The Cynical Economist

From Townhall
by Daniel J. Mitchell

I’ve occasionally commented on foolish public policy in the United Kingdom, including analysis on how the welfare state destroys lives and turns people into despicable moochers.

But if you really want to understand the horrifying absurdity of the welfare state, check out these passages from  a report in the Daily Mail.

Carl Cooper thought he was doing a public service by offering seven benefits claimants the chance to work for him. But the company boss was flabbergasted when none of them turned up on the first day. Astonishingly, not a single one even had the courtesy to tell the marketing firm boss they would not be coming in. Mr Cooper and other staff members called the new employees to ask them where they were. Initially, some refused to answer their phones  when they recognised the number calling them. When the staff finally got through, five said they would be better off staying on state benefits rather than doing the commission-based work. Four of the seven also claimed  torrential rain had put them off.

Wow. Five out of seven admitted that mooching off the taxpayers was a better way to live. What does that tell us about the over-generosity of handouts?

Let’s continue.

Mr Cooper, who runs Car Smart, a marketing firm for independent car dealers in Canterbury, Kent, criticised the benefits system and said it rewarded people for doing nothing. He added: ‘I was left stunned when none of the new recruits turned up for work. They are a bunch of workshy layabouts. ‘These are people who are so morally twisted that they would rather stay on the dole than work. ‘People keep saying there are not enough jobs in the UK but the real problem is that there are not enough determined or ambitious people. ‘The benefit system is too generous and encourages the unemployed to stay unemployed and just breeds more laziness.’

But it’s even worse than Mr. Cooper realizes. He’ll still be paying these people, but in the form of taxes that then get redistributed to subsidize idleness.

You might think the moochers would lose their benefits because they chose laziness over work, but you would be wrong.

Mr Cooper said all his employees received a basic retainer of £100 a week initially and are enrolled on to the company’s commission structure, which could see earnings rise to up to £400 a week. The jobseekers who failed to turn up will not lose their benefits because the basic pay is under the minimum wage.

I found the above story via Kyle Smith, who also cites a story from the Times about a crazy proposal to have bureaucrats scrub floors and serve as human alarm clocks for the welfare class.

Town hall officials have been told to get down on their hands and knees and “clean the floors” of the homes they visit under David Cameron’s Troubled Families programme. They have also been urged to turn up at family homes at 7am if necessary to get parents out of bed and children ready for school on time. The orders were issued by the programme head, Louise Casey… “I want to see people rolling up their sleeves and getting down and cleaning the floors if that is what needs to be done. If a family needs to be shown how to heat up a pizza, show them how to do it. If it takes going round three times a week at 7am to get Mum up, then do it.”

I would have included a link to the underlying story, but the Times has the most incompetently designed website I’ve ever encountered (presumably because they want to charge, but they don’t even give you a chance to click on the story and then pay).

Anyhow, I have three quick reactions to this bit of foolishness.

1. I’d like to see the head bureaucrat, Ms. Casey, spend a month scrubbing floors and waking people up at 7:00 a.m. She strikes me as the typical leftist clown, sitting in an office enjoying a cushy and overpaid job while dreaming up absurd ideas on how to waste taxpayer money. Maybe if she gets her hands dirty by “rolling up [her] sleeves,” she’ll learn the difference between blackboard theorizing and the real world.

2. My gut reaction is that the government should cut the handouts to these dysfunctional households. For every day the welfare bums aren’t up on time to get their kids to school, they lose 10 percent of their loot. If their floors are dirty, that’s another 10 percent. If you want to change their behavior, start cutting into the budget for cigarettes and booze.

3. More realistically, we’re dealing with a problem of people who have little if any self-respect, and they pass horrible habits to their children. Kicking them off the dole might wake up some of them, but I suspect more than a few of them are past the point of no return. Society would probably be better off if their kids were put in foster homes, but I’m sure government would screw that up as well.

Stories like this leave me increasingly convinced that the only good approach is radical decentralization. Get these programs out of capital cities like Washington and London. The U.S. welfare reform was a decent start, but get responsibility to the local level. And in cities, put neighborhoods in charge. Have those small communities in charge of raising the money and spending the money.

That approach is far more likely to generate good ideas and good solutions, though I confess I’m pessimistic about anything working.

But we should figure out ways to stop inter-generational poverty and welfare. I gather it’s considered bad form to suggest mandatory birth control for welfare recipients, so has anyone proposed a different approach that might work?

From WSJ

Illinois is a lesson in why companies are starting to pay more attention to the long-term fiscal prospects of governments.

Chicago Mayor Rahm Emanuel recently offered a stark assessment of the threat to his state’s future that is posed by mounting pension and retiree health-care bills for government workers. Unless Illinois enacts reform quickly, he said, the costs of these programs will force taxes so high that, “You won’t recruit a business, you won’t recruit a family to live here.”

We’re likely to hear more such worries in coming years. That’s because state and local governments across the country have accumulated several trillion dollars in unfunded retirement promises to public-sector workers, the costs of which will increasingly force taxes higher and crowd out other spending. Already businesses and residents are slowly starting to sit up and notice.

“Companies don’t want to buy shares in a phenomenal tax burden that will unfold over the decades,” the Chicago Tribune observed after Mr. Emanuel issued his warning on April 4. And neither will citizens.

Government retiree costs are likely to play an increasing role in the competition among states for business and people, because these liabilities are not evenly distributed. Some states have enormous retiree obligations that they will somehow have to pay; others have enacted significant reforms, or never made lofty promises to their workers in the first place.

read the rest here

From Carpe Diem

From Jeff Jacoby in today’s Boston Globe:  

“For decades, American politicians have waxed passionate on the need to put college within every family’s reach. To ensure that anyone who wants to go to college will be able to foot the bill, Washington has showered hundreds of billions of dollars into student aid of all kinds — grants and loans, subsidized work-study jobs, tax credits and deductions. Today, that shower has become a monsoon.

The College Board, which tracks each type of financial assistance in a comprehensive annual report, shows total federal aid soaring by more than $100 billion in the space of a single decade — from $64 billion in 2000 to $169 billion in 2010. And what have we gotten for this vast investment in college affordability? Colleges that are more unaffordable than ever. Year in, year out, Washington bestows tuition aid on students and their families.

Year in, year out, the cost of tuition surges, galloping well ahead of inflation (see chart above). And year in, year out, politicians vie to outdo each other in promising still more public subsidies that will keep higher education within reach of all. Does it never occur to them that there might be a cause-and-effect relationship between the skyrocketing aid and the skyrocketing price of a college education? That all those grants and loans and tax credits aren’t containing the fire, but fanning it?

Directly or indirectly, government loans and grants have led to massive tuition inflation (see chart). That has been a boon for colleges and universities, where budgets, payrolls, and amenities have grown amazingly lavish. And it has been a boon for politicians, Republicans and Democrats alike, who are happy to exploit anxiety over tuition to win votes.

But for students and their families, let alone for taxpayers who don’t go to college, it has been a disaster. The more government has done to make higher education affordable, the more unaffordable it has become.”

MP: The chart above shows that the rising costs of a college education (7.5% per year) have far outpaced rising medical costs (5.7%)  and housing prices (4.2%), and have risen annually at twice the average inflation rate (3.8%).  The graph also illustrates that the rising costs of college and the resulting college tuition bubble make rising U.S. home prices and the resulting housing bubble look relatively inconsequential by comparison.

From NRO
By Patrick Brennan

Their excesssive demands squeeze local governments.

Terry List, a teacher in Saginaw Township, Mich., has a depressing lesson for her students: “I would not recommend to my pupils to become a teacher in Michigan.”

What’s discouraging her? A proposed pension-reform bill in Michigan would derail her plans to retire — at age 47.

After these rapacious reforms, List would have to work another 16 years, to age 63, in order to earn her retiree health-care benefits. “I understand we have to tighten our belts,” she laments, “but we don’t have to use a tourniquet and cut off the blood supply entirely.” Under the reforms, such a tourniquet means she could still retire now and have a guaranteed income for the rest of her life, but she’d have to pay for her own health care until age 65 — like, you know, most Americans.

………………………………………

Until recently, employees of the Massachusetts Bay Transportation Authority enjoyed “23 and out” pensions. No matter when they began their careers, they could collect nearly full pensions after 23 years on the job. (That has been raised to the a punishing figure of 25 years, and now with a minimum age of 55 before they can collect.) Perhaps the most famous member of the organization that negotiated these benefits, the Boston Carmen’s Union, is Patrick Bulger, son of longtime Massachusetts state-senate president Billy Bulger. The younger Bulger retired from the Carmen’s Union at 43 and began collecting an annual pension of $41,000. Plus cost-of-living adjustments. For the rest of his life.

It’s hard to justify such benefits when the rest of America relies on 401(k)s, Social Security, and Medicare, making their effective retirement age, on average,  63 — and soon to rise. Public employees retire still very much in their working years. Even though they’re guaranteed financial security for life, some of them in “retirement” go on to lucrative jobs in the private sector — or, more disturbingly, back in the public sector. Take retired MBTA manager Michael Mulhern, age 48, who now enjoys a $130,000-a-year pension — and earns $225,000 a year as executive director of the MBTA’s retirement fund.  

………………………………………

As a 2007 GAO report explains, rising health-care costs make these promises extremely difficult, almost impossible, to account for — when state and local governments even bother. They usually don’t. Few still rely on pay-as-you-go budgeting for pensions, though it remains common for health care.  

By almost every measure, public-sector unions have managed to extract excessive levels of retirement benefits from governments, whose obligations have been vastly increased by the early ages at which the benefits can be claimed. That the benefits enjoyed by public employees already are more generous than anything the average American knows, and that they can enjoy them at an age when the average American is still working, isn’t just adding insult to injury. It’s adding kerosene to tinder.

read the rest here

LOL America! We Have The Best Government that Money Can Buy…

By the way, I am really curious how much nepotism and cronyism is there in Washington DC? 

White House Opens Door to Big Donors, and Lobbyists Slip In

Last May, as a battle was heating up between Internet companies and Hollywood over how to stop online piracy, a top entertainment industry lobbyist landed a meeting at the White House with one ofPresident Obama’s technology advisers.

The lobbyist did not get there by himself.

He was accompanied by Antoinette C. Bush, a well-connected Washington lawyer who has represented companies like Viacom, Sony and News Corporation for 30 years. A friend of the president and a cousin of his close aide Valerie B. Jarrett, Ms. Bush has been to the White House at least nine times during his term, taking lobbyists along on a few occasions, joining an invitation-only forum about intellectual property, and making social visits with influential friends.

At the same time, she and her husband, Dwight, have donated heavily to the president’s re-election effort: Mr. Bush gave $35,800 on the day of his wife’s White House meeting last year, and Ms. Bush contributed the same amount a month later. In November, they hosted a $17,900-a-plate fund-raiser at their home, where Mr. Obama complained that the nation’s capital should be more “responsive to the needs of people, not the needs of special interests.” (LOL was he sober when he said that?)

read the rest here

That is actually the good news. Can you imagine what would today’s America look like, if the democratic controlled senate was really “taking care of business”? 

The bad news – we pay a lot of money for those lazy bastards in Washington DC to do nothing all day long!

Report: Democrat-controlled Senate laziest in 20 years

For those who need proof that the Senate was a do-nothing chamber in 2011 beyond the constant partisan bickering and failure to pass a federal budget, there is now hard evidence that it was among the laziest in 20 years.

For example, while the Democratically-controlled Senate was in session for 170 days, it spent an average of just 6.5 hours in session on those days, the second lowest since 1992. Only 2008 logged a lower average of 5.4 hours a day, and that’s when action was put off because several senators were running for president, among them Hillary Clinton, Barack Obama and John McCain.

On the passage of public laws, arguably its most important job, the Senate notched just 90, the second lowest in 20 years, and it passed a total of 402 measures, also the second lowest. And as the president has been complaining about, the chamber confirmed a 20-year low of 19,815 judicial and other nominations.

read the rest here

In fact the things are getting worst…

Banks Seen Dangerous Defying Obama’s Too-Big-to-Fail Move

Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the nation’s credit markets seized up and required unprecedented bailouts by the government.

Five banks – JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc., Wells Fargo & Co. (WFC), and Goldman Sachs Group Inc. — held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to central bankers at the Federal Reserve.

That specter is eroding faith in Obama’s pledge that taxpayer-funded bailouts are a thing of the past. It is also exposing him to criticism from Federal Reserve officials, Republicans and Occupy Wall Street supporters, who see the concentration of bank power as a threat to economic stability.

As weaker firms collapsed or were acquired, a handful of financial giants emerged from the crisis. Since then, JPMorgan, Goldman Sachs and Wells Fargo have continued to grow internally and through acquisitions from European banks, reeling from government austerity measures related to the rising cost of public debt in Greece, Spain, Portugal, Ireland and Italy.

The industry’s evolution defies the president’s January 2010 call to “prevent the further consolidation of our financial system.” Embracing new limits on banks’ trading operations, Obama said then that taxpayers wouldn’t be well “served by a financial system that comprises just a few massive firms.”

But, but, but, wait a minute! ….Didn’t they pass the Dodd- Frank Wall Street Reform and Consumer Protection Act to deal with the too big to fail banks? 

Oh- yeah they did. 

So, what did the government incompetent bureaucratic achieved? 

Here you go…

Committee: Dodd-Frank compliance to cost private sector 24 million man-hours per year

Regulators have written only 185 of the expected 400 rules. But those 185 rules are expected to cost the private sector more than 24 million man-hours each year to comply.

The tracker has also found that those 185 rules take up more than 5,300 pages.

….let’s just get it down to the community banker — the person that loans money to most of the small businesses in our country,” Neugebauer said in a phone interview. “We’ve had a few community bankers come in here and say, ‘you know, they’re hiring a lot more compliance officer than they are loan officers.’ That is increasing the cost of banking and, ultimately, they have to charge higher interest rates and higher fees.”

The ordinary people got f@cked again…