As Slump Hits Home, Cities Downsize Their Ambitions - WSJ.com

As Slump Hits Home, Cities Downsize Their Ambitions - WSJ.com

(Lloyd wrote: "Cities should not only downsize their ambitions, but also wages and benefits to workers. If tax revenues are down 11%, so should the salaries and benefits of all workers be adjusted. When revenue goes back up, then readjust them. When regular taxpayers are hurting, so should the federal, state and local workers. There will come a time that they will have wished that they bit the bullet with us.")

Lloyd is right on the money.

Part of the problem that the US economy is exacerbating under the current administration rather than correcting is that government has grown too big and pervasive and those who are paying for government are being starved of the services they are paying for. (As above, high government benefits in Phil. but no street cleaning.)

In the aggregate, it is even worse as tax money goes to subsidize government jobs that are overpaid in most cases (underpaid in a few); but, allocated to the delivery of services that are beyond what the society can fairly afford. Society doesn't work like the communist ideal - rather, just the opposite.

An interesting quote from an old article (2009) in the WSJ sums up the problem of overpaid government workers:

"Ohanian has written numerous papers on the Depression. In one earlier paper, he pinned the persistence of high unemployment on New Deal policies, "which raised real wages substantially above market-clearing levels, which in turn kept employment and output low."

Franklin D. Roosevelt's administration did prolong the Depression with a mixture of high taxes and price-fixing, as some economists and historians are beginning to acknowledge."

If government continues to take the taxes out of society and overpay for employment of government workers, it distorts the whole society.

Since a lot of the current economic recovery is based on interest rate distortions, government borrowing and Fed printing, the liklihood of a second economic downleg increases if foreign central banks decide not to print their own currencies to buy US Treasuries - as forecast by some to have started and others as likely come April. Who knows? But the risks are there and they are being ignored as the article states by public unions, which have been striking for wage increases. Unbelievable!