The Elephant in the Room

I see that Steve Chapman noticed the same thing I did about Gov. Rauner’s first State of the State address:

Bruce Rauner, the new Republican governor, gave a State of the State address Wednesday that mysteriously failed to address the state’s huge public employee pension debt. It’s like a biography of George Custer that omits Little Bighorn.

The chance of success is about as small as Custer’s. Illinois has a bigger unfunded obligation than any state in the country, exceeding $100 billion and, by some estimates, as high as $250 billion. It has attained that distinction by failures like skipping contributions and assuming the economic good times would never end.

He concludes:

Rauner has talked about moving state workers into defined-contribution 401(k)-style pension programs. But that option does nothing to lighten the vast obligations that have already been incurred. And there is a good chance the state courts would disallow it because it would leave these workers with something less than they were promised when they were hired.

Nearly every state has followed the same basic policy of making promises today and letting someone figure out how to pay for them years from now. Illinois may be on the road to ruin, but it’s just the lead car in a long parade, passing every exit.

As I have been saying for some time the courts are likely to reject any plan from the state legislature that requires paying present public workers less than they were promised other than in a bankruptcy proceedings, something that would be unprecedented at the state level. Illinois has a limited array of alternatives: higher taxes which will be paid by fewer individuals and companies since both are leaving the state at a rapid clip, greater economic growth which it’s hard to see happening with a legislature whose only solution is raising taxes or a nationwide boom that doesn’t appear to be materializing, or cutting everything else the state spends money on as far as is necessary, possibly to zero.

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Where Do You Draw the Line?

Let me start this post with a confession. Just about everything that Fareed Zakaria (or Tom Friedman for that matter) writes nettles me. Given that confession, I have a question about Mr. Zakaria’s most recent column:

The many recent acts of terror committed in Europe don’t have behind them a coherent strategy. But they could make European governments and people treat all Muslims in Europe as suspicious and dangerous — and then the jihadis and terrorists will have achieved an important goal.

He’s warning against overreaction.

Here’s my question: where do you draw the line between reaction and overreaction? There is an English language adage that’s at least a half millennium old with which Mr. Zakaria may not be familiar: give him an inch and he’ll take an ell. Under-reaction promotes further aggression.

I have made no secret of my opinion that we reacted wrongly in response to the attacks on 9/11. However, it was not an overreaction. An overreaction would have been, as I heard asserted in the aftermath of the attacks, that we should nuke every Arab capitol.

If anything invading Afghanistan and Iraq and taking the measures towards security at home and stopping the financing of terrorism abroad were an underreaction in that they did not accomplish the objectives they were purportedly intended to accomplish. So here’s my reaction: how you draw the line between a reaction and an overreaction?

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The Lady or the Tiger?

Peter Berkowitz makes a point that I hope is not lost in the shouting. At some point the American Left will need to choose between multiculturalism of the sort that not long ago led President Obama to draw a strained equivalence between European Christians a millennium ago and DAESH today and the defense of freedom, justice, and victim peoples:

To March’s argument that as a leftist, Walzer should forthrightly oppose the massive state violence directed at the Islamists, Walzer responds that “the left-wing anti-communism of Dissent in its early years” was subject to analogous criticism. But many of those who apologized for or defended Stalin, Walzer trenchantly observes, “went on to defend or apologize for third-world dictators who call themselves anti-imperialists and for terrorists who call themselves liberators — and now for Islamist zealots.”

While March prefers to dwell on the crimes of the West and boasts of his belief in reform arising from within the Islamic world, Walzer counters with a hard fact: “the America he [March] excoriates is right now the only force effectively opposing or, at least, containing, the power of ISIS and therefore the beheadings and the mass executions and the enslavement of Yazidi girls.”

Which will it be? The lady or the tiger?

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A Competitive Race

Larry Sabato et al. point out what should be obvious—that regardless of who the Democratic or Republican presidential nominees are it’s likely to be a competitive race:

It appears that the GOP will have one of the largest, and probably the largest, field of candidates in modern presidential history (while Democrats have one of the smallest). Intense competition can invigorate a party, but the dangers of corrosive factionalism are substantial—and the current Republican Party is faction-ridden.
All that said, some might put a pinkie on the scale for the GOP at this very early moment. Why? Primarily because American politics is cyclical, and our recurrent history makes an argument for turnover at 1600 Pennsylvania Ave.
Running for a third consecutive presidential party term probably does exact a penalty on the incumbent’s party. Dan McLaughlin, writing at the conservative website The Federalist, looked at the 11 elections conducted since the end of the Civil War when there was no incumbent on the ballot and an incumbent had been reelected in the previous election (which is what we’ll have in 2016). He found that the incumbent party lost an average of 6.9 percent of the two-party vote in the next election. So, subtract 6.9 percent from Obama’s 2012 share of 52 percent, and the Republican wins the presidency quite easily—though in today’s polarized America such a significant shift from one election to the next doesn’t seem very likely.

In the post-war period once having elected a president except in the case of presidents who are obviously poorly-suited for the job, e.g. Carter, Americans are predisposed to re-elect him but not predisposed to award the president’s party a third term however qualified the candidate put forward might be.

That doesn’t mean that the Democratic candidate will inevitably lose or the Republican candidate inevitably win. It means that if the Democrats put forward a strong candidate whether the Republicans have a strong or weak candidate it’s likely to be a competitive race and if the Democrats put forward a weak one it could turn into a rout.

Over the next two years I think we’re likely to hear a lot of attempts at defining weak as strong and vice versa but I hope that Democrats don’t kid themselves into believing that whatever candidate they put forward is a shoe-in. It ain’t necessarily so and history suggest it is not so.

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I Wish He Hadn’t Said That

With friends like Dean Obeidallah, Islam does not need enemies. In a post at The Daily Beast he writes

Look, there’s no such thing as “radical Islam.” There is only one Islam. But there are radical Muslims. And there are Muslims who engage in terrorist acts

There are plenty of other bloopers in the post but that’s the one that nettled me. Consider this from Pew Research on opinion in the Muslim world:

In most countries where the survey asked Muslims questions about religious extremism more than 75% say suicide bombing or other violence against civilians is rarely or never justified.

But substantial minorities in several countries think violence against civilians is at least sometimes justified

In Egypt, a country with a population of 82 million, that minority numbers about 24 million people. In Bangladesh, a country of 156 million, the number is 41 million. Using rough numbers of about a quarter of the total number of Muslims in the world that would mean that about 400 million Muslims believe in using violence against civilians. If even 1% of those who say that are willing to put their beliefs into practice that means there are 4 million “radical Muslims”. And that’s assuming that those who say they oppose the use of violence are telling the truth. The phenomenon of people telling pollsters what they think the pollster wants to hear is well-documented.

If anything that supports the view that those in the West who are alarmed about violent Muslims are being prudent.

His example from the United States is the Klu Klux Klan. Is he seriously contending that a quarter of Americans today sympathize with the KKK? That requires more than a blithe assertion. I think it’s a baldfaced lie.

Additionally, I think that there’s a debate going on in the West. If there is only “one Islam” but a substantial proportion of Muslims profess a belief in political violence to achieve their ends, how is that to be reconciled with the claims of the others that they don’t? If those who don’t refuse to characterize those who do as unIslamic, what should we believe?

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Who Bears the Risk?

In Megan McArdle’s most recent post, on the gap between the jobs that millennials want and those that are available, she nibbles around the edges of an important insight without apparently realizing it:

Millennials don’t want to work in sales, reports the Wall Street Journal. They think it’s exploitative. They also hate the idea of variable compensation; they want a nice, steady job where the company takes the risk, not the worker.

The insight is not that millennials don’t want to work in sales. It’s that they are risk averse. That explains a long list of issues including the very low rate of new business formation.

Who bears the risk? That’s a question that underpins a lot of the pressing questions before us from healthcare to education to foreign policy to the nature of work. Companies aren’t training their employees because they want to offload that risk onto their employees; people aren’t moving for jobs they way they used to because they don’t want to bear the risk. The UAE has stopped participating in the bombing runs against DAESH because they think the risks to their pilots are too great. That’s also the issue behind President Obama’s plan for funding higher education: he wants to offload the risk from the millennials to somebody else.

Before you ask me to bear your risks, the very first question you should ask is what’s in it for me? I already know what’s in it for you.

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Other People’s Problems

What continues to baffle me about our foreign policy is that what’s garnering the most attention are other people’s problems while we continue to ignore the problems that we have with other countries that are distinctly our own.

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Changing the Subject

The reaction of the editors at Bloomberg’s reaction to the recent Republican healthcare reform plan reminds me of one of Samuel Johnson’s famous wisecracks: “Sir, a woman’s preaching is like a dog’s walking on his hind legs. It is not done well; but you are surprised to find it done at all.”

I don’t have any particular fondness for the Republicans’ plan. I do wonder when the Democratic talking point will change from “they don’t have a plan” to “their plan doesn’t add up”. Maybe that won’t be the line of attack since it might highlight the reality that the PPACA doesn’t add up, either. How about “look at how many people will be hurt!”

It will change the subject, though.

My objection to the Republican plan is the same as the reason for my disappointment with the PPACA: neither one addresses the most pressing problem with healthcare, i.e. the increase in the cost of healthcare continues to outstrip the increases in revenues and the increases in income which practically by definition means it’s not affordable. As Uwe Reinhardt put it, it’s the prices, stupid.

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Opportunities Wanted

I think there are problems with Mike Cassidy’s interpretation of the seeming conflict between the large number of unemployed and the large number of job openings:

In other words, based on historical patterns, we’d expect the level of job openings we see today to produce a lower unemployment rate than the one we have. The job market should be better than it is. –

This disconnect — persistent unemployment and underemployment despite lots of vacancies — has fueled debates among economists. Some see it as proof that the workforce lacks the skills employers value, while others take it as evidence that demand for the products and services American companies make has not recovered as fully as we’d like to think. Which side of this debate you fall on will dictate your policy preferences; for example, those in the former camp generally oppose fiscal and monetary stimulus, while those in the latter support it.

There’s another possibility that Mr. Cassidy ignores but which should be obvious to anyone who’s ever hired anyone: a lot of the jobs on offer are phantoms. There are companies, particularly large companies, who are fishing for bargains. I’d summarize it this way. When you offer to buy quarters for a nickel apiece, the only people who’ll sell you their quarters are those who are really desperate to get rid of them.

I also think that the large number of two-career households has something to do with it. Not only does it mean there are fewer people really desperate to get rid of their quarters but it also means that people are less likely to move to where the jobs are than they used to be. The opportunity would need to be pretty darned good in order outweigh the cost of abandoning one job in order to take one job.

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Rauner’s First State of the State

I missed newly-elected Illinois Gov. Bruce Rauner’s first state of the state message yesterday but I’ve certainly got an earful about it since then. The editors of the Chicago Tribune found it refreshing:

With Wednesday’s State of the State address, Gov. Bruce Rauner is on record with an agenda to make Illinois competitive again.

We’ve waited a long time for an Illinois governor to voice many of these proposals as if he means them.

The question now is whether lawmakers, the majority of them Democrats, will join a Republican governor in fixing Illinois or will try to block reforms that represent a sharp new way of doing the business of government.

They conclude: “Do legislators want to help? Or not?” My guess is not.

The editors of the Sun-Times, on the other hand, seemed to view it with more foreboding:

SPRINGFIELD — Gov. Bruce Rauner told voters he would shake things up.

And Wednesday, he didn’t hold back.

The rookie Republican governor used his first State of the State speech to unveil an incredibly ambitious agenda to a Democratic Legislature — where many of his ideas could be considered traditional non-starters. Senate President John Cullerton called it “divisive.” But House Speaker Michael Madigan said he’s keeping an open mind.

That’s because the next step is a negotiation with the Legislature.

That’s something that everyone agrees on. Since the Democrats have super-majorities in both houses of the Illinois legislature, they have complete control over what will or will not happen in state government.

I read one, consistent theme in Gov. Rauner’s speech and it’s a point I’ve made here again and again. Illinois does not exist in a vacuum. To survive economically and socially it must be competitive with its surrounding states and today it’s not. There is too much government here, there is too much bureaucracy here, there is too much corruption here, and our taxes are too high. There are geographical facts that set Illinois apart. Most of its major population centers are on the state border, adjacent to another state eager to lure businesses and workers away from Illinois.

As in Mayor Emanuel’s most recent speech on Chicago’s condition, the dog in the manger which was left unmentioned by Gov. Rauner is the problem posed by public pensions. The state’s plan has already been struck down by a court as unconstitutional. What’s next, guys? We’re waiting for your answer.

My off-hand guess it that Illinois’s legislators will not be receptive to the new governor’s message and will not cooperate. Refusing to solve Illinois’s problems is, after all, their core competency. I suspect they’ll decide to stick with the ones that brung them which means they’ll cling bitterly to the public employees’ unions to the bitter end. Our bitter end, that is, not theirs.

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