SOMETHING THAT CAN’T GO ON FOREVER WON’T: The California Pension Bomb Just Got More Explosive.
SOMETHING THAT CAN’T GO ON FOREVER WON’T: Could the Tide Be Turning Against Campus Illiberalism?
SOMETHING THAT CAN’T GO ON FOREVER, WON’T — BUT KNOWING THERE’S A BUBBLE ISN’T THE SAME AS KNOWING WHEN IT WILL POP: How Long Will the Classic Sports-Car Bubble Last?
I’VE BEEN WARNING ABOUT THIS FOR YEARS HERE AT INSTAPUNDIT: The Pension Crisis Keeps Getting Worse.
The $2 trillion public sector pension shortfall created by decades of interest group bullying and political fecklessness is not going away on its own. In fact, according to a recent report from a major consulting firm, it’s getting steadily worse. . . .
It’s important to note that the major market indices actually rose substantially over the time period covered by the report. If Wilshire assessed the solvency of public pension funds today, after months of market turmoil, the situation would likely be even more grim.
At least some state and local governments are taking steps to reform their public pension systems before it’s too late. For others, that moment may have already passed. It’s probably only a matter of time before the most indebted states and localities start going hat-in-hand to the federal government requesting massive bailouts. Time for think tanks, academics, and policymakers to start preparing for this eventuality: Should Congress be prepared to offer any assistance, and if so, on what terms?
The problem: Congress is broke too, but still in denial.
Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be. Plan accordingly.
China’s slowdown is having knock-on effects around the world. Here at TAI, we have been following the commodity crash story for some time—and not just as a piece of economic news mostly interesting to financial market speculators. This is a political and a geopolitical story as well. Falling commodity prices matter to everything from the security of Putin’s power base to the ability of the oil-dependent Nigerian state to wage an effective war against Boko Haram; the fate of democracy in countries like Brazil and South Africa is complicated by the prospective fallout from the commodity crash; Venezuela may implode into chaos as a result of the oil crash, and fears for Venezuela’s future were a major consideration in Cuba’s decision to respond to the Obama Administration’s normalization overtures. In other words, significant shifts in world commodity prices can tilt the balance of power, undermine the stability of some governments, and boost the prospects of others.
But the story may be getting still bigger. We may be looking at something more serious than the unwinding of a commodity boom; we may be looking at the bursting of a bubble that could dwarf what happened in 2008. The China Bubble is bigger than the real estate bubble, and its liquidation could pose bigger risks for world politics than the subprime implosion.
There’s a difference between China and the China Bubble. China is a middle-income developing country bumping up against the limits of a growth model built on massive exports of manufactured goods. There are lots of bubbles inside China, largely because both national and local governments have pursued a mix of stimulative policies even as the health of the underlying growth model deteriorated. Massive over-investment in real estate, infrastructure and manufacturing capacity, overvalued stock prices and poorly priced financial assets have created an increasingly toxic and dangerous economic situation inside China, and a rattled government is doing its best to keep the system from imploding. The government is hoping to achieve a ‘soft landing’ as China switches away from growth led by manufacturing for export to growth led by services and internal consumption. We shall see; China’s regulators and managers are skilled and have a lot of ammunition. But this is a difficult maneuver to execute and as Chinese society and the Chinese economy both become more complex, the task of running the country keeps getting harder.
The China Bubble on the other hand is an international phenomenon. All over the world, the producers of commodities and manufactured goods have bought into the idea that Chinese demand is a perpetual growth machine.
Something that can’t go on forever, won’t.
KURT SCHLICHTER: DON’T LET LIBERALS TELL YOU WHAT YOU CAN AND CAN’T SAY ABOUT HILLARY:
That’s a little taste of what will happen in the general election, but we conservatives have to face the heat and tell the truth. Imagine Supreme Court litigator Ted Cruz (or whoever) on the stage at a debate with Hillary, when everybody’s watching and she’s minimally able to rely on the media to save her. Hillary starts talking about what a friend to women she is, and Cruz comes back with her shameful treatment of the women her husband abused. Yeah, I expect the moderators to pull a Candy Crowley and screech and intervene to stop it, and the next day the mainstream media will be full of pearl-clutching outrage about the Republican daring to bring up a subject that they’ve decreed was off-limits. But normal people will ask. “Hey, wait a minute. Hillary did what? Why are we only hearing about this now?” And the fact that we have an alternative media – talk radio, Twitter, Facebook, the net in general, means that we can get our ideas and our views out there. They can’t gatekeep her track record of perfidy forever.
Thank you Don Lemon, not only for bringing me an ungodly amount of attention and making me a conservative martyr, but for revealing the mainstream media’s tactics, techniques and procedures to silence conservatives and keep them from telling the truth about your gal Hillary. We have the truth, Republicans – let’s not be afraid to tell it.
Read the whole thing, which is a reminder of Andrew Klavan’s 2009 video from the start of the Obama administration that all “liberal” arguments ultimately consist of two words:
When men abuse women, they are rightfully chastised, punished and maligned. But when women abuse men, they are often ignored or receive only a slap on the wrist.
This needs to change, argues Maddy Beiwel in the Iowa State Daily, Iowa State University’s school newspaper. Beiwel, a columnist for the paper, notes that pardoning women for abuse “sends the wrong message about feminism.”
Beiwel, who identifies as a feminist (the “equal opportunity” kind of feminist, she says, not the “burn the patriarchy” kind of feminist), brings up two examples of celebrities who abused their partners. Chris Brown, who assaulted fellow singer and then-girlfriend Rihanna; and Emma Roberts, an actress who was arrested in 2013 for attacking her then-boyfriend and co-star Evan Peters.
Brown will forever be remembered as the man who assaulted Rihanna, his career took a hit (though he seems to be doing fine now) and he was angrily discussed at length around the world. Roberts, conversely, received no such condemnation. . . .
Beiwell presents some statistics from domestic abuse organizations (here’s a report from the Bureau of Justice Statistics for comparison) that show that more than 830,000 men are the victims of domestic abuse each year. Beiwell contends that “women are just as capable of becoming domestic abusers.”
She also discusses the narrative that seems to have been adopted by modern-day outrage feminists that women are “pure and above reproach, with every potentially controversial or unfortunate action glossed over.” She writes that treating women like they are perfect and incapable of cruelty “is an unequivocal anti-feminist statement that ignores all of the other facets of the movement.”
Beiwell also decries the use of female domestic violence against men as a form of comedy, noting that if men were beating up women in sitcoms no one would be laughing.
“It helps perpetuate the notion in real life that if a woman is hitting you and you take it seriously, you’re weak,” Beiwel writes. “The illusion that men can’t cry leads to an emotionless, strong caricature-like being held up as the perfect man. When men are abused by women, this paragon of masculinity can seem unattainable, and men may feel the need to bury their hurt in order to attempt to measure up.”
She also points out that the old “victim-blaming” approach to questioning abuse victims still applies to men — they are told it was their own fault or even arrested in place of the actual abuser. Men also have fewer resources as abuse victims.
It’s almost as if there’s some sort of war on men going on or something.
It was kept from public view for months and months, kept hidden until Mayor Rahm Emanuel won re-election with black voter support. But it couldn’t be suppressed forever.
Since the video was released, protesters have taken to the streets, demanding “Rahm Resign” and the mayor became publicly weepy, telling us once again that he wanted to be a Rahm reborn, a better version of himself.
Who knows? Maybe he was hoping to put on that warm and fuzzy campaign sweater — the one he wore when he cut those re-election commercials to announce he’d be a kinder, more reasonable, and less imperious Rahm.
But you can’t play the sweater game twice. And the city can’t forget what he’s done.
So a month later, where is Chicago?
The mayor limps along, weakened, his public approval ratings underwater. New polls say what I’ve told you for weeks: That if the Laquan McDonald video had been made public before Election Day, Rahm would not be mayor today.
That makes people feel as if he’s cheated them. So resentment builds against the mayor most of Chicago never really liked, but feared. And now that he’s been humbled, he’s ripe.
Why would being cheated by a Democrat politician anger Chicago voters at this late date? Of course, if they actually are serious about issuing a course correction, there’s a simple decision they can make next election:
FUNDAMENTALLY TRANSFORMED: The Hill: Ex-GAO head: US debt is three times more than you think.
Something that can’t go on forever, won’t. Promises that can’t be kept, won’t be. Debt that can’t be repaid, won’t be. Plan accordingly.
HIGHER EDUCATION BUBBLE UPDATE: “U.S. universities have grown increasingly reliant on rapid, double-percentage-point-per-annum growth in the number of students from China, who now account for 31 percent of international students in American higher education.” Plus: “I think there is a sense in the U.S. that universities have taken the Chinese student enrollment levels for granted, that they’re able to charge significant tuition and somehow this growth will continue into the future unimpeded. I just don’t believe that.”
Well, you know what they say: Something that can’t go on forever, won’t.
EUROPE’S IMMIGRATION PROBLEM is structural.
This time the crisis is over one of Europe’s most cherished icons: the Schengen visa-free/passport-free zone, which has given the European project arguably its strongest evidence yet that a larger and ultimately “pan-European” community would emerge from the nation-states bound by the treaty and the ideals behind it.
The current wave is fast invalidating all earlier numerical projections: Germany is looking at about 800,000 asylum applications this year; in July alone more than 100,000 people entered Europe, mainly through Greece and Italy. Reportedly, EU Commission President Jean-Claude Juncker will now call for the member countries to resettle the 160,000 people who have reached Greece, Italy, and Hungary—a fourfold increase relative to two months ago. This is the “Schengen wave” of immigration; now reaching the point of entry places one within striking distance of Europe’s interior.
The size and distribution of the resettlement quota within the EU has become an intra-family squabble, with Britain resisting and Germany and Italy asking for higher quota commitments from other countries, especially from the reluctant “new members.” Here Hungary has led the way in its opposition to the plan, building a barbed wire fence along the Serbian border and pushing enabling legislation through the parliament that would reassert national control. Prime Minister Viktor Orban has called the immigration wave a “German problem.”
So it now will come to this: Germany’s Angela Merkel will insist that increasing resettlement quotas for all is inevitable, making it a litmus test of intra-EU solidarity. If she gets her way—and she likely will next week—Greece, Italy, and Hungary will be allowed to dispatch the migrants from their territory to other countries, establishing an ad hoc quota policy of sorts. Problem solved? Not so fast, as another deal on the resettlement quota will not alter the overall migration dynamic or momentum, with push and pull factors (war in MENA and Europe’s generous social support and prospect of a better life) now mutually reinforcing and locked in. And in a world framed by instant communications and social media, the message of Europe’s promise will continue to go out to the desperate and the entrepreneurial thousands, reinforcing their determination to come.
You can’t have open borders and generous welfare benefits. At least, not for long. And something that can’t go on forever, won’t.
REALITY ASSERTS ITSELF: UK FOLLOWING SCOTT WALKER’S EXAMPLE.
The UK is not exactly a bastion of right-wingery. As a hoary political joke has it: In the UK, they have two parties—the Labour Party, which we in the U.S. would call the Socialist Party, and the Conservative Party, which we in the U.S. would also call the Socialist Party. And in the American context, Wisconsin is not a particularly right-wing state. Why are unions not getting their way in these places?
The answer is not, pace the wailings of Richard Trumka, a labor leader and Scott Walker critic, that Gov. Walker is some unique right-wing monster—and the same holds true for British PM David Cameron. As Richard Aldous pointed out in a must-read essay yesterday, the British voters reelected Cameron because of, not despite, his austerity and reform agenda; likewise, Wisconsin voters chose three times to keep Scott Walker in office.
To the moderate voter, it seems faintly ludicrous that public sector unions, alone of all political advocacy groups, are entitled to government-enforced dues collection. And then, that voter opens the London papers and sees that unionized public sector workers such as London’s tube drivers, who make far more than that same average voter, are going to strike for the second and third time this month over issues that have nothing to do with safety, job security, or any of the supposed traditional arguments for unionization. (The rural-American equivalent would be a school strike in a Wisconsin town over pension and health contribution levels that the average voter can only dream of.)
The waning of the blue model isn’t just an American phenomenon. The inability of Western countries to support and pay for lavish public sector pensions and benefits is becoming more apparent. Voters are giving politicians on both sides of the pond a mandate to do some remodeling.
Something that can’t go on forever, won’t.
Well, we can’t rely on civilian volunteers protecting them forever.
Plus, Rand Paul on immigration from Muslim countries: “If a third of [a country’s] population is in civil war, and saying ‘death to America,’ maybe we should ask them a few more questions before they visit. Same goes for student visas.”
CORRUPT, FECKLESS LEADERSHIP PRODUCES PREDICTABLE RESULTS: Think Greece can’t happen here? You’re wrong.
Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be. Plan accordingly.
ALAN GREENSPAN: U.S. ‘Way Underestimating’ the National Debt. Something that can’t go on forever, won’t. Promises that can’t be kept will be broken. Debt that can’t be repaid, won’t be. Plan accordingly.
QUINN HILYER ON THE LATEST FROM GEORGETOWN UNIVERSITY: My Alma Mater Makes A Fool Of Itself. “Both the campus paper of record, the Hoya, and the Georgetown Center for Student Engagement (yes, I kid you not, that’s the name of an official department of the university), have done even more to embarrass themselves than did the students who posted ‘trigger warnings’ that Ms. Sommers might say things that upset somebody.”
CHEAP GAS PROBABLY WON’T LAST:
No one knows exactly what factors are causing prices to fall so far, so fast, but there is a strong suspicion that Saudi Arabia, which you can think of as the central banker of OPEC, is letting prices fall in the hopes of killing off the competition from U.S. and Canadian shale oil. The question, then, is: Who will blink first?
At first blush, you might think that Middle Eastern oil producers have the upper hand. Their oil requires relatively little investment to get out of the ground; it’s not quite as simple as sticking a straw in the desert and sucking out the black stuff, but it sure looks like that compared to the complexity of a fracking operation. And fracking wells dry up fairly quickly, requiring even more investment just to stay in place.
But the shale oil producers also have some advantages. First of all, the Saudis need high prices to support their government spending — the IMF estimates that they require a price of about $90 a barrel just to pay the bills. That means they can’t keep up a price war forever. Second of all, upstart industries tend to improve pretty quickly in their first years or decades of operation, and fracking is no exception; my Bloomberg News colleagues report that the break-even point for many operations is $70 or less, which is lower than OPEC nations can sustain.
Even if they manage to push U.S. and Canadian fracking operations offline temporarily, the technology and expertise still exist. It took less than 10 years from the time when prices started soaring to the point where the U.S. was producing more oil than most OPEC members. If oil prices soared again, it would take even less time to get up and running again.
ELECTING DE BLASIO WAS CERTAINLY A MOVE IN THAT DIRECTION: Is New York the Next Detroit?
The core problem is that returns have not tracked with the city’s optimistic projections. In 2012, the city finally lowered its projected return to 7 percent from 8 percent, but after decades of excessive optimism, that left it with a giant hole; the payments had to be stretched out over more than two decades in order to minimize the fiscal hit. Yet this still may not be enough; it’s possible that 7 percent is still too rosy.
Like many state and local pension funds, the city has tried to make up the difference between its projections and what the market actually delivered by plunging into higher-risk investments. Those more complicated investments came with higher fees . . . and the possibility of big losses. The city seems to have taken at least one major bath, on a private equity fund that closed in 2011.
A lot of people would like the city to return to more conservative investments managed by in-house managers; former Mayor Michael R. Bloomberg . . . oversaw an effort to move in that direction a few years back. But one major thing is standing in the way: politics. It’s not just the fiscal hit that the city would take from adopting a less risky, more realistic approach; it’s also opposition from unions. . . .
In New York, reports the Times, the unions don’t want to move to more conservative pension accounting, because if they do, the city will be required to put more money into the pot . . . and the taxpaying public might mobilize against the union workers who put them in this spot.
Of course, putting it off will ultimately just make the problem worse; the inexorable logic of compounding is just not very forgiving.
The Gods Of The Copybook Headings will not be denied. And the motto for this decade seems to be “something that can’t go on forever, won’t.”
USA TODAY: Deficits drop but debt bomb ticks on.
The Tea Party is the reason deficits dropped after 2010. But we’re still adding debt — and even during the “surpluses” of the Clinton era, the debt continued to climb. Something that can’t go on forever, won’t.
GALLUP ON STATE GOVERNMENT: Corruption a Factor in Illinois Residents’ Lack of Trust. Well, it’s a state noted for producing corrupt politicians. You can’t expect voters to ignore that forever.
The European Commission wants to forgo ambitious climate protection goals and pave the way for fracking — jeopardizing Germany’s touted energy revolution in the process.
The climate between Brussels and Berlin is polluted, something European Commission officials attribute, among other things, to the “reckless” way German Chancellor Angela Merkel blocked stricter exhaust emissions during her re-election campaign to placate domestic automotive manufacturers like Daimler and BMW. This kind of blatant self-interest, officials complained at the time, is poisoning the climate.
At the heart of the matter is the simple fact that renewable energy comes at a premium, and the costs for propping it up have been passed along to consumers, both industrial and residential, in the form of higher electricity costs.
Yet this turn towards green energy has produced a browner energy landscape. Germany produced more energy from coal in 2013 than it had in nearly a quarter century, and its emissions actually rose. . . .
German businesses are considering jumping ship for cheaper energy prices in the developing world or (gasp!) the United States. For households, these subsidies have acted like a particularly regressive tax: The poor feel the bite of higher electricity bills than do the rich. Germany’s new energy and economy minister Sigmar Gabriel is expected to announce a plan to cut renewable energy subsidies later this week in an effort to keep electricity prices down. That will be a step in the right direction, but significant damage has already been done.
Something that can’t go on forever, won’t.
LATE-STAGE SOCIALISM: Venezuela’s House Of Cards. “Just how big of a problem is inflation in Venezuela? The implied annual inflation rate in Venezuela is actually now in the triple digits, coming in at a whopping 283%, as shown in the chart below. What’s more, the implied monthly inflation rate has now ramped up to 36%, as shown in the chart below. That’s dangerously close to the hyperinflation threshold of 50% per month. This is due to an accelerating depreciation of the bolivar, reflecting Venezuelan’s deteriorating economic outlook.” The same actions produce the same results. And something that can’t go on forever, won’t.
SOMETHING THAT CAN’T GO ON FOREVER, WON’T: Everyone Wants To Go To Export Heaven.
What’s interesting is that we’re having exactly the same ritualistic spats that we were having 10 years ago, when I first started writing for the Economist. Japan, China and Germany are entirely dependent on exports to keep unemployment to a low roar. The U.S. is running a persistent current account deficit and, in fact, hasn’t been in the black since 1990.
No one thinks this is sustainable. But none of the big players wants to end it, either; Americans aren’t ready to actually start saving like a grown-up nation, and the export powerhouses are desperately trying to accumulate a massive hoard of IOUs before their entire populations age into Centrum Silver territory.
Yet unlike Germany, Japan and China, the U.S. feels the need to actively argue in favor of its own position. China doesn’t go around trying to get other nations to export a quarter of their gross domestic product. In fact, China would rather not have the competition. But the U.S. has to complain. And I have to wonder if we don’t feel a bit guilty about our running tab with, well, the rest of the world. We’re like a drunk who wants to reform but knows he lacks the willpower, so he urges the bartenders to close down and take up haberdashery. Which is a good guide to how effective the whole thing is.
Promises that can’t be kept, won’t be. Debts that can’t be repaid, won’t be. Plan accordingly.
A SOBERING GRAPHIC: The Reality Of America’s Finances.
Once again: Something that can’t go on forever, won’t. Promises that can’t be kept, won’t be. Debt that can’t be repaid, won’t be. Make your plans accordingly.
HOPEY-CHANGEY: U.S. Adds Two Times More Debt than Economic Output in Last 2 Years. Something that can’t go on forever, won’t.
SOMETHING THAT CAN’T GO ON FOREVER, WON’T. DEBTS THAT CAN’T BE REPAID, WON’T BE. PROMISES THAT CAN’T BE KEPT, WON’T BE. Debt Limit, Huh: Unfunded Liabilities Dwarf $16.7 Trillion ‘Ceiling.’
IT’S NOT REALLY A “CEILING” IF YOU KEEP RAISING IT: Washington Post: A recent history of America’s debt ceiling, in one interactive graphic. “If lawmakers and the White House can reach an agreement to raise the debt ceiling this fall, it will be the 40th time the limit was raised since 1980.” Something that can’t go on forever, won’t. Make your plans accordingly.
MORE ON THOSE UNDERFUNDED / OVERGENEROUS PUBLIC PENSIONS. MOSTLY OVERGENEROUS, IT SEEMS. California public pension payouts doubled after bump in benefits.
The average retirement payout for new retirees in California’s biggest public pension system doubled between 1999 and 2012, according to CalPERS data, and initial monthly payments for one group nearly tripled in that period.
State and local cops and firefighters benefited the most.
In the 14 years covered by the data analyzed by The Sacramento Bee, average first-month pensions to state police and firefighters went from $1,770 to $4,978. California Highway Patrol officers’ first-month retirement payments doubled from $3,633 to $7,418, and local government safety employees’ pensions went from $3,296 to $6,867.
Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.
PUBLIC PENSION CRISIS UPDATE: San Bernardino 1, Calpers 0.
San Bernardino just received the judicial go-ahead to declare bankruptcy more than a year after its initial bankruptcy filing. The ruling, delivered by a federal bankruptcy court on Wednesday, concludes a long legal battle between the city and Calpers, which was fighting to keep the city out of bankruptcy in order to keep its funds flowing into the pension coffers. It now looks like Calpers will have to get in line with the city’s other creditors, meaning it will probably have to take a haircut just like everyone else. . . .
The bankruptcy of one of California’s biggest cities is a major story in its own right, but even more important is what this tells us about Detroit, the country’s largest municipal bankruptcy case. Followers of that saga will note that Detroit’s pension funds are using tactics very similar to those of Calpers, fighting in court to keep the city out of bankruptcy. The Times is careful to note that the two cases are different, and that San Bernardino’s case is not precedent-setting for Detroit. But this is nonetheless an early indicator for how federal bankruptcy courts might treat these cases moving forward—and it gives Detroit’s public pension funds plenty more to worry about.
Something that can’t go on forever, won’t. Promises that can’t be kept, won’t be. Debt that can’t be repaid, won’t be.
HIGHER EDUCATION BUBBLE UPDATE: “The amount of education loans outstanding has increased every quarter since the New York Fed began tracking the figure in 2003. They now account for almost 9% of all consumer debt, up from 3% a decade ago.”
Something that can’t go on forever, won’t.
PUBLIC PENSION UPDATE: Salon Warns Public Workers: Your Pensions Are Not Safe. Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be. Plan accordingly.
NOAM SCHEIBER: Yes, BigLaw Really Is Dying. “The point is not that, of the top 250 firms in the country, only 25 will survive the next decade, period. It’s that only 25 will be doing roughly what they do today—using the same business model, charging roughly the same hourly rates (or more), with roughly the same proportion of partners to associates to clients.”
I think that’s probably right. My colleague Ben Barton has just finished a book for Oxford University Press on what’s happening to the legal profession, and he makes a similar point quite persuasively with reams of data.
Plus, a more general warning: “One final point worth keeping in mind any time someone points to history and insists the future will look pretty similar: Historical arguments tend to be right up until the moment they’re not. To take one random example, consider the insistence by so many people in the mid-2000s (many of them tied to the real estate industry) that housing prices couldn’t fall across the country all at once, since it had never happened before. That didn’t work out so well then, and you’d think it would give Big Law defenders pause now. You can’t just look at historical patterns. You’ve got to look at the reasons why the patterns existed. And if those reasons no longer apply, you’re going to find yourself in real trouble. Just ask all the happy people who bought condos in Ft. Lauderdale back in 2006.”
Something that can’t go on forever, won’t. That’s the defining sentence for this decade, I believe.
Detroit’s situation seems almost unprecedented, and it’s not clear how the city can best respond to it. The unions’ biggest problem is that Detroit simply cannot pay their pension claims without destroying city services. Detroit doesn’t have the money to provide even minimal services to its current population while paying off the large numbers of retired workers, many of whom hail from times when the city was larger and richer.
Because there is no money, there is no solution that gives the unions the relief they seek. Total obedience to the state constitutional mandate might not be possible, and that’s a problem. The government can pass a law saying that everyone has a constitutional right to a free trip to the moon, but if it doesn’t build the spacecraft that can get you there the right is void.
While the principle that federal law trumps state law on most issues is pretty clear, there are real arguments on both sides in this complicated case. But if the state constitution is unenforceable as well as being in conflict with federal law, it would be that much harder for the state constitution to block the execution of federal bankruptcy law.
However the courts eventually decide, decades of misgovernance, the criminal corruption of the Democratic Party in Detroit, and the depraved indifference of politicians at every level as crooks and hacks conspired together to loot and wreck a great American city have brought us to a place where Detroit’s problems seem almost beyond solution. The saddest part of this story is that there is still much, much more pain to come for a lot of people. Both the residents of current day Detroit and the cops, teachers, firefighters and others who trusted in the promises of Detroit politicians and union officials face a world of hurt.
Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.
DENMARK RECONSIDERS THE WELFARE STATE:
The 36-year-old single mother, given the pseudonym “Carina” in the news media, had more money to spend than many of the country’s full-time workers. All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.
In past years, Danes might have shrugged off the case, finding Carina more pitiable than anything else. But even before her story was in the headlines 16 months ago, they were deeply engaged in a debate about whether their beloved welfare state, perhaps Europe’s most generous, had become too rich, undermining the country’s work ethic. Carina helped tip the scales. . . .
“In the past, people never asked for help unless they needed it,” said Karen Haekkerup, the minister of social affairs and integration, who has been outspoken on the subject. “My grandmother was offered a pension and she was offended. She did not need it.
“But now people do not have that mentality. They think of these benefits as their rights. The rights have just expanded and expanded. And it has brought us a good quality of life. But now we need to go back to the rights and the duties. We all have to contribute.”
In 2012, a little over 2.6 million people between the ages of 15 and 64 were working in Denmark, 47 percent of the total population and 73 percent of the 15- to 64-year-olds. . . . In addition, the work force has far more older people to support. About 18 percent of Denmark’s population is over 65, compared with 13 percent in the United States.
Something that can’t go on forever, won’t.
TIMELY REMINDER: A Deposit In A Bank Is Not A Riskless Form Of Saving. Plus this: “When states become insolvent, the piper must ultimately be paid. Fatal, embarrassing insolvency is not a problem that can be perpetually or painlessly deferred.”
Something that can’t go on forever, won’t, to coin a phrase.
RELATED: German Bailout, Russian Haircut.
ANN ALTHOUSE not impressed with Gail Collins’ attack on Ted Cruz. “This woman-defending-woman column ends with a recipe metaphor. Is that good gender politics? It resonates with what I think is Collins’s effort to make us see this interplay between 2 U.S. Senators in terms of a man patronizing a woman.” If you can’t respond to a guy who’s been in the Senate for ten weeks, when you’ve been in the Senate forever, without playing the “damsel in distress” card, then you shouldn’t be in the Senate. So I guess the takeaway from Collins’ piece is that DiFi should resign in favor of someone more . . . masculine.
Plus, from the comments: “The media is testing their modes of attack against Cruz. Is he wacky, scary, a McCarthy; arrogant etc. They have to find the right theme that will stick so they can destroy him.”
And they’re so anxious to destroy him because he’s Latino.
HIGHER EDUCATION BUBBLE UPDATE: Total Student Loan Debt Has Nearly Tripled Since 2004.
Total student debt stands at $966 billion as of the fourth quarter of 2012, the N.Y. Fed said in press materials, with a 70% increase in both the number of borrowers and the average balance per person. The overall number of borrowers past due on student loan payments has grown from under 10% in 2004 to 17% in 2012.
Fewer people with student loans are buying homes, according to data in the report. Of borrowers ages 25 to 30 who are taking out new mortgages, the percentage of those with student debt has fallen by half, from nearly 9% in 2005 to just above 4% in 2012.
“The higher burden of student loans and higher delinquencies may affect borrowers’ access to other types of credit and the performance of other debt,” the fed report concluded.
Educational debt is now the largest consumer liability after mortgages.
Something that can’t go on forever, won’t.
WALTER RUSSELL MEAD: WHAT COMES AFTER THE BLUE MODEL?
Briefly, the idea is that after World War II America was organized around a group of heavily regulated monopoly and semi-monopoly companies. AT&T was the only telephone company; there were three big networks, three big car companies and so on. There was very little foreign competition, and these companies were able to offer stable, lifetime employment to most of their workers. The workforce was heavily unionized, and the earnings of the big companies were divided between shareholders, managers, workers and government in a predictable way. An intellectual and administrative class of planners, social scientists and managers ran the big institutions and administered the government.
Several forces came together to break up this system. Foreign competition, first from rebuilding Germany and Japan after World War II and then from low wage newly industrializing countries around the world, eroded the market position of companies like the Big Three auto manufacturers. The rise of offshore banking eroded the tight financial controls of the postwar era. Growing consumer impatience with the high prices and poor quality offered by monopoly companies like the telephone monopoly led to political pressure to deregulate and introduce more competition. Technological change, especially in information processing and communications, led to disruptive changes that shifted the advantage to nimble and lean companies and left the bureaucratic, slow moving giants of the Blue Age behind. American society became increasingly individualistic, with both the left and the right rebelling against the authority of experts and bureaucrats.
As a result, the old way of doing things doesn’t work anymore. Some of the changes—like the multiplication of gadgets and rise of the internet—are widely considered to be wonderful things. Others, like the rise of instability in financial markets, the polarization of incomes and the consequences of the collapse in manufacturing employment for blue collar employment and wages, are much less popular. But the reality is that there is no going back to blue; Humpty Dumpty has fallen off the wall and he can’t be patched up. The question is what do we do now.
Obama’s answer is more of the same, only bigger. I don’t think that will work. Something that can’t go on forever, won’t.
WHY OBAMA WOULD RATHER TALK ABOUT GUN CONTROL: My USA Today Column: The debt is up about 60% since Obama took office. This can’t go on forever.
WHY OBAMA WOULD RATHER TALK ABOUT GUN CONTROL: My USA Today Column: The debt is up about 60% since Obama took office. This can’t go on forever.
SOMETHING THAT CAN’T GO ON FOREVER, WON’T: Michael Barone: History Suggests That Era Of Entitlements Is Nearly Over.
ROSS DOUTHAT: Cliff Deal Shows Obama’s Weakness, Not Strength: “If a newly re-elected Democratic president can’t muster the political will and capital required to do something as straightforward and relatively popular as raising taxes on the tiny fraction Americans making over $250,000 when those same taxes are scheduled to go up already, then how can Democrats ever expect to push taxes upward to levels that would make our existing public progams sustainable for the long run?”
They can’t, because those programs are unsustainable at any level of taxation. Something that can’t go on forever, won’t.
Plus: “There is a significant constituency among Congressional Democrats that was already uncomfortable with the $250,000 threshold and wanted to push it higher — all the way to a million dollars, if a certain influential New York Senator had his way — and the possibility that these Democrats might go wobbly in a post-cliff scenario gave the White House a reason (or an excuse) to concede ground that Obama had once promised to defend unstintingly. Nor is this tax-wary caucus likely to grow weaker with time: It exists because many Democratic lawmakers represent (and are funded by) a lot of affluent professionals in wealthy, high-cost-of-living states, and that relationship is only likely to loom larger if current demographic and political trends persist.”
That’s the problem with that whole war on the rich. Obama’s enemies are the small-business Kulaks, who vote Republican, but he can’t go after them without hurting the nobles who support Democrats financially.
I’d push 5% per year cuts in federal spending across the board — no “flexible freeze” BS — and do it each year until the deficit was under control. I think this would sell fairly well politically, too. Nobody believes that any federal department couldn’t cut costs 5% without impacting performance.
The greatest fiscal challenge to the U.S. government is not just its annual deficit but its total liabilities. Our federal balance sheet does not include the unfunded social insurance obligations of Medicare, Social Security, and the future retirement benefits of federal employees. Only in the small print of the financial statements do you get some idea of the enormous size of the unfunded commitments. Today the estimated unfunded total is more than $87 trillion, or 550 percent of our GDP. And the debt per household is more than 10 times the median family income.
Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be. Make your plans accordingly.
IN BRITAIN, A DAWNING REALIZATION: The truth is that politicians are telling lies: Government is simply unaffordable. “The immediate emergency created by the crash of 2008 was not some temporary blip in the infinitely expanding growth of the beneficent state. It was, in fact, almost irrelevant to the larger truth which it happened, by coincidence, to bring into view. Government on the scale established in most modern western countries is simply unaffordable.”
Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.
SACRE BLEU! The Collapse of French Pensions.
France is between a rock and a hard place. French public debt is almost 90 percent of GDP, and the French people are unwilling to give up any more, even though France’s average retirement rate is lower than elsewhere in Europe. Sarkozy’s original reforms met with large protests, and any change in the retirement age by Hollande is likely to engender a similar reaction.
As in America, years of disastrous blue policies and overgenerous pension promises are finally catching up with France. Now policymakers are left with with a depressing choice: renege on promises to workers or watch the system go broke. Hollande has made it clear that he doesn’t want to do anything that could be seen as an attack on the workers, but he may have no choice. When the money isn’t there, it isn’t there.
Things that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.
SOMETHING THAT CAN’T GO ON FOREVER, WON’T. “My main consolation is that the change will uproot many of the delusions that have sprouted up. My main fear is that history shows this is never, ever, a peaceful process.” One way or another, the Gods Of The Copybook Headings will have their due.
Related item here.
NITA GHEI: An End To European Bailouts.
The desire to keep on spending in the face of economic crisis is universal. In Greece, parliament voted Wednesday to implement $17 billion in spending cuts, and the reaction was swift and violent. Public-service employees and others affected by the proposal erupted in riots on the streets of Athens.
The move to trim the indebted nation’s outlays cleared the way for the European Commission, the European Central Bank (ECB) and the International Monetary Fund to send a check for $40 billion. This bailout cash will give Greece some breathing space and enable government employees to cash their paychecks. It also leaves unresolved the cause of Greece’s vast debt, currently estimated at 175 percent of gross domestic product. That’s particularly troubling because it appears there will be no country left in the European Union (EU) able to bail out Greece — or any other ailing nation — the next time bills come due.
Sooner or later, you run out of other people’s money. Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.
WALTER RUSSELL MEAD: CalPERS Goes After Compton. “California’s pension crisis is metastasizing. Last week we noted that the California public pension fund CalPERS was at loggerheads with the city of San Bernardino, which was using its bankruptcy filing as grounds to default on its obligations. This week, CalPERS sued the city of Compton, which owes $2.6 million to the fund. One detects its desperation here. . . . Spin it as you like, but math wins in the end. California’s retirement numbers just don’t add up, and clinging grimly to failing policies and dying institutions is not the way forward. CalPERS can sue every city in California, but that won’t fix the pension crisis — and it won’t get the California economy on track for the kind of growth that would make the tradeoff between pensions and services a little less dire.”
Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.
NIALL FERGUSON: What Joe Biden Doesn’t Want You To Know.
The reality is that the real distributional issue the country faces is not between percentiles but between generations. As Paul Ryan put it in a powerful peroration, which temporarily silenced the ranting to his right, “A debt crisis is coming. We can’t keep spending and borrowing like this. We can’t keep spending money we don’t have.” Already a staggering $16 trillion, the debt represents nothing less than a vast claim by the generation currently retired or about to retire on their children and grandchildren. . . . What we saw last week was not just a contrast between Irish-American political styles. We saw the opening round in the clash of generations that will soon dominate American politics.
Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be honored, won’t be.
HIGHER EDUCATION BUBBLE UPDATE: Meet the High Priest of Runaway College Inflation (He Regrets Nothing). This sounds comforting: “Students have more debt than ever before. But the university president who helped propel a tuition arms race says schools are just getting started.”
Something that can’t go on forever, won’t.
LOWER EDUCATION BUBBLE: From blogger “Captain Capitalism:”
St. Paul public schools spend $17,000 per pupil per year. This translates into $221,000 per pupil over the course of their k-12 career, and that does not include baby-sitting school…er…I mean “pre-school.”
This got me thinking.
“What if we just gave the kids the $221,000 instead of educated them? Wouldn’t they be better off? I mean, I never had $221,000 in my name in my LIFE. But by the age of 18, you could buy a house FOR CASH and never have to pay rent again.”
So I looked up the median price of a home in St. Paul. $197,607 (though this may change of course).
It’s actually CHEAPER to BUY A HOUSE in St. Paul than educate one of their precious chllllllldrnnnnnnn. You could buy 1.1 houses per pupil instead of sending them to school.
Or to put it another way, things that can’t go on forever, won’t.
ROBERT SAMUELSON: Romney’s Chance To Challenge The Welfare State:
The fact that roughly half of Americans receive some government payment to which they feel morally entitled is a big part of our budget paralysis. It’s an inconvenient fact, but it’s still a fact.
Dealing with it ought to define the next president’s mission. Somehow, he must question the status quo without insulting the roughly 150 million Americans who receive federal benefits. Who deserves support and why? How much and under what conditions? Unless we ask these questions and find grounds for trimming some benefits, the budget impasse will continue and risk dangerous outcomes: a future financial crisis; crushing tax increases; or draconian cuts in programs (defense, research, highways) that aren’t payments to individuals.
This is arithmetic, as Bill Clinton might say. In 2011, payments to individuals were 65 percent of federal spending, up from 26 percent in 1960. America has created a welfare state, whether Americans admit it or not.
Actually, the share of people who receive federal benefits exceeds Romney’s 47 percent. Based on its Survey of Income and Program Participation (SIPP), the Census Bureau estimates that in mid-2011 — the latest available figures — the number of people with benefits came to 149.8 million, or 49 percent of the population. But this figure is too low, because SIPP doesn’t include several major programs (farm subsidies and college loans and grants). With these, the total probably exceeds 50 percent.
This will end when the federal government’s finances break down beyond the ability of the current Fed/Treasury jiggery-pokery to conceal it. Something that can’t go on forever, won’t. It’s important not only to try to bring things under control before a collapse, but also to explain what’s going on so that if the collapse happens anyway — say because Obama gets reelected — people understand what’s happening and why. Romney/Ryan can lay down markers there, too.
LOWER EDUCATION BUBBLE UPDATE: Progressives Sour On Chicago’s Teachers. “The Chicago teachers’ strike and the coming pension crisis has even progressives worried that public-sector employee costs are bankrupting the city: Matt Yglesias is arguing that the teachers’ union’s proposal to raise taxes to pay for their pension programs may divert funds from more important programs. . . . The larger problem here is that blue policies simply can’t be made to work. Higher taxes won’t fix the problem of an overpriced, underperforming school system; indeed, they will just drive out even more of the city’s tax-generating economic base. The city is now on a course to make all its problems steadily worse. Chicago is slowly bankrupting itself to sustain a school system it can’t afford that doesn’t educate its kids very well.”
Something that can’t go on forever, won’t. That observation, from economist Herb Stein, is likely to be the sum-up aphorism of this decade.
NICK GILLESPIE: Terrifying: Increases in Real Per Capita Federal Spending Over The Past 35 Years. “This is no way to run a country. But it might be a great way to wreck the economy.”
Something that can’t go on forever, won’t.
DEFICIT TOPS $1 TRILLION: “CBO, which releases estimates each month, said the government ran a $192 billion deficit last month. That’s the highest deficit ever for August, which is not traditionally a major month for running in the red. That deep monthly deficit powered the government well past the $1 trillion mark for the fiscal year. With a month still to go, the government is already running $1.17 trillion in arrears.”
Something that can’t go on forever, won’t.
What is monumentally new about the American state today is the vast empire of entitlement payments that it protects, manages and finances. Within living memory, the federal government has become an entitlements machine. As a day-to-day operation, it devotes more attention and resources to the public transfer of money, goods and services to individual citizens than to any other objective, spending more than for all other ends combined.
The growth of entitlement payments over the past half-century has been breathtaking. In 1960, U.S. government transfers to individuals totaled about $24 billion in current dollars, according to the Bureau of Economic Analysis. By 2010 that total was almost 100 times as large. Even after adjusting for inflation and population growth, entitlement transfers to individuals have grown 727% over the past half-century, rising at an average rate of about 4% a year.
In 2010 alone, government at all levels oversaw a transfer of over $2.2 trillion in money, goods and services. The burden of these entitlements came to slightly more than $7,200 for every person in America. Scaled against a notional family of four, the average entitlements burden for that year alone approached $29,000.
A half-century of unfettered expansion of entitlement outlays has completely inverted the priorities, structure and functions of federal administration as these were understood by all previous generations.
It is not only financial capital that is distorted by this, but moral and social capital as well.
ANOTHER UPDATE: Reader Tim Turner writes: “This article is a great start on the current state of our national finances. It is too bad that they did not finish the accounting by noting that these transfer payments consume 100% of federal tax revenues, leaving nothing at all to pay for any of the actually legitimate functions of government.”
CALIFORNIA PENSION CRISIS UPDATE: Largest public pension fund earns dismal 1 percent. “The nation’s largest public pension fund collected a dismal 1 percent annual return on its investments, a figure far short of projections that will likely bring pressure on California’s state and local governments to contribute more money, officials said Monday. The return reported by the California Public Employees’ Retirement System was well below its projected return of 7.5 percent for the fiscal year that ended June 30 and is prompting administrators to consider changes to investment strategies.”
Key bit: “You just can’t rely on these optimistic assumptions that somehow the investment returns are going to be so great that you don’t have to worry about paying for this stuff.” Things that can’t go on forever, won’t. Debts that can’t be paid, won’t be.
RICK SANTELLI ON TARP: “Hurry up, let’s spend three quarters of a trillion dollars; how much due diligence did they do for our role as taxpayers in basically bailing out the banking system? Obviously zero!”
Also, The Problem In A Nutshell: Annualized GDP Growth Of 1%; Annualized US Debt Growth of 21%. Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t be.
MORE ON THOSE UNDERFUNDED / OVERGENEROUS PUBLIC PENSIONS: Moody’s Triples Pension Debt Estimates.
As we follow the evolving story of collapsing public pensions, one of the trickiest issues is the lack of reliable estimates of future returns on investment. Many of the biggest offenders among pensions assume returns of 8 percent or higher. These numbers may seem reasonable by historical standards, but they’re hopelessly optimistic today. Even plans that have revised their estimates downward still project returns far above what most analysts expect. If these estimates don’t come through, taxpayers will be left holding the bag, and either pension payouts will have to shrink or other services, including education and law enforcement, will have to.
Unions have long claimed that these worries are mere alarmism, but now Wall Street is stepping in to say it, too: pension investment projections are far too high. A new estimate from Moody’s anticipates average pension returns of 5.5 percent rather than the traditional 7 or 8 percent investment projection. The result of this estimate is a tripling of national pension debt, from $766 billion to $2.2 trillion. This is a major increase, but many analysts believe that it is accurate, or at least more accurate than previous estimates.
Something that can’t go on forever, won’t. Debts and obligations that can’t be paid, won’t be.
MEN: Defective, Or Just Unnecessary? “Earlier this year, women became the majority of the workforce for the first time in U.S. history. Most managers are now women too. And for every two men who get a college degree this year, three women will do the same. For years, women’s progress has been cast as a struggle for equality. But what if equality isn’t the end point? What if modern, postindustrial society is simply better suited to women? A report on the unprecedented role reversal now under way— and its vast cultural consequences.” Something that can’t go on forever, won’t.
WALTER RUSSELL MEAD: Public Pension Cutbacks Spread Across The Country. Something that can’t go on forever, won’t.
EUROPE: Employees at Just One Paris Hospital Are Owed 2 Million Vacation Days. Something that can’t go on forever, won’t.
INDEED: The Spenders Won 2011: Republicans fell for Obama’s backroom budget trap. But something that can’t go on forever, won’t.
GOOD QUESTION: The Law School Bubble: How Long Will It Last if Law Grads Can’t Pay Bills? “In 2010, 85 percent of law graduates from ABA-accredited schools boasted an average debt load of $98,500, according to data collected from law schools by U.S. News & World Report. At 29 schools, that amount exceeded $120,000. In contrast, only 68 percent of those grads reported employment in positions that require a JD nine months after commencement. Less than 51 percent found employment in private law firms.” Something that can’t go on forever, won’t.
RIOT AT THE MALL OF AMERICA. “I recently read Stephen Hunter’s Soft Target, about a terrorist attack on the Mall of America. While the outcome yesterday was entirely different–no one was seriously hurt, and reportedly no shots were fired–the beginning of the riot, with screaming shoppers fleeing from gangs of ‘youths’ amid the sound of broken glass, and people being herded into the back rooms of stores for safety, was eerily reminiscent of Hunter’s novel. The moral, I suppose, is that civilization faces various threats against which we do not yet have adequate antidotes.”
Actually, we do. If “youths” felt they were at serious risk of being shot when attacking innocents, this sort of thing wouldn’t happen. And, in fact, not so long ago they were, and it didn’t. If these problems become widespread, the antidote will present itself. “Youths,” in general, do what they can get away with, and don’t do what they can’t.
UPDATE: Reader Richard Kaul writes: “Minnesota has a shall-issue concealed carry law that’s worked well, despite the metro DFL’s prediction of street bloodbaths. But the law does allow establishments to ban concealed carry, and the Mall of America does so. Which is one reason I rarely go there. I figure I can go other places that choose not to make me an easy target.”
And reader Eric Klaus writes:
It wasn’t too long ago that when a plane was hijacked, the “expert” advice was to sit quietly and acquiesce. We all know how that worked out on 9-11.
Robberies and rioting youths are still in “acquiesce” mode. Things that can’t go on forever, won’t.
MORE ON THOSE UNDERFUNDED / OVERGENEROUS PUBLIC PENSIONS: Public retirement ages come under greater scrutiny.
After nearly 40 years in public education, Patrick Godwin spends his retirement days running a horse farm east of Sacramento, Calif., with his daughter.
His departure from the workaday world is likely to be long and relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life.
Such guaranteed pensions for relatively youthful government retirees — paid in similar fashion to millions nationwide — are contributing to nationwide friction with the public sector workers. They have access to attractive defined-benefit pensions and retiree health care coverage that most private sector workers no longer do. . . . With Americans increasingly likely to live well into their 80s, critics question whether paying lifetime pensions to retirees from age 55 or 60 is financially sustainable. An Associated Press survey earlier this year found the 50 states have a combined $690 billion in unfunded pension liabilities and $418 billion in retiree health care obligations.
Something that can’t go on forever, won’t.
HIGHER EDUCATION BUBBLE UPDATE: A Mortgage With Every College Graduation. “In order to have a healthy housing market you need to have a steady employment base and also a low level of distressed properties. Both of these prerequisites unfortunately are not applicable to the current economy. One albatross of future buyers is the now increasing burden of student loan debt. While virtually every other debt sector has contracted since the recession hit student loan debt is the only segment that has increased dramatically. . . . Just look at the data; in 2000 student loan debt was roughly 2 percent of all household debt. Today student loan debt makes up over 7 percent of total household debt. Many future buyers are going to have their purchasing power curtailed by the amount of debt they are carrying with student loans.”
Yeah, as I’ve been saying for a while, if you graduate college with the equivalent of a mortgage already, you’re not going to be so quick to take on another one.
And check out this graphic:
Others, equally disturbing, at the link. Moral: Something that can’t go on forever, won’t. This can’t go on forever.
RICHARD EPSTEIN: Why Progressive Policies Always Fail.
We have rigged our tax policies so that, depending on the year, close to 40 percent of the income tax revenue comes from the 1 percent of the population that controls 20 percent of the wealth.
Close to half the population pays no federal income tax at all. This is a political disaster in the making.
The American economy is currently stagnating for two main reasons. At the top of the system, a relentless program of redistributive taxation undermines incentives for long-term investment and growth.
Yet from this vain pursuit of economic equality, we get declining standards of living for all. Simultaneously on the ground, excessive regulation of labor and real estate markets chokes off growth — employer by employer and house by house.
Our lopsided structure cannot last. Stock market losses cut the total income of so-called “one percenters” by around 30 percent between 2007 and 2009, with the greatest losses in the top 0.1 percent.
Higher tax rates will drive that overall level of wealth lower still, given that so little government revenue comes from the bottom half of the income distribution. Low tax revenues plus shiny new entitlements create an unsustainable situation where 40 percent of current expenditures are funded by long term debt, on which principal and interest payments will soon come due.
Something that can’t go on forever, won’t.
HIGHER EDUCATION BUBBLE UPDATE: Law School Stimulus: $54.3 Billion Student Loans Through 2020. The graphics on graduate debt levels are just plain scary. Just remember: Something that can’t go on forever, won’t.
SOMETHING THAT CAN’T GO ON FOREVER, WON’T: CBO: U.S Deficit Ran $240 Billion For First Two Months Of Fiscal 2012.
SOMETHING THAT CAN’T GO ON FOREVER, WON’T: Americans’ Incomes Flat, Spending Up. Yeah, the returns on savings are — by design — nonexistent, but I don’t think we’ll get an economic recovery this way. Just call me one of these critics: “Critics say the Fed is punishing those who play by the rules — those careful enough to set aside money for savings or people who built up a nest egg and are living on fixed incomes that depend on interest.”
I repeat — if this were a Republican administration, the press would be full of sob-story reporting about senior citizens eating dog food because their CD rates are so low.
HIGHER EDUCATION BUBBLE UPDATE: Student Loan Debt Hits Record Levels. “The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. . . . Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what’s owed on home loans and credit cards.” Something that can’t go on forever, won’t. This can’t go on forever.
USHA RODRIGUES: Scamlaw: Paternalism vs. Prudence.
It is wrong for law schools to lie. About anything in general, and about placement statistics in particular. Wrong, wrong, wrong. I’m in favor of the Law School Transparency Project. Like I tell my students: lying is bad. Courts don’t like it, law schools shouldn’t do it, and you shouldn’t do it, either.
OK, now that we’ve gotten that out of the way, the gravamen of the LawScam beef seems to be that students are incurring crippling debt and can’t get jobs that will make that debt manageable. I think that this is a bad situation. I feel bad about it. Even though, as I blogged 2 years ago, I think that state law schools in general–and Georgia Law in particular–come out looking pretty good. . . . Law schools are a form of social sorting. If you likewise agree, that means doing away with T3 and T4 schools means doing away with access to the legal profession for a whole swath of people. Maybe most of them shouldn’t be lawyers in the first place. That argument has lots of resonance now–and forever if you think, like Larry Ribstein, that the legal market is permanently changing. But if the market shifts again, and lawyers are back in demand, then without these T3 and T4 schools, there will be a lot of people with their noses pressed up against the glass, clamoring to be lawyers and mad that they can’t be.
I’m inclined to agree with Ribstein, but this is a good point. Meanwhile, they’re having a whole symposium on the topic over at The Conglomerate, so just keep scrolling.
HIGHER EDUCATION BUBBLE UPDATE: In The Atlantic, The Debt Crisis At American Colleges.
How do colleges manage it? Kenyon has erected a $70 million sports palace featuring a 20-lane olympic pool. Stanford’s professors now get paid sabbaticals every fourth year, handing them $115,000 for not teaching. Vanderbilt pays its president $2.4 million. Alumni gifts and endowment earnings help with the costs. But a major source is tuition payments, which at private schools are breaking the $40,000 barrier, more than many families earn. Sadly, there’s more to the story. Most students have to take out loans to remit what colleges demand. At colleges lacking rich endowments, budgeting is based on turning a generation of young people into debtors.
As this semester begins, college loans are nearing the $1 trillion mark, more than what all households owe on their credit cards. Fully two-thirds of our undergraduates have gone into debt, many from middle class families, who in the past paid for much of college from savings. The College Board likes to say that the average debt is “only” $27,650. What the Board doesn’t say is that when personal circumstances go wrong, as can happen in a recession, interest, late payment penalties, and other charges can bring the tab up to $100,000. Those going on to graduate school, as upwards of half will, can end up facing twice that.
A fact of academic life is that the tuition-debt nexus keeps most colleges going.
Something that can’t go on forever, won’t. This can’t go on forever.
SOME WILL SEE THIS AS AN OPPORTUNITY: 1/2 Say Spending Cuts Will Lead To Violence. From the comments: “The half saying there will be violence is probably the same half that has their hand out.”
The threat of such violence is used by bureaucrats and various representatives of the looter/moocher classes to extract payments, of course. But it doesn’t matter. Something that can’t go on forever, won’t, and current expenditures can’t go on forever, so they won’t. If that leads to violence, then there will be violence. But I don’t believe that violence in a broke country with limited financial options and limited political patience will receive the same payoff as violence in a rich country with lots of options and extensive patience.
NEW YORK POST: So Who’s Playing Politics With The Debt?
The president went to great pains yesterday to stress that raising the $14.3 trillion debt limit “is not a vote that allows Congress to spend more money. . . . [It] simply gives our country the ability to pay the bills that Congress has already racked up.”
Washington spends more than it takes in — and that can’t continue.
Indeed, it was reported yesterday that the US Treasury now has an operating cash balance of $73.8 billion — $2.4 billion less than the cash that Apple, the computer giant, has on its books.
The reason is simple: Apple collects more cash than it spends. With Washington, it’s the other way around. And increasing Washington’s revenues via higher taxes does nothing to rein in spending.
Something that can’t go on forever, won’t. Debt that can’t be repaid, won’t.
SHOCKER: Investigation into APS cheating finds unethical behavior across every level. “Across Atlanta Public Schools, staff worked feverishly in secret to transform testing failures into successes. Teachers and principals erased and corrected mistakes on students’ answer sheets. Area superintendents silenced whistle-blowers and rewarded subordinates who met academic goals by any means possible.”
It’s basically Enron with your kids. The cheating is a big deal, but what the cheating was designed to cover up is the broader problem of an education system that’s failing miserably, doing much worse at educating kids than it did decades ago despite a massive increase in resources consumed. Is that a sign of a lower-education bubble? I think it might be. “Steady increases in per-pupil spending without any commensurate increase in learning can’t go on forever. So they won’t. And as state after state faces near-bankruptcy (or, in some cases, actual bankruptcy), we’ve pretty much hit that point now.”
THE ECONOMIST: Higher Education Bubble: Blowing Up Grad School. More here. “The ultimate benefit seems to be a substantial wage premium, and comparisons of that premium to average levels of tuition or incurred debt make college look like an incredibly good deal. The tricky thing is that there may well be an identification problem: it could simply be the case that students who go to college earn more, because the types of students that go to college are the types that have characteristics (intelligence, discipline) that translate into higher earnings. University degrees could simply be expensive signaling mechanisms at best, in this world, and massively wasteful cultural institutions at worst.”
Related: Down To Business: Higher Education Is Ripe For Technology Disruption. “If you think online degrees will remain just a niche, consider the time when Borders and E.F. Hutton were touting their superior in-person experiences.”
Or is it really a student loan bubble?
What can’t go on forever, won’t. The increases in tuition and indebtedness we’ve seen over the past couple of decades can’t go on forever, so they won’t.
OBAMA TO SPEAK: Reader David Wegener writes: “NBC has had two crawls during Celebrity Apprentice that Obama intents to make an important announcement. Is he actually planning on preempting the end of tonight’s show?”
Here’s a report: “House Intelligence committee aide confirms that Osama Bin Laden is dead. U.S. has the body.” Well, good. Better late than never. Alas, since I don’t have working TV, I won’t be able to watch.
And reader Dan Mason writes: “Usama Bin Laden dead — Obama capitalizes on the continuation of another program started by the Bush administration.” First Gitmo, now this? Well, I approve. But, then, a warmonger like me would, I suppose.
UPDATE: It’ll stream live here.
And Jody Green writes: “We have the body? What now? This will be interesting. What do we do with it. Put it on trial in NY? Send it to the Royal Family? Send it to Gitmo? Just curious.” On Facebook, Dana Loesch was suggesting we exhibit it Mussolini style. Of course, if he was killed by a missile there may not be much to exhibit.
Plus, thoughts from Austin Bay: “Would that we had him in Fall 2001. However, time has worked against Bin Laden. He dies tarnished. A man who hides in a cave for ten years is no martyr. He quickly lost the aura of divine sanction — he was driven out of Afghanistan, and the US stayed. Moreover, the US took its counter-terror war into the heart of the politically dysfunctional Arab Muslim world. What’s the choice between tyrant and terrorist? Iraq provides a choice. Al Qaeda made Iraq a battleground and lost — lost to the Iraqi people and the US.”
Also, thoughts from Pejman Yousefzadeh. “I am more than happy to give the Obama Administration–and the Bush Administration before it–plenty of credit for having designed and implemented the military operations that brought about bin Laden’s demise. Here’s hoping that he didn’t die quickly after the mortal blow landed.”
And a reader emails: “This is why we continue to use drones in Pakistan.” [LATER: Well, it wasn’t a drone, apparently.]
Much more here.
And on Facebook, Rick Torres comments: “(Has) Been Laden.” Plus, Frank Warner emails: “ESPN is running the Mets-Phillies game in Philadelphia. Minutes ago, here in the cradle of liberty, the fans started chanting, ‘USA! USA!’ You know why.”
Meanwhile, reader Shane Boyd cracks: “When do we get to see the long form death certificate?”
And he didn’t preempt Trump, because he still hasn’t come on. Hurry it up, man. I’m going to bed soon.
Plus, from Rick Moore on Facebook: “Reports are Obama’s speech is being delayed because the CIA is still trying to notify bin Laden’s next of goat.” Cheap, but still funny.
And Debbie Eberts emails: “Interesting that Petraeus was tapped for the CIA about the time OBL was actually killed.”
And Bigwig emails: “Not to be a wet blanket, and I’m glad he’s dead…but isn’t it a mistake have the President of the US schedule an unprecedented Sunday night speech just to announce his death? Won’t that just burnish Osama’s status even more as far as the Islamists are concerned?” Meh. His status is Room Temperature. I don’t mind underscoring that.
Jake Tapper tweets: “Sources say OBL killed at a mansion in pakistan, human mission, shot, US has the body.” A mansion in Pakistan? That raises real questions about Pakistani complicity with Osama. Stay tuned for the followups, I guess.
And Prof. Stephen Clark emails: “With Bin Laden dead, on to al-Zawahiri. I hope the President takes the opportunity to make clear – abundantly clear – that regardless of the administration, this country’s policy is now and forever will be to hunt these bastards down, every last one of them; that they will be killed in the field, or brought to justice in this country – and that either outcome is satisfactory.” Well, if he ever comes on, maybe he will. I can’t wait much longer.
Will there be any complaints from the usual lawfare types?
MORE: He’s on now.
Good speech so far. Interesting that Obama referenced Bush in a positive way here, which has not been his pattern of late. And he pretty much picked up on Prof. Clark’s point.
And it was nicely short and to the point. Well done.
And Bill Hobbs tweets: “Dude who nailed bin Laden will never be ‘one-upped’ anytime he’s in a group swapping war stories.”
JIM MANZI: CHANGE IS COMING:
If you had asked me at a New Year’s Eve party in 2006 what I thought the odds were of the U.S. government taking a controlling interest in the largest bank, the largest car company, and the largest insurance company in America, I would probably have laughed at you. Yet within 36 months, this is exactly what had happened.
My friends who are more liberal than I probably should not make the analogous mistake of imagining that benefit reductions that seem absurd politically right now might come to seem less absurd, and surprisingly quickly.
If you think about it, any real solution to the federal deficit problem is currently politically impossible; yet we know mathematically that, barring a productivity miracle, the situation cannot persist indefinitely. Therefore, we know that some change that currently seems politically impossible is all-but-certain to happen sooner or later.
Something that can’t go on forever, won’t.
STANDARD & POOR’S TREASURY DOWNGRADE: The rating agencies are always the last to know. “As in the case of Enron, the smart money gets gone long before credit downgrades start hitting the headlines. As noted in this column, PIMCO, the world’s largest bond fund, got clear of U.S. Treasuries some time ago, following the lead of a number of hedge funds. The oil-exporting countries are dumping U.S. debt, too. Perhaps they know something we don’t?”
UPDATE: Inflation-adjusted federal spending per capita. “A hundred years ago, federal spending for each person was the equivalent of $200 in today’s dollars. After FDR, with all of his massive public spending, it was $1,000. This year, it’s over $12,000. How long can this continue?” Not much longer. And if something can’t go on forever, it won’t.
HIGHER EDUCATION BUBBLE UPDATE: Liberal Arts Heading For A Crash?
Our business model is built on all kinds of assumptions that don’t hold anymore,” said Richard Holmgren, associate dean and CIO at Allegheny College. “Over the last 40 years of the last century, we built a model based on the assumption that net revenues per student would go up every year.…We have a culture built on that assumption,” Holmgren said. “Over the last 10 years, we’ve been struggling because net revenues have been flat.”
None of the participants in the daylong business-model workshop that followed seemed to dispute the basic premise that liberal arts programs are plagued by twin threats of inertia and economic unsustainability. To make matters even more grim, one self-described envoy of “the corporate world” — Kit Stinson, a vice president at the telecommunication giant Avaya — spoke up early on in the conference to testify against the truism that liberal arts graduates make for more creative and critical-thinking workers, setting off a parallel discussion about whether today’s incarnation of liberal education, sacrosanct to many, actually increases students’ employability outside academe.
Something that can’t go on forever, won’t. Plus, bringing tuition shock home: “Eugene Tobin, a program officer at the Andrew W. Mellon Foundation and former president of Hamilton College, agreed that faculty members tend to hold relatively unsophisticated views of the business of higher education until their children begin applying to college.”
INDEED: Normal Interest Rates Would Be A Disaster For U.S. Debt. “And that’s why the Federal Reserve is buying U.S. Treasuries. If they didn’t, the U.S. would have to pay higher interest rates on its debt, and we can’t afford to. None of this can go on forever.” Something that can’t go on forever, won’t.
TYLER COWEN: The Fiscal Illusion: “As we fail to make progress on entitlement reform with each passing year, Professor Buchanan’s essentially moral critique of deficit spending looks more prophetic. We are fooling ourselves most of all. United States government debt in public hands is now more than $9 trillion, but most people still don’t realize what it will take to pay that off. . . . The famous Keynesian rejoinder, ‘In the long run we are all dead,’ is less comforting when that long run comes into sight.”
Something that can’t go on forever, won’t. That’s going to be the theme for this decade, I suspect.
SUDDENLY NOTICING REALITY AT THE NEW YORK TIMES: State Workers and N.Y.’s Fiscal Crisis.
At a time when public school students are being forced into ever more crowded classrooms, and poor families will lose state medical benefits, New York State is paying 10 times more for state employees’ pensions than it did just a decade ago. That huge increase is largely because of Albany’s outsized generosity to the state’s powerful employees’ unions in the early years of the last decade, made worse when the recession pushed down pension fund earnings, forcing the state to make up the difference.
Although taxpayers are on the hook for the recession’s costs, most state employees pay only 3 percent of their salaries to their pensions, half the level of most state employees elsewhere. Their health insurance payments are about half those in the private sector. . . . To point out these alarming facts is not to be anti- union, or anti-worker.
Do tell. If something can’t go on forever, it won’t.
UPDATE: Related thoughts here. Things that can’t go on forever, won’t.
GREG BEATO: The More We Spend On Higher Education, The More We Spend On Higher Education. Things that can’t go on forever, won’t. More: “In the face of the Internet and other technologies that have made information and instruction cheaper and more accessible than ever, you might have predicted that the ever-expanding multiversities of the 1980s and 1990s would suffer the same fate as the music industry and the newspaper business. Instead, scope creep has functioned as an ingenious survival mechanism. . . . It’s true that for-profit institutions are raking in huge profits in large part because of federal subsidies. (The CEO of the holding company behind Strayer University made $41 million in 2009.) But it’s also true that few if any for-profits are using federal money to finance lengthy sabbaticals for high-paid professors who teach a handful of classes a year, or the athletic pursuits of undersized linebackers who should have hung up their cleats after graduating high school. Non-profit institutions of higher learning have been using federal money to make sure American college kids are the tannest, best-fed, most vigorously administrated students in the world for decades now. For a little extra credit, our elected officials should start holding them more accountable too.”
WORRIES ABOUT THE GROWTH IN “populist resentment of public employees.” Now where could that come from? Something that can’t go on forever, won’t. The current system of public finance can’t go on forever.
POINTS AND FIGURES: Is There An Education Bubble? Things that can’t go on forever, won’t.
DIRE STATES: Deep in debt, most governors will have to either raise taxes or cut spending— exactly what not to do when recovering from a recession. For most, the spending cuts are going to have to take priority. “Neither taxpayers nor bondholders will fund ever-increasing spending. It can’t go on forever; it will stop.” Yes, that rule from Herb Stein — things that can’t go on forever, won’t — is the defining rule of this age.
AN END TO THE EURO? “I hear all the reasons that this has to muddle through. But I remain worried. Already, I am not hearing great things about the German economic team; the economists are having a harder and harder time persuading the politicians that this is a good idea and the voters are getting madder and madder. Angela Merkel is fiercely resisting expanding Europe’s emergency fund. Meanwhile, so are voters in Ireland who don’t see why they should have to pay through the nose to bail out foreign banks. As Herb Stein said, if something can’t go on forever, it won’t. And this can’t go on forever.”
DO YOU THINK? “The ongoing increases in college tuition and fees make the housing price bubble seem pretty tame by comparison, and we should therefore be very concerned about the possibility that we might now be facing an unsustainable higher education bubble.” If something can’t go on forever, it won’t.
IN RESPONSE TO MY EARLIER PRINTER BLEG POSTS, READERS WRITE IN: Reader Rob Ives emails:
I have a small HP wireless laser printer (1022nw) which has been great, but I think the low priced Samsung wireless printers (I have one at home) are impossible to beat. The prices are so low they are hard to believe. Just try “Samsung laser printer” at Amazon.
You mean like this? Reader Tom Armstrong emails:
Epson R series. I bought an R300 a couple of years ago on eBay for $40 (newer model R340 is available for <$75 on eBay). It prints directly on CD’s which is handy on occasion and does a decent job printing photos. But most of all, there are vendors selling generic ink (again on eBay), for less than $2 per cartridge. It has separate cartridges for each color so you don’t throw away the whole color cartridge because you’re out of blue. I buy a case of 24 (6 of each color), for $35, free shipping. And the ink quality is as good or better than Epson ink. It’s a really good “throwaway” printer.
Reader Martin Pease writes:
I am in charge of supporting a remote sales force. The single biggest technical problem I encounter is printers, and the main culprit is HP. Drivers that don’t work right, tons of crapware installed from the CD, dozens of services installed in Windows… For my own personal printer, I bought a Brother MFC-J630W multifunction printer. It has wired, wireless and USB for connectivity, it installs a minimal set of software, and it just works. I am recommending Brother printers to all the people I support over HP models. They tend to be a bit cheaper, too.
I’ve had good luck with HP in the past — my early-1990s LaserJet 4L still works — but they seem to have cut quality lately. And there’s an InstaPundit bonus. A reader emails: “Good news! You recommended Brother wireless laser printer has been reduced on Amazon to $99! Can’t beat that!”
Meanwhile, William Stoddard is bucking the HP-haters: “For Michelle Dornath-Mohr’s benefit, I’d like to say that I’ve been buying and using Hewlett-Packard printers and multifunctions for years. I traded in my previous HP printer for a multifunction early this year, not because it had stopped working, but because it was no longer possible to download a printer driver compatible with my current operating system; they seem to last forever, and at least for inexpensive models, the output quality is pretty good. My new multifunction has full wireless capability, which is handy. So I recommend looking at HP.”
And Jonathan Bailey writes:
I just delivered my oldest daughter to UofA in Tucson and I bought her a Canon Pixma MP560 that cost about $150 ($50 after Apple rebate). It’s an all-in-one unit that prints, scans, copies and faxes. Canon has one tank of ink per color, so using up one color doesn’t require you to by a whole new cartridge, just the color you are out of at roughly $12.00. Also, the scan feature of Canon printers and scanners create multi-page PDF files, unlike HP all-in-ones that create a separate TIF file for each page. I use an HP for work (at home) but find I need to use the Canon on the family computer to scan documents (frequently), meaning I do a lot of running back and forth between computers with a thumb drive. Can’t speak for the other printer
brands out there but I’m happy with the Canon.
Hope this helps. The Canon is showing at just $79.99 at the moment, so that’s pretty cheap.
TIM CAVANAUGH: “Bernanke is now entering the second of two hot dog-eating competitions, but in this round buns and condiments are included. Much as I’d like to say this is going to be the hot dog-eating competition where somebody actually explodes, I think Bernanke will pull it off. The world hasn’t lost its taste for American debt, and America hasn’t lost its taste for running it up. Yes, yes, it can’t go on forever, but for the Fed’s purposes it only needs to go on until they can claim the Great Repression is over and have somebody believe them.”
A MILLENNIAL CRI DE COEUR: InstaPundit reader McKean Evans emails in response to this Michael Barone post:
I’ve read your blog nearly every day since I was in high school (class of ’04), when the 2000 election disputes and 9/11 really woke me up to the world of politics, and while I haven’t always agreed with you about everything, this is the first time I’ve felt compelled to write to you. So let me say in advance that for about ten years now I’ve been an avid reader and for the most part, very much appreciated what you’ve had to say. I’ve done my very best to avoid ranting and to produce a courteous and reasonably concise statement of why, longtime reader that I am, I’m frankly quite angry with some of your recent postings. Of course, you’re the one with the blog, you’ve got the right to your opinion, and it’s an opinion that I’ve had a great deal of respect for for a long time, so all I ask is that you think about what I have to say in the future.
There’s been a real trend in the blogosphere lately, among people with a variety of different views, to make arguments which run something along the lines of: “the Millennials are lazy, they had everything handed to them on a silver platter, they’re the byproducts of the cult of self-esteem and they’ve never had to work for anything before now, so why should we care if they have trouble finding work right out of school?” Now don’t get me wrong, I’ve always found a lot of what seems to characterize my generation as fairly repellent (Exhibit 1: /Jersey Shore/), and I think that there are a lot of very valid, very important criticisms to level at the the way in which our society has extended adolescence into (apparently) perpetuity, not to mention the wisdom of borrowing yourself into six figures of college debt. However, this new trend of shamelessly and self-righteously laying into 20-30 year olds who, for example, are forced to move back home after graduation because they can’t get a job, or who are forced to remain on their parents’ health insurance, is just counterproductive. Moreover, it’s incredibly insulting. New college graduates are among those most impacted by the recession, and they’re in the worst position to handle unemployment. We don’t have savings, or CD’s, or a 401(k), or home equity to fall back on. What we have is our parents. And make no mistake, nobody, but nobody, is excited to move back home with the folks.
Now of course it’s tempting to make the point that most of us wouldn’t be in this position if we hadn’t borrowed so heavily for school, and that’s absolutely a valid point. That’s a discussion that absolutely has to happen in our society. But it’s completely unjust and inappropriate to simply tell everybody who graduated in the past two years, who still can’t find steady work, that it’s their own damn fault. We weren’t of voting age when Congress decided it was a great idea to undermine the housing and financial sectors, by giving huge home equity loans to persons with no capacity to ever repay them. You wouldn’t have found us among those who blindly followed the financial gurus of the late 90’s and early aughts, who just /knew/ that you could buy a house and that its value would increase forever. You definitely wouldn’t have found us working for the UAW, while the unions bled the heart of the manufacturing sector dry over the past thirty years.
But I’ll tell you where you would have found us over the past ten years, while the stage was being set for everything to go to hell. We were at school, in the library, doing exactly what we were supposed to be doing. And if there’s one great sin of my generation, it’s that we blindly listened to everything that our parents and teachers told us about the value of a college education, of a “liberal arts” degree, and the risks of heavy student loan debt. To grow up in the late 1990’s and in the aughts was to be constantly inundated with the importance, the absolute necessity of Almighty Higher Education. I started hearing about planning for college when I was around 13, and my parents were comparatively very laid back. For the vast majority of people who are now in their 20’s, adolescence wasn’t about anything at all but getting in to college. Our teachers talked about College the way that Churchill talked about Victory. I’ve long argued that the reason why popular culture among young adults today is so obnoxiously, insufferably adolescent is at least partly due to the fact that we were never /allowed/ to be adolescents. You didn’t play sports or write for the school newspaper or volunteer at the soup kitchen because you wanted to, you did it to pad that college application. I can’t tell you how many times I was told, point blank, that the way to success was to get into the best college you could, and borrow as much money as you could to pay for it. Of /course/ college was worth six figures in debt. To even ask the question was unthinkable for most of us, because we had never been allowed to consider the possibility that it might be otherwise.
So now we’ve just graduated, and the fact is that there are simply no jobs. I myself graduated in May from a very competent, middle-of-the-road law school, and probably around 75% of my class is unemployed. And I can tell you first hand that none of them are happy about moving back in with the folks. They’re not doing it because they’re too lazy to support themselves, they’re doing it because they’re looking at 150-200k in student loans and no employment. When I say “no employment” I don’t mean a lack of big-law, 100k associate employment. I don’t even mean that we’re having trouble getting the clerkships and government jobs that the ivy league law schools so despise. I mean nothing–there are simply no jobs.
Did my generation grow up with unreasonable expectations about life, employment, and the value of a degree? Absolutely. But before you’re so quick to judge us, please remember that for the vast, vast majority of our admittedly short lives, we worked intensely hard to do what we were told was the right thing to do, the only thing to do, by absolutely everybody in authority. The worst you can really say about us is that we did what we were told when we were children.
Yeah, it’s a really tough jobs environment out there right now. And Barone’s comments, while correctly observing a trend, are somewhat at odds with his book Hard America, Soft America, which says that America has the worst 18-year-olds and the best 30-year-olds in the industrialized world.
UPDATE: Reader James Ruhland emails: “The best reply a Boomer can give to McKean Evans comes from Animal House: ‘You f’d up. You trusted us.'”
ANOTHER UPDATE: Reader Douglas Landrum writes:
My heart goes out to McKean Evans. My son just graduated from college – a very tony private school and his Mom and I footed the bill. Our son is still on the payroll – to our chagrin. The rap that Millennials are lazy or had everything handed to them just isn’t so. I think they will be the next greatest generation. They see the ultimate greed of the Boomers (of which I am ashamed to be one). We are the greediest generation. We expect to have our Social Security and Medicare too. We expect to benefit from Obamacare – or so the predominant liberal core of the Boomers do – all at the expense of younger generations. My son has degrees – business marketing major and studio arts minor. He has no job in his field. My son is an ocean lifeguard and delivers pizzas. I am sure he would work as third job if he could find it. These kids will mature up tough and savvy. They will also allow us to be death paneled out of their lives. Don’t under estimate their grit.
Well, the death-paneled-out thing doesn’t sound so great. Meanwhile, Charles Austin writes:
He has it down pat, the whole it’s somebody else’s fault but mine. But as their expectations of the high paying career they are entitled to are smashed between the Scylla of debt as far as the eye can see and the Charybdis of progressive nanny-statism and they are forced to move back home to stretch their adolescence out just a little farther, is it fair to say the chicks are coming home to roost?
I graduated in 1981. That too was a tough job market. If anything really does annoy me about this kind of commentary it is that they think it has never happened before and that they are a special case worthy of special treatment.
The Carter generation vs. the Obama generation. I think the latter has it worse, personally. At this point, a Carter rerun would be an improvement.
MORE: Reader Steve Poling writes:
Your post http://pjmedia.com/instapundit/101267/ is one of those rare, long ones that always pique my interest. I don’t think the millenials are lazy, but they may have been misled, victims of educational malpractice. If you have an entire country in which nobody learns how to create value, you should not be surprised if nobody has a job. There will be work for lawyers as long as human nature is as it is. Plumbers, electricians, mechanics, cooks and barbers will also be needed as long as people use such things, get hungry or have hair that grows.
However, a sizable portion of the academy has been diverted into useless endeavors. How many religion and gender studies majors does this nation need to keep America strong and prosperous? How many fill-in-the-blank studies departments exist to provide sinecures to politically connected fellows whose core competency is railing at cops and drinking beer with the President? If your college major teaches you how to create trouble for others, I’m happy when you can’t find work. Conversely, if you can make something besides trouble, then I hope you’ll create value for yourself and for society.
My daughter graduated from Michigan’s Engineering school last year and turned down a job offer in lieu of graduate study. When she finishes her Masters next month, she’ll be able to find work at several places worldwide because she picked a useful major.
Well, creating value is less rewarded than it used to be. And people tend to flock to things that are rewarded. And reader Robin Tillings writes:
I think the themes of your posts yesterday are at a confluence. McKean Evans’s email was a convincing argument for teaching critical thinking skills, which might seem to be in the realm of school curriculum, but really falls into parental responsibility.
Evans is correct that our society emphasizes the roll of higher education as a gateway to a better living. But, as you pointed out in that link to the WP article about college grads going into the trades for a more secure future and readily available jobs, reality intrudes when parents offer their kids the sink or swim choice. Somehow, I don’t think young Mr. Evans is envisioning a future of plumbing despite his dismay at living at home post-college, but that might change if Mom and Dad were asking for rent and utilities money.
My husband and I both hold degrees in liberal arts from good schools and graduated into the 1990 recession. My parents wisely counseled graduating without debt ( Dad a conservative after all), which was the best advice they ever gave me as we had to work a lot of unpleasant jobs to pay the rent post-graduation, a turnip farm one summer being the most memorable and unpleasant. My husband learned the trade of fine cabinetry and construction, which has been extremely lucrative and allowed me to be a stay at home mom and homeschool our eldest. Every valuable skill my husband has in his proverbial toolbox, he learned himself or on the job, and even in this deplorable job market, he landed a wonderful job when his own business went sour with the housing market.
While it’s nice to tell acquaintances in our Ivy League town that we have college degrees (fits the snob appeal), the truth is I’m not sure I’ll counsel my children that college is the single path to success, despite cultural pressure. Self education is a wonderful journey and what we’ve learned on our own stumbling path is that demonstrable skill sets and a strong work ethic trump degrees for most careers. These days it seems that college degrees are paying for a title and a Rolodex of contacts, which can’t be dismissed as unimportant, but should be placed in context of the big picture. Would you pay $100K for a list of names?
Well, I suppose it depends on the names. But point taken. Another reader emails:
I’m a member of Gen-X and have found that the baby boomers seem to claim that any subsequent generation to theirs is lazy and shiftless. I’m firmly of the belief that the boomers project their own vices upon subsequent generations without any true understanding of the wreckage that they’ve left in their wake. Our generations have been starting the career ladder facing higher college debt, higher rent/housing prices, and older employees who have benefited from improvements in health care and don’t intend upon retiring from their well paid perches. From a Gen-X perspective, we have been judged by how much less our generation has produced despite the fact that *per*capita* we’ve outperformed the baby boomers, there are just fewer of us. I’ll bet that the millenials will be at least as productive as we, and there are more of them. The baby boomers should be singing our praises in the streets, for without our industry *and*tax*dollars* that is where they’ll be in their twilight years.
A BLU-RAY PLAYER THAT CONSUMER REPORTS RATED “BEST BUY” for well under 200 bucks. Lots cheaper than the one I bought. And this check-rated model from Sylvania is just $119.15. They’ve become commodity items, I guess.
UPDATE: Reader Matthew Moss writes:
For $127.99, you are buying yourself a lot of headaches. Firmware updates have to be done by CD. Load times are forever, quality is at best Okay. And not to state the obvious but look at the price, it is the equivalent of less than four Blue Ray discs. If you can only afford that, you can’t afford to go Blue Ray.
At $220.00 you can get something with LAN connectivity and Netflix online, plus Youtube and few other features you’ll probably never use. If you want a Netflix hub, this the way to go.
But if that isn’t important to you, then why jip yourself? Get a Sony PS3, top of the line Blu Ray player and the best gaming console currently out there. Price? Same as the Magnavox.
Wow, those have gotten cheaper.
WORRIED ABOUT DEBT? This chart won’t make you feel better. But remember — if something can’t go on forever, it won’t.
RICH KARLGAARD: The Coming Blue-State Collapse. “Collapse” may be too strong a term — though with the pension and health-care overhang maybe not — but the rule is that things that can’t go on forever, won’t. And what’s going on in a number of these states can’t.
NICE WORDS: A reader emails: “Your coverage of the post election period is almost making things fun which would otherwise have been depressing. Wonderful.”
Well, we have to take our fun where we can find it — or make it. And while I favored McCain as the lesser evil, since the election his camp has been working overtime to make sure I don’t feel too bad about his loss. Thanks, guys!
Meanwhile, instead of moping that “we blew it,” I’d encourage Republicans and others on the right to look to the future and figure out how to advance the cause of small government and liberty. As a first order of business, I’d suggest focusing on Congress. Unlike Obama, the Democratic leadership is already serving, and already screwing up. Chris Dodd alone should provide endless entertainment, and opportunities to point out dishonesty, hypocrisy, and malfeasance. Can we see just how low they can take Congress’s approval ratings?
Then there’s Joe Biden. They can’t keep him under wraps forever! And once he’s out of the Senate, can we please try to repeal his dumb R.A.V.E. Act?
So be of good cheer. There’s useful stuff to do, and fun to be had doing it. This is the blogosphere — if you’re not having fun, you’re doing it wrong!
ERIC S. RAYMOND: Timing the Entitlements Crash. “The fundamental problem is that income-transfer programs (and the interest service on the debt purchased to keep them running) are spending wealth in higher volumes than the economy can actually generate, and demand for that spending is rising faster than the economy is growing. Thus, raising tax rates is no longer a way out, if it ever was.” Remember, if something can’t go on forever, then it won’t.