George Rebane
[This is the transcript of my regular KVMR commentary aired on 25 May 2012.]
The world is in a turmoil that most people equate to something that has to do with finances. In addition to the reports from Europe about Greece, and Spain, and Italy, and on-and-off austerity programs, we are already numb with news of the European disease that has also spread to our shores. For those who still try to bury their heads in the sand, there’s more, and here I’ll try to connect a few dots.
The latest news about the joys of socialism comes from the Northern Marianas, way out in the Pacific. Home to about 53,000 people, these islands are a United States territory populated by American citizens. And looking at the mainland years ago, their government employees saw a good thing – lavish public service employee union negotiated pension funds – and so they set up one of their own. Well, cutting to the chase, their pension fund is broke and last month filed for bankruptcy.
This happened for the same reason that our stateside public pension funds are teetering. The islands’ politicians put in place pensions that could be earned with as little as three years of work, paid out handsome benefits that could be increased by adopting your grandchildren, who could even inherit the payments after you died. Long story short, the fund is projected to run out of money next year, and therefore seeks bankruptcy protection.
At this point you might say, who cares. Well, governments and government agencies cannot file for bankruptcy of the kind that lets you walk away from your contracted financial obligations. So the Northern Marianas pension fund is claiming not to be a part of their government, since the government is also flat broke. And that makes this case an interesting landmark that is being watched by literally hundreds of stateside pension funds also contemplating ways to get out of having to pay their growing number of government pensioners. Declaring bankruptcy would be a great solution to duck their trillions of unfunded liabilities.
You’ll recall that Greece went bankrupt for exactly the same reason – unfunded pensions for government workers which there number one out of four in the country’s work force. Greece’s socialism has come home to roost, and now they will have no choice but to leave the euro and go back to their own drachmas, which they can print to their hearts desire when that becomes their own faith-based money. In any event, their pensioners and recipients of transfer payments – read welfare – are screwed, they will be paid off in monopoly money because their government policies destroyed their economy’s ability to generate wealth.
The rest of Europe is watching with baited breath to see if the coming Greek exodus will cause a financial tsunami that would start the dominoes toppling across the continent. And on this side of the pond we wonder how much of it will wash over here.
On top of unfunded pension plans, here we have a failed forty-five year welfare state that started in 1965, and was advertized as an “unconditional war on poverty”. Well, that war has been lost because we have spent $15T on it, and have put barely a dent in the country’s poverty rate. Instead, we have destroyed families and created a reliable dependent class that costs about $62,000 a year for a poor family of three. Overall, it is costing taxpayers over a trillion dollars a year, and all it does is deliver reliable votes to politicians, and jobs to untold thousands of government workers who administer this redistribution of wealth through 126 confusing and overlapping programs. And there is no end in sight to either the cost or the damage, because it’s easy to become a recipient and too hard to give it up. So look for a bankruptcy coming to a pension fund or government program near you.
What ties all these reports together is that they represent the common face of socialism. Socialism is like a fast growing tree with a weak root structure, one that doesn’t keep up with its foliage before it finally rots. Then after a while the visible part suddenly dies, and the disease spreads.
My name is Rebane, and I also expand on these and other themes in my Union columns, and on georgerebane.com where this transcript appears. These opinions are not necessarily shared by KVMR. Thank you for listening.
rebanesruminations.com 
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