AUDIO: Where are tax increases going? What about to pay for 15% raises for state and local government employees between 2012 and 2015 (most of it to fund pensions)?
In this San Diego radio interview on 12/27, as a researcher for the California Policy Center, I provided the first release of compiled 2015 data on average California public sector worker pay and benefits by city, county, and state agencies, and by miscellaneous, police, and fire. My segment starts at minute 6:30.
Radio Interview (starts minute 6:30) KOGO AM 600, San Diego – Carl DeMaio Show
As reported earlier this month in the Los Angeles Times, California policymakers are expanding their war on “climate change” at the same time as the rest of the nation appears poised to reevaluate these priorities. In particular, California’s legislature has reaffirmed the commitment originally set forth in the 2006 “Global Warming Solutions Act” (AB 32) to reduce the state’s CO2 emissions to 40% below 1990 levels by 2030.
Just exactly how California policymakers intend to do this merits intense discussion and debate. As the Los Angeles Times reporter put it, “The ambitious new goals will require complex regulations on an unprecedented scale, but were approved in Sacramento without a study of possible economic repercussions.”
At the risk of providing actual quantitative facts that may be extraordinarily challenging for members of California’s legislature, most of whom have little or no formal training in finance or economics (ref. California’s Economically Illiterate Legislature, 4/05/2016), the following chart depicts data that helps explain the futility of what California’s citizens are about to endure:
CALIFORNIA ENERGY CONSUMPTION, POPULATION, GDP, AND CO2 EMISSIONS Comparisons to the rest of the USA, China, India, and the world
(For links to all sources for this compilation, scroll down to “FOOTNOTES”)
The first row of data in the above table is “Carbon emissions,” column one shows California’s total annual CO2 emissions including “CO2 equivalents” – bovine flatulence, for example, is included in this number – expressed in millions of metric […] Read More
AUDIO: If public pension funds were subject to the ERISA rules that govern private pension systems, last year’s total payments into these funds would have been $37 billion short of what is necessary to keep them solvent in the long run.
The following 8 minute interview aired on the Doug McIntyre Show (KABC, AB 740, Los Angeles) on December 8, 2016.
Earlier this month the California Policy Center released a study that provided additional evidence that the U.S. stock indexes are overvalued by approximately 50%, along with calculations showing the impact of a major downward correction on the solvency of California’s state and local government pension systems. Stocks are now at unsustainable bubble valuations.
Not covered in this study, but equally overvalued, are bonds, which pension systems misleadingly categorize as “fixed income” investments in their portfolio disclosures. CalPERS even went so far as to trumpet their success in earning a 9.29% return on “fixed income” investments in their most recent press release – a healthy return that offset losses elsewhere and allowed them to earn a marginally positive return of 0.61% last year. But “fixed income” investments usually refers to bonds, and bonds are also at unsustainable bubble valuations.
Here’s why bonds are overvalued today: Whenever new bonds are issued at lower fixed rates of interest than the bonds that were issued before them, then those older bonds that pay higher fixed rates of interest can be sold for more money than their original price. This is because on an open market, buyers will price a resold bond at a value calculated to equalize returns. When rates go down for new bonds, the prices for existing bonds go up. The problem is that back in the 1980’s, bonds were being issued at rates as high as 16%, and today, they’re being issued at rates close to zero. After a […] Read More
Back in 2012 we published an article entitled “The Forgotten 33%,” which included a graphic entitled “American Voter Breakdown 2012.” It depicted the U.S. electorate as comprised of 46% who pay zero net taxes, 20% who work for the government and are net tax consumers, the 1% “super rich,” and the “forgotten 33%,” who work in the private sector and earn enough to be positive net taxpayers.
The point of the article, then and now, was that people with an intrinsic preference for big government comprise a super-majority of voters in America. But something has changed since 2012…
AMERICAN VOTER BREAKDOWN 2016
The emergence of Donald Trump and Bernie Sanders as serious contenders to become president of the U.S. reflects a growing awareness among voters in all of the above categories that things can and should be better. The 33% who constitute America’s beleaguered taxpayers were angry four years ago, and this time around they’re furious. Their ire is the most easily explained: Now more than ever, they work long hours for less wages or lower profits, all while being told by the establishment press, by mainstream academia, and by left-wing politicians that they’re “privileged,” and still aren’t paying their “fair share.” If they’re white, they’re told their success is the undeserved result of their color, when in fact they’ve been the recipients of institutionalized reverse discrimination for nearly two generations. And no matter what their ethnicity, they confront soaring prices for housing, health care, […] Read More
If anyone is looking for evidence that government unions use their immense influence to support the growth of an authoritarian state, look no further than their unequivocal support for global warming “mitigation,” and all attendant agencies and laws to support that goal.
In 2006 California’s union-controlled legislature passed AB32, the “Global Warming Solutions Act,” a measure that was touted as a trailblazing breakthrough in the dire challenge to avoid catastrophic climate change. The premise behind AB32 is that CO2 is a dangerous pollutant, and that eliminating CO2 emissions is necessary to prevent the planet’s climate from overheating, with all the apocalyptic consequences; rising oceans inundating coastal regions, epic droughts cascading through the world’s fragile forests and killing them, extreme storms, acidic oceans, collapsing agriculture – the end of life as we know it.
Maybe that’s true – and maybe not – but how it’s being managed is a corrupt, misanthropic, epic scam.
If anyone is looking for evidence that government unions and crony capitalists work together – contrary to the conventional wisdom that presents the appearance that they are in conflict – again look no further than their shared support for global warming mitigation, expressed in the legislative mandate to reduce CO2 emissions. AB 32 implements this by forcing industrial entities to purchase permits to emit progressively smaller quantities of CO2, via an auction process that is expected to raise $20 billion per year to finance renewable energy investments.
Think about how government unions will […] Read More
The modern history of the Silicon Valley arguably began in 1957, when eight young PhD graduates left Shockley Semiconductor Laboratories to launch the first high-volume chip manufacturer, Fairchild Semiconductor. Fairchild and its spinoffs, including Intel and Advanced Micro Devices (AMD), were the early participants in what became the most fervid ecosystem of fiercely competitive innovators the world has ever seen. Inspired by the mantra “better, faster, cheaper,” and fueled by billions in venture capital, the Silicon Valley is now the epicenter of the information age that has transformed our lives.
With power, however, comes corruption. The Silicon Valley’s inspirational mantra has become challenged in recent years. High-tech products that used to sell because they were better are now sold because they are mandated by law. They sell not because they are faster, but because they are engineered to operate according to a social or environmentalist agenda. And they are most definitely not cheaper, but instead cost far more than they should. And across the product spectrum from high-tech to low-tech, Silicon Valley leadership increasingly uses their political clout to support this new agenda.
This is no longer competitive innovation. It is crony capitalism. Here are examples of these mandated products:
Light switches that don’t simply turn on (up) or off (down), but instead require prolonged pressing in exactly the right spots – not intuitive at all – and turn off again after a brief interval in order to save energy. “Low flow” faucets that have 1/4″ feed pipes instead of […] Read More
Financialization – “a pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production.” – Greta Krippner, University of Michigan (source Wikipedia)
If you want one word to describe the biggest threat to the American economy, “financialization” would be the prime candidate. This is a threat that has no ideology. The left tends to blame economic challenges on the excessive power of oligarchs. The libertarian right tends to blame economic challenges on excessive regulations emanating from oversized government. But financialization empowered the oligarchs. And financialization is the toxic remedy that has, for a time, enabled oversized government.
Krippner’s analysis of financialization goes beyond its obvious manifestations – the most obvious being the loophole that allows hedge fund managers to avoid paying ordinary income tax on the billions in bonuses they earn when they get lucky placing bets with other people’s money. An excellent in-depth article in Time Magazine published on May 12th, entitled “American Capitalism’s Great Crisis,” quotes Krippner’s deeper explanation of how financialization began:
“The changes were driven by the fact that in the 1970s, the growth that America had enjoyed following World War II began to slow. Rather than make tough decisions about how to bolster it, politicians decided to pass that responsibility to the financial markets. The Carter-era deregulation of interest rates—something that was, in an echo of today’s overlapping left-and right-wing populism, supported by an assortment of odd political bedfellows from Ralph Nader to Walter Wriston, […] Read More
A report issued earlier this year from California’s Office of Legislative Analyst “California’s High Housing Costs: Causes and Consequences,” cites the following statistics: “Today, an average California home costs $440,000, about two–and–a–half times the average national home price ($180,000). Also, California’s average monthly rent is about $1,240, 50 percent higher than the rest of the country ($840 per month).”
It’s actually much worse than that. Anyone living on California’s urbanized coast, from Marin County to San Diego, has to laugh at the idea that a modest home can be found for anywhere close to $440,000, or a decent rental can be found for anywhere close to $1,240 per month. In most urban areas within 50 miles of the California coast, finding a home or a monthly rental at twice those amounts would be considered a bargain.
These prohibitive costs for housing are mirrored in California’s unusually high costs for electricity, gasoline, water, and, of course, California’s unusually high taxes. The cost of living in California is one of the highest in the nation – along the coast, it’s probably the highest in the nation. For this reason, it’s completely understandable that California’s state and local government unions perpetually agitate for higher pay and benefits for their members. But they’re leaving everyone else behind.
The problem with the oft-repeated mantra “teachers, nurses, police and firefighters need to be able to live in the communities they serve” ought to be obvious. Nobody can afford to live in these communities, unless they’re […] Read More
Current policy solutions enacted to address California’s water crisis provide an object lesson in how corruption masquerading as virtue is impoverishing the general population to enrich a handful of elites. Instead of building freeways, expanding ports, restoring bridges and aqueducts, and constructing dams, desalination plants, and power stations, California’s taxpayers are pouring tens of billions each year into public sector pension funds – who invest 90% of the proceeds out-of-state, and the one big construction project on the table, the $100B+ “bullet train,” fails to justify itself under virtually any credible cost/benefit analysis. Why?
The reason is because infrastructure, genuinely conceived in the public interest, lowers the cost of living. This in-turn causes artificially inflated asset values to fall, imperiling the solvency of pension funds – something that would force them to reduce benefits. Beneficial infrastructure is also a threat to crony capitalists who don’t want a business climate that attracts competitors. Affordable land, energy, and water encourage economic growth. Crony capitalists and public sector unions alike hide behind environmentalists, who oppose growth and development, all of it, everywhere – because no new developments, anywhere, suits their monopolistic interests. No wonder the only infrastructure vision still alive in California, the “bullet train,” is nothing more than a gigantic, tragic farce.
Urban Water Consumption is a Small Fraction of Total Water Use
Returning to the topic of water, a basic examination of the facts reveals the current drought to be a problem that could be easily solved, if it weren’t for […] Read More