Other People’s Money
The effort to spend other people’s money without regard to the common good of the taxpayer will always lead to crisis. We are seeing it throughout this country already, Detroit, Michigan, Stockton, California, San Bernadino, California, Mommoth Lakes, California, San Jose, California. California seems to be the home of most of the failed cities; I wonder what they all have in common? One state law they have is the requirement that all Public Pension plans must be fully funded.
Each of these cities had to borrow money before they got to the point where they had to seek the protection of the bankruptcy courts. Long before these cities had to borrow money they had to realize that they were operating a failed business. They were charged with an obligation to spend the tax revenue that belonged to the tax payers. They tax payers expected that money to be used wisely and for the common good of all the tax payers.
Elected officials, who almost certainly could not work in the private sector, because the private sector expects positive results from their employees, were running cities without understanding their own actions or understanding the foolishness of their decisions.
Much but certainly not all of their bad decisions were based on agreements with public sector unions. Those agreements would never have been made in the private sector because they don’t make sense. The job security agreements and generous benefits that could never be paid for would clearly prevent the company from remaining profitable.
In spite of what politicians say, profits are not bad. Profits are not the result of cheating people or taking advantage of employees, profits are the result of good business practices and smart money management. Profits are made through good leadership and effective decisions in a free market environment.
In the public sector those making spending decisions never focus on making a profit, or even considering how much is available to spend. They only focus on what they intend to accomplish by spending other people’s money. They never focus on what is the common good for the taxpayer; they use the spending to satisfy the hopes and desires of voters and campaign contributors. The only time they consider how much money is available to spend, is when they discover that they don’t have enough.
That scary thought doesn’t cause them to consider cutting back on spending; they find new ways to make the tax payer pay more to the government. Whether they think it through or not they are depending on the redistribution of wealth. Tax payers can always pay a little bit more and then the elected idiots will have more money to spend to accomplish whatever they think they need to accomplish. (What they want to accomplish is usually to buy off voters or party bosses, or union bosses, it is rarely if ever to spend money on the common good of the tax payer)
These cities are failing because the elected money managers are not concerned with where the money comes from. They only want to get credit for spending the money in ways that is expected of them. Actions have consequences. Deficit spending, borrowing money with no means to pay it back, and raising taxes have significant impact on tax payers.
Tax payers are a selfish group of people. They want to keep as much of what they earn as possible. Tax payers hate to pay more and more in taxes and get less and less in return. Tax payers are not only selfish they’re smart and understand money management. When city taxes are too high, they move out of the city. Tax payers come in the form of individual tax payers and business tax payers. It’s bad enough when individuals move out of a city and take their income and tax dollars out of reach of the failing city tax collectors, but when businesses do it they take individual tax payers with them. Businesses have employees and other businesses that made money from that business, which removes a bigger piece of their tax base away.
Robin Hood stole from the rich and gave to the poor, but he always knew where the rich were and could access their money to steal. Failing cities and their incompetent and failed elected representatives can’t find the tax payer or access their money any more. The purpose of their spending never moves away.
The voters they intend to buy off with their unwise and foolish spending, as well as the campaign contributors are still there and must continue to be fed with that unwise and foolish spending.
Unwise and foolish spending is the key to every failed city. That’s what led to the borrowing and that’s what led to the bankruptcy.
It is possible to buy the affection of uneducated and poorly informed voters, but it’s not possible to continue to use other people’s money to buy that affection.
It is possible to repay campaign contributors and supporters with money from the tax payers, but it can’t continue forever. Tax payers are smarter than politicians, tax payers want and deserve to keep more of their money than the government confiscates.
Tax payers ask themselves this question frequently. Why work so hard and work so many hours but not get to keep the money I earn. I can work less and have to pay less in taxes and live the same way I do now. I can stop working and live off the government and not have to pay any taxes at all.
Our current system creates an environment where it provides benefits for not working and taking public assistance; at the same time it provides punishments and disincentives for hard work and high income. Our political system is set up for failure. The government is training the population to be idle and lazy, it punishes those who work hard and earn a good living, and it rewards those who take rather than give.
Other people’s money cannot possibly be better spent by any elected official. Other people’s money is just that; other people’s money. Until we have elected officials who understand this and spend like a miser and not like a drunken sailor, we will continue to have failed and bankrupt cities.
It won’t be too long before we start to have failed states as well. Illinois and California are on the fast track to bankruptcy and ruin.
It is not possible to spend yourself into prosperity, but you can spend yourself into ruin.