Retired city workers in the Liberal Utopia of Detroit are being asked whether or not they want the city to exit bankruptcy, by slashing retirement pensions and cost of living adjustments. Officials are urging retirees to agree to a 4.5 percent cut in pension payouts, and an end to COLA. Unsurprisingly, some former city workers are less than thrilled by the idea of taking a pay-cut in an attempt to lessen the city’s debt obligation.
Now, I understand the retirement pension of an average city worker is not amazingly lush in the city of Detroit; but (and this is a purely economic observation) such poor choices are primarily the consequence of being the major creditors in a poorly-managed municipality… In other words: This is what happens when you depend on liberal government for your livelihood. Heck, if Detroit was a financial institution we would see Occupy Wall Street protestors demanding the forfeiture of every policeman’s pension within the 142.9 square miles of Detroit’s geographical footprint.
But, I guess things are a bit different when we’re talking about publicly elected snake-oil salesmen running a major metropolitan area into the ground. After all, Detroit politicians have been employing the same big-government spending campaigns as Chicago, LA, and New York for decades… Why on earth would we expect creditors of such a spending spree to suffer the consequences of deficit finance, right?
The truth is, this isn’t a matter of public employees taking a cut to their pensions. Nor is it a matter of Democrat promises being broken. This is merely the result of dependency on government. Reliance on any big spending city budget tends to be anchored (whether liberals want you to believe it or not) in fiscal reality. At the end of the day, the promises made by government are only as solid as the financial reality backing said promises.
Just like Solyndra, government contractors, or a Social Security beneficiary depending on the continued funding of a bankrupt “pay-as-you-go” system, Detroit retirees are at the mercy of the deficit they voted into existence. It might not be “fair”, but it is the fiscal reality of the real world. After all, pensions based in private companies go bankrupt all the time… And such a result is generally chalked up to the consequence of mismanagement and executive incompetence.
Well… Welcome to Detroit.
Now, there will be a number of personal tragedies that unravel in this mess. But, it would be good to remember what, precisely, is responsible for the destruction of so many retiree accounts: Big Government, decades of Democrat politicians, and government over spending. In other words: Those big-mean liberals used Detroit tax dollars (present and future) as a slush fund to implement their form of statism. Well… Kinda like splurging at a Vegas night club, the bill eventually comes due. But, in this case, whoever is left at the end of the night will suddenly find themselves responsible for a half century of Democrat expenses.
Yeah… Most of these retirees simply put in their time for the city, and don’t (necessarily) share responsibility for driving the general fund into an accountant’s debt ridden nightmare. Now, just imagine how much better off workers would have been had they been given the freedom to invest their money as they had wished… I mean, heck, with a bankrupt government, and a dying city, it would be hard to imagine doing worse in the free market. (Of course, I guess they could have invested in Solyndra, or Abound Solar.)
Unfortunately, the bottom line for would-be beneficiaries of Detroit pensions, is that the city doesn’t have the money. And, really, isn’t the idea of modern-day liberalism focused on “spreading the pain” around? Well, congratulations Detroit: You’re finally seeing the cost of Big Government in actual dollar amounts. I know: It’s far more fun spending the money, than paying the bill… Welcome to the real world of finance. But, don’t forget what John Maynard Keynes pointed out when advocating for increased government spending: “In the long run, we’re all dead.”
Of course, he never said we’d be able to afford the coffin.