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News

In France, unionized thugs riot against maturity and responsibility

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Here’s a story about the public sector union riots in France from Bloomberg News. (H/T Mary)

Excerpt:

French refineries remained shut, trains were on half service, schools closed and gas stations ran dry as unions held their fourth strike in two months against President Nicolas Sarkozy’s plan to raise the retirement age.

Sarkozy has refused to retreat from a proposal to increase the retirement age for a full pension to 67 from 65. His plan would bring France closer to Germany and the U.S., which are moving toward setting 67 as the full-retirement age, according to the Organization for Economic Cooperation and Development.

The French Senate is set to vote on the pension measure this week, giving final parliamentary approval to a plan to eliminate the retirement-system deficit by 2018.

“This reform had been postponed for too long and the deadline couldn’t be push further anymore,” Sarkozy said at a press conference in Deauville, France. “I hope that everyone stays calm so that things don’t go beyond certain limits. We cannot live without gasoline. I will see to it with the security forces that public order is guaranteed.”

Some protests turned violent, with youths today fighting police in the Paris suburb of Nanterre. In Lyon, some demonstrators broke shop windows and pillaged stores, L’Express magazine said on its website. Television reports showed snaking lines of drivers waiting to fill up on gas as about a quarter of the country’s 12,000 service stations carried signs saying they’d run out of fuel.

Government ministers said France has enough fuel to last several weeks and that they’ll continue to use police to break up barricades at oil depots.

[…]France’s 12 refineries have been on strike for a week, and no crude is arriving at the ports of Marseille, Le Havre and Nantes.

[…]Exxon Mobil Corp. declared “force majeure,” in France, saying it will be unable to meet some of its oil supply obligations and that it has begun shutting down its Gravenchon refinery, the larger of its two oil-processors in the country.

“A complete shutdown of the refinery is now under way,” Catherine Brun, an Exxon spokeswoman in Paris, said by phone today. “We cannot deliver products out of tanks.”

Total SA, the country’s biggest oil company, said a quarter of the 4,000 service stations it operates in France face shortages of one or more fuel products because of the strike.

[…]In France, the average retiree gets a net 65 percent of his average qualifying wage in government pension payouts, compared with 61.5 percent in Germany, 47 percent in the U.S. and 44 percent in Britain, according to the OECD.

I’m not sure why, but the word “extortion” pops into my mind. Or maybe I was thinking of “arrested development”. What is it called when grown men and women refuse to grow up and take responsibility for their own lives and insist on receiving entitlements provided by their harder-working neighbors?

Could a public sector union pension crisis happen here in the USA? Well, consider this article from The Economist, a radically-left-wing pro-Obama magazine. (H/T ECM)

Excerpt:

CHUCK REED is the Democratic mayor of San Jose, California. You might expect him to be an ally of public-sector workers, a powerful lobby in the Golden State. But last month, at a hearing on pension reform held by the Little Hoover Commission, which monitors the state’s government, Mr Reed lamented his crippling public-pensions bill. “City payments for retirement benefits have tripled over the last ten years even though our workforce has declined dramatically, and we have billions of dollars in unfunded liabilities that the taxpayers must pay,” he said.

Mr Reed estimated that the average cost to his city of employing a police officer or firefighter was $180,000 a year. Not only can such workers retire at 50, but some enjoy annual pension payments greater than their salaries. They are also entitled to cost-of-living increases of 3% a year, health and dental insurance for life and lump-sum payments for unused sick leave that could reach hundreds of thousands of dollars.

Plenty of similar bills are looming in America’s public sector: in municipalities, in the federal government, and especially at state level. Defined-benefit pensions, which link retirement income to salary, are expensive promises to keep. The private sector has been switching to defined-contribution plans, in which employees bear the investment risk. But the public sector has barely begun to adjust, and has built up a huge liability to its staff. Worse, it has not funded the promises properly.

Joshua Rauh, of the Kellogg School of Management at Northwestern University, and Robert Novy-Marx, of the University of Rochester, estimate that the states’ pension shortfall may be as much as $3.4 trillion and that municipalities have a hole of $574 billion. Mr Rauh calculates that seven states will have exhausted their pension assets by 2020—even if they make a return of 8%, a common assumption that looks wildly optimistic. Half will run out of money by 2027. If pension promises are to be kept, this will place immense strain on taxes. Several have promised annual payments that will absorb more than 30% of their tax revenues after their pension funds are exhausted (see chart 1).

Now the problem is making headlines, especially in California, where taxpayer groups have been highlighting the generous pensions of some former employees. More than 9,000 beneficiaries of CalPERS, the largest state retirement plan, receive more than $100,000 a year.

The stage is set for conflict between public-sector workers and taxpayers. Because almost all states are required to balance their budgets, any extra pension contributions they make to mend a deficit will come at the expense of other citizens. Utah has calculated it will have to commit 10% of its general fund for 25 years to pay for the effects of the 2008 stockmarket crash. But attempts to reduce the cost of pensions are being challenged in court and will be opposed by trade unions, which still have plenty of members in the public sector.

It’s not good for people to go through life becoming more and more accustomed to bailouts and redistributed wealth from their neighbors. Everyone should have to earn their own money and provide for themselves during their own retirement years. It’s not good to be dependent on other people – it’s better to make your own way in the world, and to share with others who have less than you do.

News

Obama says “there’s no such thing as shovel-ready projects”

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From the radically-leftist New York Times.

Excerpt:

While proud of his record, Obama has already begun thinking about what went wrong — and what he needs to do to change course for the next two years. He has spent what one aide called “a lot of time talking about Obama 2.0” with his new interim chief of staff, Pete Rouse, and his deputy chief of staff, Jim Messina. During our hour together, Obama told me he had no regrets about the broad direction of his presidency. But he did identify what he called “tactical lessons.” He let himself look too much like “the same old tax-and-spend liberal Democrat.” He realized too late that “there’s no such thing as shovel-ready projects” when it comes to public works. Perhaps he should not have proposed tax breaks as part of his stimulus and instead “let the Republicans insist on the tax cuts” so it could be seen as a bipartisan compromise.

It would have been nice to know that 2.7 trillion dollars and 8 million jobs ago.

Economics in One Lesson

Perhaps it is time to review Henry Hazlitt’s Economics in One Lesson, chapter 4, entitled “Public Works Mean Taxes”.

Excerpt:

Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.

Excerpt that the government, lacking a profit motive, is never as efficient as private business is in spending money – government wastes money that it never earned in the first place.

And consider Chapter 5 as well, entitled “Taxes Discourage Production”.

In our modern world there is never the same percentage of income tax levied on everybody. The great burden of income taxes is imposed on a minor percentage of the nation’s income; and these income taxes have to be supplemented by taxes of other kinds. These taxes inevitably affect the actions and incentives of those from whom they are taken. When a corporation loses a hundred cents of every dollar it loses, and is permitted to keep only fifty-two cents of every dollar it gains, and when it cannot adequately offset its years of losses against its years of gains, its policies are affected. It does not expand its operations, or it expands only those attended with a minimum of risk. People who recognize this situation are deterred from starting new enterprises. Thus old employers do not give more employment, or not as much more as they might have; and others decide not to become employers at all. Improved machinery and better-equipped factories come into existence much more slowly than they otherwise would. The result in the long run is that consumers are prevented from getting better and cheaper products to the extent that they otherwise would, and that real wages are held down, compared with what they might have been.

There is a similar effect when personal incomes are taxed 50, 60 or 70 percent. People begin to ask themselves why they should work six, eight or nine months of the entire year for the government, and only six, four or three months for themselves and their families. If they lose the whole dollar when they lose, but can keep only a fraction of it when they win, they decide that it is foolish to take risks with their capital. In addition, the capital available for risk-taking itself shrinks enormously. It is being taxed away before it can be accumulated. In brief, capital to provide new private jobs is first prevented from coming into existence, and the part that does come into existence is then discouraged from starting new enterprises. The government spenders create the very problem of unemployment that they profess to solve.

George W. Bush cut taxes in his first term and created 1 million NEW JOBS. Government spending is a job killer. Companies understand that government spending has to be paid for eventually, so they stop hiring people now to save the money for later tax increases.

News

Obama’s health care rationing czar has guaranteed health care for life

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Story here from Byron York. (H/T ECM)

Excerpt:

Donald Berwick, recess-appointed by President Obama to head Medicare and Medicaid, is a well-known advocate of health care rationing and admirer of Britain’s National Health Service. Rising health costs and limited resources “require decisions about who will have access to care and the extent of their coverage,” Berwick wrote in 1999. Last year, he said, “The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open.” Of the NHS, Berwick says simply, “I love it,” adding that it is “one of the great human health care endeavors on earth.”

As it turns out, Berwick himself does not have to deal with the anxieties created by limited access to care and the extent of coverage. In a special benefit conferred on him by the board of directors of the Institute for Health Care Improvement, a nonprofit health care charitable organization he created and which he served as chief executive officer, Berwick and his wife will have health coverage “from retirement until death.”

Rationing for thee, but not for me. It’s the leftist way. And similarly, you can bet that Barack Obama is not going to wait in line for his health care. But you will. Just give him your money and trust him, OK?

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