The Human Dilemma

Human beings are social animals.  We didn’t come to dominate the planet by overcoming lions, tigers and bears on our own as individuals.  We did it by working together, helping each other, learning from each other, sharing in groups large and small.  We need each other, and our institutions from the smallest (the family) to the largest (the nation) to those in between (businesses, communities, friends, state and local governments).

But contributing to those groups carries risks.  Risks of being exploited, caring without being cared out, being misunderstood, cheated, neglected, deceived.  Because others might exploit those personal and social and business and government relationships to their own ends, taking as much out, and putting as little in, as possible.  Since that is also part of human nature – to see everything through the prism of self-interest.

To live and work together, human beings require trust.  But trust can be exploited, abused, betrayed.  That’s the human dilemma.  It has been for thousands of years.  Societies where people can trust each other, and their leaders, thrive.  People who betray that trust can come out ahead — until everyone is doing it.  And then the very social foundation that makes that betrayal possible crumbles to dust, taking all with it.  And here we are.

DeBlasio and Cuomo Administration Management: A Review

Imagine it’s 10:30 am on a typical weekday during the school year.  At that time New York City is paying 211,843 members of the NYC teachers’ retirement system (or was a couple of years ago).  What are they doing?  If you made a pie chart, what would it look like?  How many are retired? (We know that, it was 88,507, or 41.8% of the total).  How many are out sick?  How many are in preparation periods?  How many are on break?  How many are in out of classroom assignments or administrative posts?  How many are on release time?  How many are on sabbatical?  How many are the second pedagogical employee in a classroom?  How many are doing not much useful because they are waiting for something from someone else, because of some disorganization that wasted their time?  And finally, how many are actually doing something useful with regard to the education and child care of children?

What if, instead of the pie chart being based on the number of people, it were based on the total cost of the NYCTRS members in each category – their cash pay or pension, their health benefits, their other benefits?  Now imagine the same charts being produced for all the other city and state agencies – police, sanitation, fire, transit, corrections, judiciary, parks, social services, hospitals, etc.  

Good management seeks to ensure that workers have the qualifications, motivation, training, tools, organization and scheduling to do useful work almost all the time they are being paid, and to limit the amount going to those not doing such work, to the extent possible.  So that the workdays fly by, and the maximum (or at least a fair) amount in services is produced for a given about of cost.  By that standard, how good was the management in the Cuomo and DeBlasio Administrations?  How fair is the deal the employees and contractors of the City and State of New York provide to other New Yorkers, compared with what public employees, retirees, contractors and their retirees expect to be provided with by private sector workers in exchange?  What would happen if an organization such as Consumers Union (Consumer Reports) were to examine the quality and value of public services provided by state and local governments the same way it looks at the goods and services provided by private corporations?  That is the topic of this post.

America’s Debts 2021: Z1 Data from the Federal Reserve and Related Commentary

Last Thursday the Federal Reserve released its 2021 Z1 data on, among other things, America’s debts.  There is some good news.  Sort of.  For those who are not average workers, not paying rent, not hoping to buy a house, and not hoping to invest their savings for retirement and have it be worth more than what they put in years later when they retire, rather than less.  Total U.S. credit market debt, after having soared from 330.3% of total U.S. GDP in 2019 to 374.6% of U.S. GDP in 2020, a shocking increase, then plunged to 361.1% of GDP in 2021.  It is still higher by 30.8% compared with 2019, and by 192.6% of GDP compared with 1980, before the “buy now and hope someone else will be stuck paying later” era began.  But the 13.5% decrease in debt as a percent of GDP is still the largest since at least 1953.

How was this accomplished?  Did Americans, American businesses, and American governments suddenly start reducing their debts by a massive amount?  Uh – no.  In straight dollars total credit market debt increased 6.1%, financial debt increased 5.8%, non-financial debt increased 6.2%, household/non-profit debt increased 7.3%, corporate debt increased 5.2%, other business debt increased 3.6%, state and local government debt increased 1.9%, and U.S. government debt increased 7.2%.   But in straight dollars, nominal GDP increased by 10.1%, even more, in part due to an expected snap back from COVID-19 shutdowns, but also in part due to soaring inflation.  The Economist magazine said years (decades?) ago that Generation Greed had run up so much debt that the choice was to inflate it away, default it away, or face stagnation for decades as it is paid back.  That was back when total U.S. debts were far lower than today.

https://www.economist.com/special-report/2010/06/26/in-a-hole

https://www.economist.com/buttonwoods-notebook/2013/05/22/can-it-be-inflated-away

No one is prepared to admit that today the goal is inflate away debts (and the buying power of wages and ordinary people’s savings).  Then again, would anyone have predicted 10 years ago, or 20 years ago, or 40 years ago that the Federal Funds rate (controlled by the Federal Reserve) would be at 0.08% at a time when inflation has soared to its highest level since 1982?

Sold Out Futures by State: The Sold Out Future Ranking For 2019

Over the past three posts I’ve documented how today’s and tomorrow’s Americans have had their future sold out and cashed in with regard to state and local government debts, inadequate past infrastructure capital construction, and retroactively increased and underfunded public employee pensions.  Over and above the generational inequities at the federal level in government, in the private sector, and even in many families.  Plus climate change, which some have claimed will be so bad I should stop worrying about other aspects of generational inequity.

These aren’t technical issues to be discussed one at a time, as if they were independent of each other.  They are a single ethical issue to be discussed and understood as a whole.  Look at any issue, any institutional decision in government, business and the professions, any social trend of the past 40 years, and examine how it has affected those in different generations – who benefitted, and at whose expense.  And you will find the same thing.  

That is why our society is in decline, something all those crazed about the tribalist cultural issues that consume out geriocratic politics apparently understand, and are desperate to find someone else to blame for.  The Sold Out Futures by state ranking, based on the state and local government part of it, is my contribution to the bigger story, one that remains under Omerta.  

Adding it up, on average today’s and tomorrow’s Americans have inherited a Sold Out Future due to past state and local government deals and non-decisions equal to 47.0% of their personal income in FY 2019.  That is virtually unchanged from the 47.1% I found when I did the same analysis for FY 2012, despite a much stronger economy and another asset price bubble.   

Unlike the other generational inequities in our society in the wake of Generation Greed (and more like the differences between families), the state and local government burden is not the same everywhere in the U.S.   It is greater or smaller depending on where you live.  It attaches to the people there now, unless they move away from it, and may eventually attach to each place’s real estate, since real estate cannot pick up and move.  This final post in the series will rank states, and New York City and the Rest of New York State separately, based on how sold out their futures are.

Sold Out Futures By State: Public Employee Pensions from FY 1972 to FY 2019

Even another stock market bubble, in fact an everything bubble that has temporarily inflated the price of every asset to historically high levels relative to income, has not been enough to get the average U.S. public employee pension fund out of the hole.  But it has been enough to knock the public employee pension crisis out of the news, and give politicians an excuse to shift even more of the cost to the future.  As I showed here…

https://larrylittlefield.wordpress.com/2013/11/29/pensions-the-nature-of-the-lie/

When asset prices bubble up, future investment returns are going to be lower.  If the bubble is big enough, future returns could be negative for decades, as they have been in aging countries like Japan, and countries that try to inflate away their debts like Argentina, two (hopefully but not necessarily extreme) versions of our own future.  Predicted future return returns should be reduced as asset prices rise, as ERISA requires private pension funds to do by tying future returns to current interest rates.  But in the public sector, which was exempted from ERISA, when asset prices bubble up public unions cut deals with the politicians they control to increase benefits in Blue States, and while anti-tax politicians slash pension contributions to cut taxes in Red States.  (Actually, they do both things in both types of state).  Then, when asset prices correct to normal, somehow it’s nobody’s fault.  Wall Street stole the money!, PBS Frontline claimed in an investigation of the problem.  That’s why nobody is talking about pensions now – that lie temporarily unavailable.  

Thus far the federal government, at great cost to ordinary people in disadvantaged later-born generations, has managed to keep paper asset prices – and housing prices – inflated, to benefit the rich and seniors.  Even so in FY 2019, despite sky-high asset prices and the passage of more than a decade since the problem was acknowledged (by some), my back-of-the-envelope estimate is that U.S. state and local government pension funds were $3.65 trillion in the hole, more than ever before.  A more sophisticated analysis by the Bureau of Economic Analysis, using the assumptions private pension funds are required to use, put the hole at $4.54 trillion in 2018.  But in which states is the problem the greatest?  Read on and find out.

Sold Out Futures by State: Debt and Infrastructure for FY 1972 to FY 2019

The federal government just passed a $ 1 trillion “infrastructure bill” that, for a while, will increase the amount of federal funding for infrastructure.  Most of the actual spending, however, will be continue to be done by state and local governments, just as has been the case in the past.  The modest increase in spending, adjusted for inflation, is intended to address a backlog of needed projects.  But federal funding is only one source of money for state and local infrastructure.  State and local taxes are another, and bonds, usually paid off over 30 years, are a third. 

The extent of infrastructure varies from place to place.  In rural areas the only public infrastructure might be a county or town road, supplemented by power supplied by a rural electrification co-op, and telephone and postal service cross-subsidized by those in cities.  Instead of paying for public water, sewer, and solid waste collection, people provide these for themselves.  In cities, on the other hand, there may be mass transit, public sidewalks, airports, seaports, public water, sewer, solid waste collection, and in some places public electric utilities.  So do low-density rural states spend less on, and receive less in federal funds for, infrastructure?  Do states with low past infrastructure spending also have low debts?  How are the estimated $1.4 trillion infrastructure spending shortage and the $3.2 trillion in state and local government debt distributed around the country?  Read on and find out.

Sold Out Futures: A State-By-State Comparison of State and Local Government Debts, Past Infrastructure Investment, and Unfunded Pension Liabilities Through FY 2019

In two years of the COVID-19 pandemic, with society under stress, we have seen increasingly strident political fights over whose cultural attitudes and preferences should be imposed on others, who should get to contribute less to the community, and who should get to take out more.  In the shadows, however, is a bipartisan consensus as to who should be made worse off and be sacrificed the rest of their lives to pay for it all.  Ordinary people in later born generations, those who will be living in the United States in the future.   The pandemic has given politicians of all alleged views, and the interest groups that back them, an excuse to do, to an even greater extent, what they have done for 40 years.  Cash in the common future to address the perpetual “emergency” of the present.

So it was in Washington in 2020 when The Donald and the Republicans, having already sent the federal debt soaring to cut taxes for the rich and then ran a federal deficit equal to one-quarter of the U.S. economy.

https://larrylittlefield.wordpress.com/2021/03/15/federal-reserve-z1-data-for-2020-the-king-of-debt-went-out-with-a-bang-and-our-children-and-grandchildren-will-be-poorer-for-the-rest-of-their-lives-to-pay-for-it/

And so it is in Washington today, where Biden in the Democrats claim their plans will be “paid for” – meaning the burden shifted to the future would only be as great as it was under Trump and the Republicans.

It is in this context that for the fifth time, I have reprised an analysis of state and local government finance data from the U.S. Census Bureau, for all states and for New York City and the Rest of New York State separately, with data over 49 years, to determine the extent to which each state’s future had been sold out due to state and local government debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.   You’d think that the extent of disadvantage for the later-born, and who benefitted from creating it, would be the number one issue in every state election, and the number one topic of debate in the media.  Instead, it remains under Omerta, especially here in New York.  Shouted down under the comforting culture war issues that Generation Greed prefers.  So, although standing up for the later born and common future may amount to nothing more than standing on the beach shouting into a hurricane as a social tsunami heads for shore, over the past month I have updated the “Sold Out Future” analysis with data through FY 2019.  This post, a national summary and explanation of where the data comes from and how it was used, and the next three, will show what I found.

New Jersey Governor Phil Murphy Should Have Told the Truth About Generation Greed

Four years ago, I asked if newly-elected New Jersey Governor Phil Murphy would be the first to tell the truth about Generation Greed.

Will New Jersey’s Phil Murphy Be the First To Tell The Truth about Generation Greed?

Telling his new constituents exactly what share of their state income taxes, local property taxes, transit fares and toll payments were going not to public services and benefits they were getting today, but rather to costs shifted forward to the present by past New Jersey politicians, and the older and former state residents and special interests they had pandered to.  Costs from past debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.  The tell would be to reduce taxes, tolls, and transit fares to a level that only reflects the public services and benefits that the State of New Jersey and its local government are providing to New Jerseyans today.  So people would see what the public services they are now getting actually cost.  And then fund all the costs from the past with a separate, additional income tax, property tax, transit fare and toll surcharge that everyone could see. The Generation Greed surcharge.  It would be right in their face, not in some report no one reads, day after day and year after year.

Governor Murphy (like the rest of them) chose not to go that route.  And despite an economic upturn, stock market bubble, and gusher of federal money that the later-born will be sacrificed to pay back someday, that temporarily made his options and decisions much less painful than they could have been, and will ultimately be, he was nearly thrown out of office, barely winning re-election against Republican challenger Jack Cittarelli.  Meanwhile, Democratic New Jersey Senate President Steve Sweeney has apparently been ousted by a truck driver and politician novice running a low-cost campaign.

The top issue, according to pollsters, was taxes.  Even though New Jersey’s total state and local government tax burden, as a percent of state residents’ personal income, doesn’t come close to what we’ve been forced to pay in New York.  Even at their lower tax total, today’s New Jerseyans apparently don’t feel they are getting fair value for their money.  Well of course they aren’t. 

New York City Local Government Employment and Payroll: Could That Have Actually Happened?

Over the past few years, and especially during the pandemic, we have heard the same thing over and over again.  New York City public agencies and public contractors can’t possibly provide New Yorkers with decent public services because they are understaffed, underpaid, underappreciated.  And city residents are undertaxed.  You heard it from the cops as crime jumped during the pandemic, and from the teachers who needed more staff for hybrid learning – and now need even more without hybrid learning.  You hear it from the Department of Corrections, the judges, the public defenders and DAs.   You hear it over and over, and rarely does anyone threaten their own career by objecting.  Cheated out of $billions!

So I was shocked to learn that according to Employment and Wages data from the Bureau of Labor Statistics, from 2016 to 2020 New York City local government employment increased by 36,627 (8.1%) while local government employment in the rest of New York State decreased by 35,991 (6.2%).  That New York City local government payroll increased by fully 44.1% in four years!!!  Compared with an increase of 7.8% for the rest of the state.  I checked this against data reported to the Governments Division of the U.S. Census Bureau.  This source reports a mere 7.5% increase in “full time equivalent” employment (full time plus part timers converted to a smaller number of full timers based on hours worked), compared with a 1.1% increase for the U.S.  March local government payroll, according to this source, increased 22.0% for NYC, and 10.8% for the rest of the state.  Despite these differences NYC local government payroll, as measured by the two sources, ended up in about the same place — $40.4 billion for annual payroll based on employment and wages, and $38.8 billion for the monthly Census Bureau data multiplied by 12.  Which makes sense due to raises that might have occurred during the year, and seasonal employment in the summer.

All this makes me wonder – just what have two politicians seeking higher office with public employee union support:  Mayor Comptroller Scott Stringer, and President Governor Mayor Bill DeBlasio, been doing?

There and Here, Generation Greed Wants Everything but Refuses to Pay For Anything

Who, in a decade or two, will want the job of changing former President Donald Trump’s diapers, and who will have to pay for it?  

As I’ve said for years, The Donald is THE MAN of his generation.  A generation that came to interpret freedom as freedom from responsibility, to a greater extent than the generations before or after.  For those on the so-called “right,” it was freedom from social responsibility — to the community through paying taxes, to the planet by conserving natural resources, and even, it turns out, to those around them by wearing masks and getting vaccinated.  For those in the so-called “left” it was freedom from personal responsibility, to family members, or non-family progeny, when personal fulfillment, or sexual gratification, or just wanting to get high made that responsibility burdensome.  That has been the story, but not the fact.  In reality Trump, like the majority of his generation, was against any responsibility at all, social or personal.  Eventually, however, he and those of his generation will age to the point where they require custodial care, care that is either hugely expensive or personally draining to provide.  To be provided and paid for by whom?

I bring this up again because it would appear that in the UK, the generation that demanded lower taxes on itself is now demanding additional old age care for itself, paid for exclusively by the less well of generations to follow. Generations already on the wrong end of slashing social benefits for children, while putting a triple lock on a guarantee of benefits for aging adults.  Thus continuing to align Generation Greed’s economic, social and political choices with what, at least here in the United States, have been the personal and family choices of many, if not most.  All while engaging in a culture war to distract attention from what they, collectively, have done.  But there, unlike here in the U.S., generational inequities are at least talked about.

If you happen to be a comedy writer or comedic playwright, hold that thought about Trump’s last days.  I’ll have a suggestion for you at the end of this post, one that could bring 40 years of economic and social trends home to the later-born in a way that perhaps lots of boring data and analysis that you’ll have to get through first does not.