Kevin Williamson over at NRO has written one of the more prescient pieces I've seen on the current state of US entitlements: The Entitlement Bubble: The Bust Is Going to Be a Nightmare
My freind over at NRO John Derbyshire, has been telling people to get a government job for years. And for years, I've been telling him that anyone who does what he says will be 'buying at the top'. It's not the soul sucking, pointlessly bureaucratic work that appeals to him but the generous benefit package that comes with it. Working for the government right now means retirement at close to full pay in your 50's (sometimes in your 40's) and free medical care until you die. While we dupes in the private sector not only have to pay our own way, but are forced to pay for the government staffers as well in the form of higher taxes.
But I've been trying to tell him for years that the ship has already sailed. Anyone who goes to work for the government today will never have a chance to see any such generosity. The political backlash against the public sector has already started in places like NJ and California, and it's spreading rapidly. But while John doesn't see that yet, I get the impression that Kevin Williamson might.
You see, professional investors are paid to look into the future, but analysts like John and Mr. Williamson are paid to look at the state of things right now. Don't get me wrong - I think they both do that very well. But I get the impression that the fog of the future is clearing for Kevin Williamson just a bit. And while he can't make out the precise problems that will be there for us in the future, he can make out a rough outline of it.
Add into the mix 10 years of double digit inflation eroding the value of earnings for all those (excessively) generous government retirement packages, and you see much more of the picture in 2020. That pressure will decimate our national standard of living, but will also erode a substantial part of our national debt. And it's that result that will keep the political pressure on for higher inflation for years. None of that is mentioned in the NRO piece.
Still, with all that said, it's a highly illuminating and well written article that gives a glimpse of the bloated state of things for the unproductive classes. And it does give a hint of the size of the future problem, even if it doesn't try to detail it.
5 comments:
Tom-
Well said. I would add that, even if by some miracle the benefits actually were there, anyone who takes Derbyshire's advice is making a pretty sad comment on their life. How pathetic to spend 20-30 years doing "soul sucking, pointless bureaucratic work" in order to retire a few years early...
Rick
Rick,
In John's defense, his advice is about 50% joking. In his heart of hearts he really believes that the government shouldn't be allowed to do much, and they would therefore not need many people to do it.
But for the other 50%, I think he has a point as far as that goes. Even the most exciting job involves some level of drudgery. And if you make the focus of your life something other than your job, what's a little extra drudgery more or less? I mean, it's not like anyone is going to expect you to actually do anything.
To pull from one of his other rants, not everyone is cut out to be a movie star, an astronaut or a Fortune 500 CEO. So if you have to do a job that will offer only middling pay and minimum excitement, why not do it in the environment that will at least let you retire in comfort at an age where you're young enough to enjoy it.
For myself, I don't disagree with you. But John is my friend so I feel obliged to defend him at least a little.
To be clear, I wasn't criticizing John - I know him (a little) and obviously realize he shares these sympathies. My point was more a broader comment on our society, and how it has devolved from a culture of risk-taking and "frontier mentality," to this quixotic quest for security. We all die in the end - pretty sad to spend a big chunk of your life doing something you hate just so you can be a little less afraid.
I actually wrote a piece about this last year if you're interested...
http://whoistheabsurdman.blogspot.com/2009/07/ultimate-answer-key.html
Honestly, I would not be very confident predicting what the mess will look like. I just know that it's there.
I'm not sure the pressure for inflation is exactly what we think it is. (It's there, it's huge, I'm worried about it, don't get me wrong.) The reason is that inflating away the debt and entitlement liabilities only really works if you've eliminated the deficit first -- otherwise, you end up paying an inflation premium on your deficit borrowing, erasing your ill-gotten seigniorage gains, right? Or am I missing something?
So, I used to think that the talk of default I hear was 100 percent crazy talk. Now I only think it's about 80 percent crazy talk.
Personally Kevin, I think the deficit can be addressed much more easily than the entitlement issue. Christie is taking the right steps in NJ and I don't see any reason why something like that can't be done on a national level in this political climate.
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