claims, linking to the Colorado public pension system’s benefit calculator page, yield a 100% pension — the equivalent, he asserts of an annuity that would cost one million dollars and change to buy on the open market.

And wait! it gets worse:

Additionally, most state employees do not fund any contributions to their pensions from that 75K.

Sounds bad, I guess — except for two problems that are to me illustrative of the absolute intellectual poverty for what passes for libertarian argument in this country.  First, such arguments are usually deeply empirically challenged, as they are here.

That is:  Mr. K.’s key numbers are wrong, apparently simply made-up.  It may be true that if you, as Mr. K. says he did, “plug some numbers” into the the benefits calculator you get a retirement payment equal to your salary at retirement.  But no actual Colorado public employee does.

Instead, as Mr. K. would have discovered had he employed his mad intertube skillz just a little more rigorously, the retirement benefit ranges runs by yearly steps from 10% after five years of employment to a maximum of 87.5% at thirty five years of service and above.  Significantly that percentage is not calculated on the final, and commonly the highest paid year of service, but on a formula that provides for a lower figure and that, in essence, prevents any sweetheart raises from skewing the retirement payout. (All this can be found by clicking on this link and then downloading the relevant benefit explanations.)

There’s more, of course.  Mr. K. asserts that most state employees don’t contribute to their pension plans.  Maybe in his universe, but not in this one.  The Colorado plan, PERA reports that in 2008, employees contributed $717 million to the plan, while employers provided $863.5 million. You can, I suppose, argue about the appropriate ratio — but the key message is that, of course, Mr. K. said something flat out wrong that, conveniently, supports his myth of the leech-like viciousness of public servants.  In the real world, the employees of Colorado Springs have been paying significant amounts to their own future compensation.

At the same page, you’d find that the average monthly retirement benefit for 2008 was $2772, which annualizes to all of $33,264 — not nothing, truly, but hardly the caviar and Cadillac compensation of Mr. K.’s fever dreams.

Enough: you get the point.  Mr.K., like many of the anti-government crowd I’ve argued with in the past, feels free to assert what he is convinced must be true.  That’s behavior I recognize as I raise my small son — but it is something that, thankfully, at age nine, he has begun to outgrow.  It seems a developmental disorder afflicting much of the body politic that a similar progression has not taken place amongst too many alleged adults.

The problem with such invention is that it has real consequences.  In this case, Mr. K. wants to see Colorado Springs employees taking one for the taxpayer:

What else am I forgetting? Health care benefits, much better job security, and hours and holidays most of us would envy….What is really destroying the American way of life, the unwillingness of some of us to pay ever more to support this abomination or the fact that we have created a class of citizens who demand ever more of our money in return for keeping the streetlights on?

Hey! I thought class war was for my side!

This is the second problem with glibertarian discussions of the evils of government.  They really do believe in magic ponies.  Streetlights good.  People who go up on lifts to change them? “This abomination.”

I don’t doubt that there is waste and sloth and indifference in government service.  Hell, I’ve seen it in every business  or institution I’ve owned or worked for, so I don’t see why the public sector should be any different from the private and non profit ones.

I also know some folks high up in big-city government so  I know (a) problems exist and (b) very smart and dedicated people work like hell to deal with them.  And I know and or receive services from a lot of not-so-high up folks.  And what gets me is the way that folks like Mr. K. seem to think two things:

First, that contracts may be binding for thee and me, but not if your contract happens to be collectively bargained and between an individual and the state.  The cop who started work ten years ago signed on to a challenging, difficult and sometimes dangerous job in exchange for a defined compensation package.  Now we should throw this away?  I don’t think so.

Second, that whatever we pay our civil servants is always too much, and hence ill-gotten, which is why it is OK to cut people’s pay  while expecting them to provide the same labor.

Here’s the horrible truth:  we don’t pay civil servants very much, really.  A Colorado Springs police sargeant makes, broadly, between $55,000 and $70,000 — or roughly $27.50 to $35 an hour. That’s for an experienced person in a supervisory role, working a job that requires considerable expertise and specialized skills, not to mention acceptance of the risk inherent in police work.

Why do skilled and smart people do the work — be they cops, teachers, whatever?  Because they like it, one hopes, but also because they accept a bargain — they’ll take a constrained wage in exchange for security and good benefits.  Take some part of that bargain away, and you’ll lose folks.  Usually the best ones, if you accept free market notions of rational self-interest, which I do.

So you have to ask yourselves:  Do you feel lucky today?  How much do you cut before these kind of people say f*ck it, and move on?

Seriously:  you can always cut something.  But you lose something when you do.  And if you have so committed yourself and your community to the idea that government is an abomination, it should come as no surprise that the cuts start to hurt.  But it does, which is why folks like Mr. K. have to make stuff up to get the horrible facts of real life out of their heads.

To which I say — move to Colorado Springs!  Show us what paradise can be.  I double dog dare ya.

Image:  Vincent Van Gogh, “The Potato Eaters,” 1885.

Galt’s Gulch: Or How the core Republican Idea is Destroying the American Way of Life

February 1, 2010

This, from the Denver Post, on the city of Colorado Springs’ discovery that taxes actually pay for things that people, you know, need and use. (h/t Atrios).

This is, among other things, what folks like Megan McArdle never seem to get — not merely that governments do things that (a) private entities won’t and or can’t and (b) that are necessary if you are, say, going to have thousands or millions of folks living in close proximity to each other, and (c)  those things that need to be paid for — by the people in common, that is to say, by government — include a bunch of stuff essential for a sound economy and any chance of achieving what is commonly thought of as the American way of life.

That is — it might be hard to quantify the contribution of adequate street lighting to GDP — but ask yourself what it would do to retail sales to have pools of darkness every thirty feet along a commercial street.

Or — it may not show up on a a monthly report of manufacturing output, but ask yourself whether the long-tail consequences of a diminished police presence in a factory district might include an impact on that district’s safety, and hence production — or if a change in fire response times could translate into altered insurance costs.

And you don’t even have to ask the speculative question about the value of investment in school facilities and in the quality of public schooling as discovered in very real dollars in the home valuations realized by property owners in the relevant districts.  That’s on that answers itself.

See e.g. this recent NBER working paper for an account of facilities spending (institutional access required for the full paper. Abstract here.) (That there is a lot of complexity in the area of the private and public economic value of education I willingly concede. But the broad picture of improved schools = higher property values appears to hold.)

It is possible, if you are a true believer, to imagine a gated world in which the “accomplished” secure for themselves all those qualities of life they seek on piece-work/piece-paid basis.  Dystopic science fiction turns on this conceit, among others.

But I’m a believer in Jane Jacobs work. And the key message of her Cities and the Wealth of Nations is that you need thriving, diverse (in every sense of the word), and ambitious cities to generate the range of activities that produce both healthy economies and polities.

To get that, you need some sense of a common stake in the civic enterprise.  You need to be willing to pay to keep the streets lit, potholes filled, police on their shifts and schools capable doing more than riding herd on the pre-unemployed.  Any society can tolerate some proportion of the unconsciously lucky in the delusion that their comfort is insulated from any external shock.  It cannot survive when that belief becomes an epidemic psychosis with an incidence >50% in one of our would-be ruling parties.

Don’t believe me?  Just ask the good, tax-averse citizens of Colorado Springs.

Image:  Wojciech Gerson, “Merchants in Danzig” 1865.