California Likely Closed Through April

Forget shelter in place: It may be time to settle in place.

Gov. Gavin Newsom said Tuesday that California will likely remain closed through April. His prediction came the same day President Donald Trump announced his intention to reopen the country by Easter, on April 12.

Newsom did not directly address Trump’s comments, but he emphasized that such a timeline would not work for California.

  • Newsom: “We’re trying to bend that curve, but we haven’t bent it. … April, early April, I think that would be misleading to represent, at least for California. … I’ve said this very honestly and objectively based on all the expertise and experts … the next six to eight weeks will be pivotal and will be determinative in terms of being able to … reset expectations. … I said eight to 12 weeks … we can continue to do what we’ve done, and if we do that, hopefully, we’ll be in a very different place than we are today. I think April, for California, would be sooner than any of the experts I’ve talked to would believe is possible.”

By underscoring his reliance on health experts to determine an appropriate time to reopen the state, Newsom implicitly contrasted himself with the president, who said he chose the April 12 date because “I just thought it was a beautiful time.”

However, it’s ultimately governors, not the president, who will decide when their states reopen for business. To date, almost half of U.S. states have imposed lockdowns in response to coronavirus. …

Click here to read the full article from CalMatters.org

Protecting Taxpayers in a Time of Crisis

The word “unprecedented” is fitting for the coronavirus crisis that is now savaging both the health of countless Americans as well as our nation’s economy.

Not since September 11th has the United States faced such a challenge.

In reaction to the outbreak, healthcare professionals have emphasized the importance of speed. Dr. Michael Ryan, Executive Director of the World Health Organization, who has seen more than his share of epidemics, advised “Be fast, have no regrets. You must be the first mover. The virus will always get you if you don’t move quickly. If you need to be right before you move you will never win. Perfection is the enemy of the good when it comes to emergency management,” he said.

In a few weeks, or perhaps longer, we will be able to assess whether our health care response to the virus, including quarantines, social distances and “sheltering in place,” was overkill or not enough. But everyone, at this point, seems to fully grasp the concept of “better safe than sorry.”

The same philosophy seems to be applicable to the economic crisis as well. The immediate reaction from our political leaders has been to do something – anything – and do it fast. At the federal level, there has already been bipartisan support for a preliminary bailout of $1 trillion. For those of us who are fiscal conservatives, the headlong rush to add to the existing mountain of federal debt is deeply disturbing.

At the state level, Gov. Gavin Newsom has taken aggressive action on the health care front but also has signed into law (or issued executive orders) designed to lessen the economic damage. While some of these policies are understandable under the circumstances, the interests of taxpayers and property owners do not seem to be getting the same level of concern as other interests.

To read the entire column, please click here.

Covering School Funding in Time of Crisis

The COVID-19 crisis has interfered with many functions that could result in long-term changes. At-home workers might become more plentiful after the crisis passes (perhaps even helping to solve the problem of crowded freeways); limited sports seasons may lead to fewer games in the future on basketball and baseball schedules; and even consideration of California’s school funding through Average Daily Attendance might get a second look.

Governor Gavin Newsom said it is probable that schools will remain closed throughout the remainder of the school year.

Newsom expects the federal government to provide waivers to school districts which receive federal funds using school attendance as a factor.

Likewise, the legislature has prepared to keep the school districts financially whole by passing AB 117 to offset any loss of funding because of COVID-19 school closures. The bill states that the bill would deem instructional days and minutes requirements met during the period when schools are closed due to the virus.

California schools are funded on the basis of Average Daily Attendance (ADA). The ADA is calculated on the number of children actually in attendance in a school or district each day school is taught. Without state and federal intervention to change the rules, schools’ budgets would be devastated.

The advantage of ADA is that school authorities and parents will see to it that students attend classes.

Like regulations in other fields of endeavor, the school funding rules have fallen, at least temporarily, to the virus’s interference with normal circumstances.

While a handful of states use ADA as a funding calculus, a larger number of states base funding on Average Daily Membership (ADM). ADM is based on total school enrollment so if attendance is down, the schools don’t take a financial hit.

Advocates for ADM argue that poorer school districts suffer under ADA funding schemes because attendance rate is often lower. Also, administrative record-keeping and counting would be reduced under an ADM system.

Perhaps this crisis will bring re-evaluation of ADA funding. Re-thinking school funding on an ADA basis is worth considering because of the continued drop in student enrollment in California schools.

That is a discussion for another time. For now, state and federal governments are responding as they must during this unprecedented crisis.

Joel Fox is editor and Co-Publisher of Fox and Hounds Daily.

This article was originally published by Fox and Hounds Daily.

Coronavirus State Of Emergency — Under Single-Payer, California Would Be In A Permanent State Of Emergency

For most of us, the coronavirus pandemic is an ordeal we’re slogging our way through. However, some are seizing the opportunity to appeal for support for the health care schemes that have failed other nations.Vermont Sen. Bernie Sanders, for one, has gone as far as to claim that Medicare for All would have been more effective in handling the coronavirus outbreak than our current mixed health care system.Meanwhile, Gov. Gavin Newsom has declared a state of emergency.

The grim twist is that under the single-payer arrangement he’s grown fond of, medical care in California would be in a constant state of emergency.

Earlier this year, Newsom cranked up his Healthy California for All Commission. Its members were instructed to determine how the state will provide “coverage and access through a unified financing system, including, but not limited to a single payer financing system.”

Whatever the commission comes up with, it would only worsen an outbreak of a virulent and easily spreadable disease, such as one we might have coming if the cases of coronavirus continue to grow. A government-run medical care system, which will be overused and overwhelmed due to its “free” nature even in ordinary times, could not handle the mass of patients.

“In the not-too-distant past, Canada and the United Kingdom have struggled to handle outbreaks of everything from severe acute respiratory syndrome (SARS) to the seasonal flu,” Pacific Research Institute President Sally Pipes wrote last month.

“That’s largely because these countries’ government-run, ‘Medicare-for-all’-style systems lack enough health care personnel, hospital beds and other resources to meet the needs of their populations even in good times. A public health threat like a pandemic can stretch single-payer health care to its breaking point.”

Pipes also notes that checking the spread of disease requires doctors, hospitals, and public health officials to work fast and closely coordinate their efforts.“That’s tough to do,” she says, “when there aren’t enough doctors or hospital beds to accommodate the sick.”

Absent a pandemic, a government-run or universal health care system would still be in a permanent state of crisis. Single-payer systems place an unmanageable strain on public finances.The California Legislative Analyst’s Office reckons “a single-payer program similar to that envisioned in” Senate Bill 562, the Healthy California Act, introduced in 2017 but never becoming law, “could cost around $400 billion annually and require new state tax revenues in the low hundreds of billions of dollars.”

A government takeover of Californians’ medical care would also produce a system under an endless siege. Because users won’t regulate their consumption in a third-party-payer arrangement, where there is no payment at the point of service, doctors, nurses, and physicians will be buried by demand. The only recourse available when this occurs is to deny treatment to some.

A year ago, a flu season that was hardly the worst of the decade “pushed the 70-year-old” National Health Service “to the brink of collapse,” Pipes wrote in Fortune. The previous spring, the British Medical Association said the NHS had reached the point of being in a perpetual year-round crisis.Only months earlier, the Daily Express reported that “the number of patients who die while languishing on NHS waiting lists has rocketed,” with “at least 10,000 extra people every year never” receiving “the treatment they have been waiting for compared with five years ago.”

Even the British House of Lords has been forced to admit the health care system for all “is in crisis.”Then there’s Servizio Sanitario Nazionale, the public national health service of Italy, which has been hit harder by the coronavirus than any other Western nation. Conditions are particularly grim there because there aren’t enough doctors in the system to properly treat the sick nor enough beds to accommodate them.

Shocking as the facts are, they should surprise no one. A government system doesn’t have the incentives to provide better care and extend lives, and to do these things more efficiently. A competitive private-sector market does. This is one reason that, as the Hoover Institute’s Lee Ohanian reported last year, Britain’s “NHS is now turning over some NHS operations to for-profit companies with the expectation that they will achieve higher efficiency levels.”

It’s also why Californians who can afford to will be traveling to other states to see doctors and have surgery should Sacramento force a single-payer scheme on the state. The outbound traffic would be heavy under normal circumstances, and as miserable as a Los Angeles rush hour when we’re threatened by future outbreaks of nasty, highly communicable diseases.

This article was originally published by the Pacific Research Institute.

Gov. Gavin Newsom Orders All of California to Shelter in Place

In a dramatic and unprecedented move, California issued a mandatory, statewide shelter-in-place order on Thursday after Gov. Gavin Newsom warned 56% of Californians — 25.5 million people — could be infected with coronavirus in the next two months.

The governor’s executive order means the most populous state in the nation will effectively shut down non-essential services — altering daily life for 40 million residents for the indefinite future. It allows Californians to continue to go outside to get food or medicine, to walk their dogs, to care for relatives and friends, to get health care, but generally, the directive is to stay at home. 

The order is legally enforceable, meaning disobeying can result in a misdemeanor with up to $1,000 in fines or six months imprisonment, although Newsom said social pressures will likely be enough to encourage people not to gather in the middle of a public health crisis.

Newsom said he made the difficult decision based on modeling by state health officers and new data related to infection rates in the state. Similar shelter-in-place directives were already being used by a number of Northern California counties and the governor had previously asked seniors to stay home, but Thursday’s action now applies to everyone.

“Let’s bend the curve together,” the governor said in a livestream, referring to the effort to slow the spread of COVID-19 to prevent health facilities from being overwhelmed by patients. “Let’s not regret. Let’s not dream of regretting, go back and say, ‘Well, you know what, we coulda, woulda, shoulda.’ Not when the data all points to where I think most of us know we’re going.” 

The directive was the culmination of swiftly escalating restriction in the face of an even more swiftly escalating peril. In just two weeks, Californians saw social gatherings limited first to 250 people, then only to the young and healthy, then locally outlawed in the Bay Area and some other counties. Sports events were canceled. Disneyland shut down for only the third time in history. Then millions of students were sent home from schools and colleges. Bars were told to issue their last call and restaurant seats emptied out. 

It is unclear for the moment when normalcy will return, and Newsom’s executive order was much broader than many of shelter-in-place orders imposed earlier in the week by some cities and counties. What will remain open are the bare essentials: gas stations, pharmacies, grocery stores, banks and laundromats. Restaurants can offer take-out and delivery. About 500 members of the National Guard will be deployed for humanitarian work to help distribute food.

The governor said social media companies such as NextDoor will begin to provide informational kits to check in on neighbors and loved ones. AmeriCorps and the California Conservation Corps will also ramp up outreach to fight isolation, he said.

“One-pagers so you know what kinds of things you need at home to protect yourself, those that are socially isolated, our seniors struggling with loneliness, as much or more than anything else to make sure we reach out, maybe call five people a day, just check in on them,” Newsom said.  

Newsom said his decision wasn’t made lightly. Rather, it came after weeks of effort in collaboration with the Centers for Disease Control and Prevention to model the spread of the novel coronavirus in California, according to Health & Human Services Secretary Mark Ghaly. 

“And we are very glad we had built that model,” Ghaly said. “It’s put us in a great position with our partners across the state to be prepared for what we are starting to see, which are hospitals with many patients, and patients who are in the ICU and having outcomes that we’ve seen in other countries.” 

Earlier in the day, the governor said he had warned President Donald Trump that more than half of Californians — 25.5 million people — could be infected with coronavirus over the next two months as he sought at least $1 billion in federal aid from congressional leaders.

“If we change our behaviors, that inventory will come down,” Newsom said. “If we meet this moment, we can truly bend the curve to reduce the need to surge, to reduce the need to have to go out and to cobble all those assets together.”

In a letter dated Wednesday, California’s governor requested White House assistance to deploy the USNS Mercy hospital ship to Los Angeles as health officials project the state will fall short of hospital beds needed to handle a surge in COVID-19 cases. In the last 24 hours, the state reported 126 new cases, a 21% increase, and the rate is doubling every four days in some areas. 

“We project that roughly 56 percent of our population — 25.5 million people — will be infected with the virus over an eight week period,” Newsom wrote. 

Newsom also sent a separate letter to the leaders of the U.S. Senate and House of Representatives seeking at least $1 billion in federal funds to support California’s response to the pandemic. The money, he said, is needed to purchase and set up health care facilities that the state projects it will need to treat a flood of patients. This includes using state-run hospitals, mobile hospitals and retrofitting hotels and motels.

The governor also asked for additional congressional support to help families and low-income households cope with the crisis by extending unemployment insurance, increase reimbursement for Medi-Cal, the state’s Medicaid program, suspend work requirements for food stamps as families go hungry and allocate more funding for nutrition programs for children and seniors. 

Newsom also called for loans for small businesses and technology and broadband funding for school districts with high concentrations of families in poverty as schools scramble to adapt to online learning or studying at home.  

State health officials estimate that California hospitals have the capacity to handle a surge of about 10,000 people. However, some models project the state could need twice that, closer to 20,000 extra hospital beds

He announced a series of steps being taken to bridge that gap. They include ramping up hospital beds by leasing motels and hotels, borrowing university dorms, staving off hospital closures and asking the federal government for two mobile hospitals in addition to the naval hospital ship.

He announced Seton Medical Center in Daly City, which had been slated for closure by Verity Health Systems, would continue operating and said a second hospital in Southern California would be named on Friday.    

While government officials are conferring with pharmaceutical companies such as Gilead in seeking treatments, Newsom said he “was pleased” to see Tesla’s CEO Elon Musk tweet about the possibility of producing ventilators. Musk said Tesla’s cars contain sophisticated ventilation systems and SpaceX, his spaceflight company, makes life support systems.

“Ventilators are not difficult, but cannot be produced instantly,” Musk replied.

In Newsom’s letter to the president, the governor asked that the naval hospital ship be deployed to Los Angeles because it will free up beds at existing hospitals and health facilities to respond to acute care needs, such as heart attacks and strokes or car accidents. 

Newsom sought to strike a chord with the president’s hometown.

“The population density in the Los Angeles Region is similar to New York City, (and) will be disproportionately impacted by the number of COVID-19 cases,” Newsom wrote.

CalMatters reporter Rachel Becker contributed to this report.

This article was originally published by CalMatters.org

The Train That’s Still Going Nowhere

The Legislative Analyst’s Office recently issued its Review of the Draft 2020 High-Speed Rail Business Plan. It’s not a ringing endorsement of the project. Three of the report’s five key oversight issues confirm what’s been known all along. California’s bullet train is a troubled enterprise.

  • First, says the LAO, “we point out that the near- and long-term schedules identified in the draft 2020 business plan appear ambitious.”
  • Next, “we identify some near- and long-term funding challenges confronting the project.”

The latest cost estimate “to complete Phase I is $80.3 billion, which is about $3 billion higher than the 2018 cost estimate. This cost estimate is about $1.3 billion higher than the 2019 cost estimate.”

At the same time, the California High-Speed Rail Authority “estimates available total project funding of between $20.6 billion and $23.4 billion through 2030.” While similar to the 2019 project update report estimate, it’s “lower than was assumed in 2018.”

  • Third, the system is likely to need taxpayers’ money before the first train leaves the station. The need for subsidies “does not appear to be consistent with the spirit of” Proposition 1A, which voters approved in 2008 to OK the bullet train. Under Prop 1A, passengers, “rather than the general public,” were expected to “pay for the full cost of its ongoing operations and maintenance.”

Yet “under HSRA’s proposed approach, the state (and general taxpayers) is anticipated to pay for whatever portion of the system’s operating costs that is not recovered from passenger fares — estimated at roughly $54 million annually.”

The fourth and fifth key oversight issues cover alternatives and “flexibility to change.”

According to the LAO, construction and completion schedules have also been miscalculated.

“Some activities,” says the LAO, “are anticipated to occur later than previously expected, including those related to project construction and interim operations, as well as environmental work. …

“Specifically, HSRA projects that trains will provide interim service from Merced to Bakersfield by 2029. In comparison, in the 2018 business plan, HSRA anticipated launching interim services on the ICS [initial construction segment] and the San Francisco-to-Gilroy segment by 2027, and the 2019 PUR [project update report] anticipated providing operating service between Merced and Bakersfield in 2029.”

The Valley-to-Valley line will be completed in 2031, two years later than the 2018 business plan and 2019 PUR had previously assumed.

The project as a whole is 13 years behind schedule, a likely foreshadowing of chronically late trains if the project is ever completed.

Seven years ago, after giving the project a poor review, the authors of the Reason Foundation’s analysis (“California High Speed Rail: An Updated Due Diligence Report”) said it was “not too late to save the California economy and taxpayers the enormous costs of the California high speed rail project.” Joe Vranich, a relocation specialist who has moved his business from California to Pennsylvania, believes it’s still not too late.

“If I had the time I’d do some research to find a leader who in the past made the best of a bad situation by shutting down a hopeless public project, cite the lessons learned from that person’s approach,” he told PRI, “and if that person is still alive, recommend that Gov. Newsom put that individual in charge of the California project — and shut it down.”

Officials need not let concerns about wasting funds that have already been spent cloud their judgment. It’s not out of the question that the private-sector could eventually make use of the construction that’s been completed, allowing taxpayers to recover the stranded costs. There is simply no compelling reason to force them to rescue the entire mess.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

This article was originally published by the Pacific Research Institute.

How the Virus May Permanently Change the Way We Do Business

Chances are, the coronavirus pandemic will forever change the way you do business.

For one thing, business travel may be reduced. Already, Zoom is zooming; one report last week said videoconferencing traffic in North America and Asia has doubled since the outbreak began. Once execs finally see for themselves that meaningful interchange really can get done remotely, they may not be so willing to expend the time and money for many face-to-face meetings in the future.

For another thing, we likely will see more work-from-home options in the future. Last week, several universities, including California State University – Northridge, announced that students cannot sit in classrooms for the immediate future but will “attend” school virtually from home. 

Businesses similarly are allowing more work to be off site. Again, once bosses see that remote work can be good work, the culture for offsite work will grow.

And that, in turn, may trigger all manner of secondary effects. Will we need so much office space in the future? Will each family member need his or her own car? If more people are working at home, will business-lunch spots migrate to the suburbs?

Another effect: decoupling from China.

Businesses and consumers have long been addicted to low-cost manufacturing in China. But if Chinese producers increasingly are unable to deliver goods, American businesses will find alternate providers. And once they make the switch, it may be hard to go back to China, especially considering that country’s low wages, spotty environmental concern and suspected use of slave labor.

In short, big, disruptive splashes like the coronavirus often create ripples that have long-lasting effects. We can’t predict, of course, what all those effects may be. We only know that the coronavirus is likely to change the way businesses operate and the way you work.

Charles Crumpley is editor and publisher of the San Fernando Valley Business Journal.

This article was originally published by Fox and Hounds Daily.

Government Pensions Are Dividing Americans and Damaging the Economy

Now that financial markets around the world are experiencing a long-overdue correction, the best we can hope for is that we hit bottom before a deflationary cascade causes a worldwide depression. Those economists who believe in the long-term debt cycle may claim that this time the end has arrived, and they may be right. COVID-19, oil price wars, traders and investors hating Trump — these are just pinpricks. This bubble has been inflating for decades.

There have been plenty of warnings. Interest rates at near zero in the United States and actually negative in European nations. Record borrowing by the federal government, and, possibly worse, record levels of consumer debt. Corporate borrowing to buy back stock instead of invest in R&D and plant modernization.

In January 2000, at the peak of the internet bubble, total credit market debt in the U.S. was $27.8 trillion. By October 2007, at the peak of the housing bubble, total debt had climbed to $51.4 trillion. As of October 31, 2019, the most recent period for which data is available, total debt had climbed to $73.4 trillion.

Debt accumulation is not a sustainable way to stimulate growth. At some point, there is not a mere “correction,” such as what was seen in 2000 and 2008, but a fundamental restructuring of the financial economy of nations, such as happened in the 1930s. Has that reckoning arrived?

Either way, as of close on March 12, the Dow Jones had given up nearly three years of gains, with no real end in sight.

Wall Street’s Biggest Player: Public Employee Pension Funds

Which brings us to public sector pensions, which are among the most socially divisive, economically damaging scams that nobody has ever heard of.

To get an idea of the financial scale of public pensions, note that the U.S. Census Bureau estimates the total invested assets of pension funds managed on behalf of local, state and federal government employees is $4.3 trillion. Roughly 17 percent of Americans either work for or are retired from a local, state, or federal government agency.

By contrast, the Social Security Trust Fund, serving all 327 million Americans, and in which many government employees also participate along with receiving their pensions, has a total asset value of $2.9 trillion.

This is an incredible fact. Taxpayers—who it should go without saying, are paying for both systems—have contributed to a public employee pension system that is 50 percent larger than the Social Security Trust Fund, even though Social Security serves six times as many Americans.

By now most Americans, most definitely including voters, will have stopped reading. Pension finance is a boring topic. But public sector pensions pose a far bigger threat to America’s government budgets than Social Security ever will.

For starters, Social Security is adaptable. Lower the benefits, establish means-testing for benefits, raise the contribution percent, raise the contribution ceiling, raise the retirement age; all of these options are but one congressional vote and presidential signature away from implementation. Not so with public pensions, where financially responsible modifications to the pension systems are thwarted by collective bargaining contracts and union power. How bad is the problem?

Determining just how in the red public pensions are today depends on who you ask. And thanks to lax reporting requirements, good data is typically about two years behind. A Pew Research study released in June 2019 estimated the pension funding gap, “the difference between a retirement system’s assets and its liabilities,” for all 50 states, to be just over $1 trillion. But that’s only the officially reported number.

A study conducted by the prestigious Stanford Institute for Economic Policy Research put the total at over $5 trillion. This massive disparity in estimates is because how much has to be invested today in order to fund pension payments in the future largely depends on how much pension system fund managers think their investments can earn. Private-sector pensions have to use the bank lending rate as their required earnings estimate, which is why private-sector pensions are, generally speaking, not in financial trouble.

Public-sector pensions, on the other hand, are heavily influenced by government union bosses who want to maximize pension promises with minimum input either from their members through withholding or through direct contributions by government agencies. So they hire actuaries and money managers who claim they can earn, on average, 7 percent (or more) in interest on their investments, every year, year after year.

But what happens when they don’t?

That is where we find ourselves today. Pension funds, over the long term, are considered financially “healthy” if they are 80 percent funded or more. That means, for example, if the official numbers for 2018 are correct, the public sector pension assets nationwide were $4.3 trillion, the total liability was around $5.3 trillion, and the funds in aggregate were around 80 percent funded. There are big problems with this, however.

First of all, nobody believes the collective unfunded liability of America’s public employee pension funds is only $1 trillion. As noted, the Stanford researchers put that number at over $5 trillion. But most ominous is the fact that even if these pension systems were 80 percent funded, that is not where they’re supposed to be at the tail end of an 11-year bull market. Over the past 10 years, the U.S. stock market has tripled. Why are these pension systems, at best, only 80 percent funded?

Dividing Americans, Damaging the Economy

Public employee pension funds are among the biggest players, if not the biggest players, on Wall Street. If you want to know where literally trillions of dollars are being aggressively invested in private equity deals, hedge funds, and countless other speculative investments in debt, real estate, and foreign securities including in fascist China, look no further. These funds are under relentless pressure to deliver rates of return that are historically unsustainable, and the reason they are historically unsustainable is intimately connected to the populist discontent sweeping America today.

Public-sector pension funds, because they involve trillions of dollars, are too big to beat the overall rate of investment returns, and ultimately the rate of investment returns cannot exceed the rate of economic growth. The fact that investment returns have exceeded the rate of economic growth over the past few decades is precisely the reason there has been a widening in the gap between the super-rich and the desperately poor in America. It is the reason for the financialization of the American economy, where asset bubbles create collateral to create debt to create liquidity to create consumption to create profits.

This can’t go on, but the money managers want it to go on so public sector pension systems can buy another quarter of phony solvency. The alternatives are unpleasant to contemplate.

A few years ago the largest public sector pension system in the United States, the California Public Employees Retirement System with over $300 billion in assets, announced it was going to double the required payments from participating agencies over the next five years. That process is well underway and is the primary motivation for the hundreds of local tax and bond proposals on every primary and general election ballot in the state. If there is a recession, much less a depression, it won’t be enough.

Meanwhile, in the rest of America, those private-sector workers who are required to save money in 401k plans to supplement their eventual Social Security benefit, are now watching their retirement security vaporize before their eyes.

How is this fair? How is it that public sector employees can collect guaranteed pensions that pay, on average, two to three times as much as Social Security and, on average, are collected ten years earlier in life.

Defenders of public employee pensions point out that investment returns pay most of the cost for these pensions, not taxpayers. That’s only true, however, as long as those investments continue to deliver excellent returns. Once that assumption goes off the table, taxpayers pay for public-employee pensions. This results in higher taxes and lower services, and still doesn’t solve the problem of poorly regulated pension funds rampaging through the financial sector with trillions of dollars and grossly inadequate risk aversion, since they know taxpayers will pick up the tab whenever their schemes falter.

Public Sector Union Agenda Aligns with Big Finance

Public-sector pensions are yet another reason why the big corporate and financial sector political contributions in America overwhelmingly favor Democrats. These pension systems, and the benefits they provide, establish a common interest between government workers and big finance. Through the political agenda of their public-sector unions, which are overwhelmingly Democrat, the economic interests of public employees and America’s wealthiest elites are kept in perfect alignment.

No wonder public employee unions don’t fight open border policies. Not only do millions of destitute immigrants require more government administrators at all levels, but corporate profits—to help the pension funds—are boosted by the influx of cheap labor. No wonder public employee unions love draconian environmental regulations. The regulations create artificial scarcity—especially the policies of urban densification—and scarcity creates asset bubbles which help the pension funds.

No wonder public employee unions don’t object to exporting private sector jobs—international corporate profits translate into higher investment gains. No wonder public employee unions always support more bonds and borrowing—the proceeds expand government payrolls at the same time as underwriters and investors reap billions in commissions and interest payments.

And no wonder public employee unions don’t care if the welfare state implodes when the debt bubble pops and government deficits become unmanageable. Public employees don’t depend on the same network of taxpayer-funded social entitlements as the citizens they serve. To put it in terms that are crude but regrettably accurate, American citizenship is economically irrelevant to public employees. They are a separate class of Americans, exempt from the pitfalls of stressed public services, and exempt from the perils of market crashes.

The best thing that could happen to unite Americans would be to eliminate all public sector pensions and transfer the assets into the Social Security Trust Fund. One may endlessly argue the virtues or vices of Social Security, but compared with government pensions, Social Security has not split the nation in two, nor does it pose the same financial threat.

Unlike public employee pension formulas, Social Security benefits are progressive, meaning that high-income Americans have a lower ratio of contributions made to benefits received than low-income Americans. Unlike public employee pensions, there is a cap on Social Security benefits, and there is the ability to fine-tune the system to retain solvency.

Most important, however, if there is going to be a taxpayer-funded retirement security net for all Americans, it should be one system, with one set of formulas and incentives, equally applied for all citizens. If police, firefighters, nurses and teachers are heroes that deserve generous compensation, fine, let that take the form of higher salaries. Then they might invest their monthly surpluses into 401K plans, like the rest of us. And if that’s unacceptable, then they might make common cause with their private citizen counterparts to arrive at ways to improve Social Security. But all Americans would be confronting these problems together.

Patriotic members of the public sector must make some tough choices in the coming years. If lean years come, do they want America to be run by an international plutocracy, where citizenship is meaningless, but their own jobs as government enforcers are secure and lucrative? Or do they want American citizenship to still mean something? Pensions might be a useful litmus test.

This article originally appeared on the website American Greatness.

Money Can’t Buy Love, Or Elections

Of the many conclusions that can be drawn from the March primary election in California, perhaps the most notable is that money doesn’t always translate into political success.

Let’s start with the “bad” Proposition 13 — the $15 billion statewide school bond measure which, at this writing, is way behind in the polls. The Associated Press has already called the election for the opponents.

The proponents of the bond had a lot of things going for them including the vocal support of the governor, education interests, public sector unions and developers. They also had a sympathetic purpose. Raising money for schools has traditionally been easy in California because education ranks very high in importance among the state’s voters. The slogan “it’s for the kids” may be overused, but it can still be effective.

The proponents also had something else which should have translated into a huge advantage: Lots of campaign cash. Although all the financial filings with California’s secretary of state are not yet publicly available, the proponents spent at least $10 million and perhaps much more than that to push their messaging.

Slick television ads claiming crumbling schools, lead in the pipes and asbestos in the ceiling tiles were intended to push the sympathy buttons of concerned voters.

To read the entire column, please click here.

Gathered for the Feast at the Hotel California

Welcome to the Hotel California, such a lovely place… Plenty of room at the Hotel California, any time of year, you can find it here…
– “Hotel California,” by the Eagles, 1977

For decades California’s aristocracy has engaged in unsustainable feasting, as they consume the leviathan carcasses of what were for a time the world’s the finest water project, freeway system, and the public universities. Living off a capital endowment that once provided abundance, the aristocrats of California have neglected all of these achievements, instead imposing scarcity on a quiescent populace.

California’s aristocrats get wealthier as they ration supplies of every necessity, from housing to water and energy, and the money they should have invested in maintaining affordable abundance goes instead into pay and pensions for their armies of usefully co-opted, unionized public servants, and entitlements for a growing underclass that votes reliably Democrat.

By now California’s so-called “up down coalition” of Democrat voters has enabled its ruling class to acquire absolute power. Meanwhile, California’s beleaguered middle class either flees to other states or continues to vote against their own interests because they think it will demonstrate their commitment to the twin Gods of “diversity” and fighting climate change. And as the old adage goes: power corrupts, and absolute power corrupts absolutely.

California’s political economy today is set up to reward the wealthiest political insiders, destroy the hardest working middle income citizens, while expanding the ranks of the lowest income residents and pandering to them by pretending to care about wealth inequality, social “equity,” and “environmental justice.” This explains the status of California as a sanctuary state. It also explains California’s burgeoning, unaccountable homeless population.

These deplorable social conditions as well as the neglected infrastructure in California could easily be managed, but then there would be no reason to expand the unionized state, no reason to drive down private sector wages while elevating public sector wages and benefits, and fewer opportunities for the wealthiest Californians to profit from asset bubbles. This is textbook political corruption. California is a one-party banana republic, ran by a plutocracy that is looting the people’s inheritance to further enrich themselves.

The Hotel California Is Now Open on Venice Beach

In February 2020 the Venice Beach homeless “bridge housing” complex was opened for occupancy. It is a prime example of how crony capitalist corruption hides behind the mask of social justice and “inclusion.” This shelter is situated two blocks from the beach, on a three acre parcel where land is valued at $30 million per acre. This city owned land could be sold, and the proceeds could be used for shelter housing in far less expensive parts of Los Angeles County.

Instead, 154 homeless individuals are now occupying a “temporary” shelter that cost $8 million to construct, and will cost another $8 million per year to operate. Eventually, supposedly within three years, “permanent supportive housing” will be constructed on-site for these homeless – or as they are now referred to, the “unhoused” – so they can continue to live two blocks from the beaches of the Pacific on one of the most expensive pieces of real estate on earth.

This is an example of “inclusive zoning” at its most extreme. It is based on the premise that if disadvantaged people, low income people – even those struggling with mental illness or substance addictions – are brought into an affluent neighborhood, the habits and attitudes of the affluent residents will be absorbed by these less fortunate individuals, and “foster greater social and economic mobility and integration.”

The entire affordable housing policy agenda, enshrined in zoning regulations and tax incentives across America and especially in California, is susceptible to corruption. Why develop market housing, when you can get tax credits and tax exemptions if you build subsidized affordable housing. In California, the government implemented regulations and fees so punitive that they effectively rationed housing for all but the very wealthy, and now are soaking the taxpayers to subsidize “affordable housing” at an average cost of over $600,000 per unit. But why seed the most expensive parts of California’s cities with homeless shelters a cost of over $50,000 per bed?

Here where we could be seeing corruption disguised as compassion at its worst, because the easiest way to acquire tax subsidies and tax credits is if an area can be officially declared “blighted.” Once this label applies to any census tract, not only do the federal money coffers automatically open wide for redevelopment, but the local cities can declare eminent domain to force homeowners to sell their homes which are then demolished to make way for hotels, hospitals, shopping malls, and residential high-rises.

It doesn’t take much to tip the balance in a census tract to a “blighted” status, and even less to earn a score that qualifies the area for less draconian but still very lucrative tax credits and subsidies. It is based on three variables, average median income, rate of unemployment, and rate of poverty. Take a look at this map of the coastline of West Los Angeles. The census tracts are outlined with yellow lines; some of them are only a half-mile in area, only a few hundred acres in size.

Notice that large parts of Venice Beach are already shaded yellow, meaning they are “eligible” for tax incentives based on “blight.” Flip that shade from yellow to red, as has happened in Santa Monica to the immediate north, and even more tax incentives arrive. How many people with perfect scores for “blight” would it take to transform these areas?

Don’t Walk Your Dog After Dark in Venice Beach

The homeless in Venice Beach have been a growing menace to law abiding, hard working residents for years. The problem has became considerably worse in just the past year, but if you object to the presence of people smoking methamphetamine and defecating on the sidewalk in front of your home or business, apparently that means you’re a fascist, a social darwinist, and a sociopath. Never mind the fact that you and your spouse may both be working overtime to pay a mortgage, or that you have young children you want to keep safe.

Now that the Hotel California “bridge housing” is officially opened up, a new breed of homeless have arrived on the scene. As if the nonstop distribution of shit on Venice’s sidewalks and syringes on the local lawns wasn’t bad enough, eyewitness accounts offer lurid details of local women now being aggressively followed and harassed by gangs of young men who correctly identified this new “shelter” as a place where they can get free meals and free overnight accommodations.

Common sense would suggest that if the civic authorities had the slightest respect for the residents, this shelter would have a curfew, and would not admit intoxicated individuals. But the opposite is the case. Out of respect for the human rights and dignity of the “unhoused,” Venice Beach’s Hotel California is a “wet” shelter, meaning that any time of day or night you can stagger in as stoned or smashed as you wish, get some sleep or a free meal, then leave again.

Exactly how is something like this not expected to pull even more of the “unhoused” to make Venice Beach their free home? They have everything they need – free food, free shelter, freedom of movement, “tolerance” of their “lifestyle,” and no accountability. But in a census tract of only a few blocks, a facility of 150 people without jobs (perfect score on “unemployment rate”), without income (ditto), and clearly living in poverty, watch out. Blight, and with that, eminent domain by the City of Los Angeles, could swiftly follow.

Inclusive zoning, California style, includes the practice of redistributing poverty to make certain neighborhoods blighted and low income, so that developers, working closely with the city bureaucrats, can use major federal financing incentives and eminent domain to completely demolish previously intact neighborhoods where residents invested their lives and fortunes to call home.

The ideal underlying inclusive zoning is overtly communist. It suggests that everyone has a right to live anywhere they want, and that private property rights are a manifestation of privilege and oppression as much as hard work. What great irony that this seductive siren call is a useful tool in the hands of political cronies and profiteers.

And so California continues its descent into madness. At least, down in Venice Beach, one may get out as well as get into the Hotel California. But what incentive might prompt anyone want to do that? From each according to their abilities, to each according to their needs.

This article originally appeared on the website American Greatness.

 *   *   *