23 December 2010

Governments are Not Forever: The Coming Idiocracy

Think of Prichard, Alabama, as the preview of coming attractions. Mayor Ronald Davis, pictured at left, is the face of Prichard's government. Prichard's government is like many local governments across the US deep south and California, except perhaps a bit advanced in its progression toward a corrupt inability to meet its obligations.
the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions, and if so, how.

“Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”

...The city’s rapid decline began in the 1970s. The growth of other suburbs, white flight and then middle-class flight all took their tolls, and the city’s population shrank by 40 percent to about 27,000 today, from its peak of 45,000. As people left, the city’s tax base dwindled.

...The city had already taken the unusual step of reducing pension benefits by 8.5 percent for current retirees, after it declared bankruptcy in 1999, yielding to years of dwindling money, mismanagement and corruption. (A previous mayor was removed from office and found guilty of neglect of duty.) The city paid off its last creditors from the bankruptcy in 2007. But its current mayor, Ronald K. Davis, never complied with an order from the bankruptcy court to begin paying $16.5 million into the pension fund to reduce its shortfall.

A lawyer representing the city, R. Scott Williams, said that the city simply did not have the money. “The reality for Prichard is that if you took money to build the pension up, who’s going to pay the garbage man?” he asked. “Who’s going to pay to run the police department? Who’s going to pay the bill for the street lights? There’s only so much money to go around.”

Workers paid 5.5 percent of their salaries into the pension fund, and the city paid 10.5 percent. But the fund paid out more money than it took in, and by September 2009 there was no longer enough left in the fund to send out the $150,000 worth of monthly checks owed to the retirees. The city stopped paying its pensions. And no one stepped in to enforce the law.
When the human capital of a municipality, state, or country is allowed to decay -- when unqualified people rise to positions of responsibility and power -- why should anyone be surprised when complex systems decay and collapse?

Across large parts of North America, Europe, and Oceania, human competence is being lost over time, and replaced by persons who are less than competent. Sometimes the explanation for a human system's failure lies in the corruption and lack of integrity of the system's leaders and operatives. In many cases it is not actually the fault of the persons placed in positions of responsibility -- it is the Peter Principle at work.

The problem is widespread and growing rapidly. If you have been unaware of the phenomenon, the wakeup call can be a bit of a shock.

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Blogger Kinuachdrach said...

Let's not be too hard on Mayor Davis. The die was cast when a much earlier generations of politicians set up Ponzi schemes for pensions and and other forms of social support.

That earlier generation of politicians (going back to FDR and LBJ) were truly incompetent on a massive scale -- there were thousands of State & Federal politicians who approved these unsustainable schemes.

The true Harvard-educated incompetents are still with us. That NYT article complains that no one enforced the law when Prichard stopped paying pensions. They don't teach "can't get blood out of a stone" at Harvard, apparently. Then the NYT approvingly notes the Feds can take over failing private pension schemes -- that would be the same Fed that is deep in debt and unsustainably overspending its income.

Peak Government -- coming soon to a juridiction near you. And the most competent people in the world could not stop it.

Thursday, 23 December, 2010  
Blogger al fin said...

Mayor Davis is probably no more corrupt than thousands of other politicians. Prichard is merely on the leading edge of a growing tsunami of public default.

The US Feds can bail out all the cities and states, but who will bail out the Fed when its bonds become worthless?

As for competence -- it isn't meant to stop governmental collapse. It is meant to help people survive through whatever comes after.

Thursday, 23 December, 2010  
Blogger Kinuachdrach said...

The competence which will help people survive Peak Government will not be found in government.

There may be a very few isolated competent politicians and civil servants, but most of the competence will be found in individuals in the Military, in productive Industry, voluntary organizations (especially religious), and in Agriculture. Zero competents from Academia, and probably not much better than that from the Judiciary.

Anyone who is counting on governmental competence for survival should probably expect a very quick exit.

But competence will rise to the top after Peak Government. It may take decades or longer, but the human race will regroup and more forward again.

Thursday, 23 December, 2010  
Blogger gtg723y said...

Perhaps after peak government hits the fan birth control will be hard to come by and high IQ women will contribute their genes to future generations again.

Sunday, 26 December, 2010  
Blogger LarryD said...

Peak Government has building ever since FDR's administration. Social Security, in particular, is an inter-generational Ponzi scheme which is close to hitting its fall-apart crisis.

There's hardly anyone left alive today who remembers how small the Federal Government used to be.

Academia, particularly the Ivy League, has been surviving on the strength of its reputation, no longer deserved in large part. Instapundit has been talking about the education bubble. A lot of bubbles are getting ready to pop, at some point expect them to cascade.

Stock up on food, emergency gear, etc.

Monday, 27 December, 2010  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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