Thingish Things

California’s Default Lines

Written By: William F. B. O'Reilly - May• 20•12

The New York Post’s multi-talented Kyle Smith, who is both a film critic and a political writer, pens a must-read piece today comparing the fiscally reckless behavior of modern day California and Greece.  The latter threatens to take down a continent; the former a nation. Our nation. Mr. Smith’s nearly 2,000-word piece is meticulously researched and compellingly written:

Greek and Californian politicians made the same mistake: They wanted union backing so badly that they promised far more than they could ever deliver. They knew that they’d be long gone before the crisis kicked in, or maybe it would solve itself. Either way, they didn’t care. They were happy to use tomorrow’s seed corn to buy themselves power. California’s pension plans face a $500 billion hole in unfunded promises.

The difference between Greece and California, of course, is that Greece can bail on its current monetary system, the Euro, and return to the Drachma. It can then print as much money as it wants, cheapening its currency, to pay down debt (whoever gets the paper contract to print Drachmas is golden.) California can do not such thing. Barring secession, California will remain on the dollar, meaning the rest of us will have to pay her bills if she goes belly up. And all signs suggest she eventually will.  

Mr. Smith pulls no punches in where the fault lies: 

 Until recently in American history, though, unions were seen as a good thing, a tool the ordinary worker could use to get some leverage against “heartless capitalism.” Then, while voters weren’t looking, public-sector unions hijacked taxpayers to award themselves extravagant pay and benefit packages.

“Sustainability” is a word we use a lot, yet hardly ever when it comes to fiscal matters. California’s largesse is no more sustainable than Greece’s. Each of them is bound to face a horrible reckoning.

We all are unfortunately. Even the states that have lived within their means. 

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