Let’s not bicker and argue about who killed who…

I agree entirely with Mark when he urges us not to confuse state and national politics. As a resident of Arizona, I understand this only too well. Indeed, it’s interesting to me to look at the twin budget catastrophes of New Jersey and Arizona and the different methods each state is taking to remedy them. For instance, unlike New Jersey, Arizona does not have particularly powerful public sector unions. Our tax rates are not as high as New Jersey’s are. Nor is the cost of living throughout most of the state. Then again, Arizonans also tend to make less money, receive fewer state services, and so forth. Yet both states are in miserable fiscal predicaments, because the people assigned to govern both states have spent more than they have taken in, have promised more than they can ever hope to pay out, and have generally mismanaged the most basic tasks of governance – all of which was greatly exacerbated by the housing bubble and the subsequent recession.

In my post on austerity measures I in no way intended to assign blame for all of this to the public sector unions. They are, if anything, an active symptom of a much more ingrained problem which the political class has drummed up over the years. Public sector unions are acting in their own best interest – or at least their own best short-term interest – and that is rational enough and hardly something to blame them for doing. Politics is messy business, and the unions play the game just like anybody else.

The point I was trying to make was not who should or should not be burned in digital effigy. I was simply suggesting that the term ‘austerity’ has been used rather loosely – ignoring the fact that many cuts simply return spending to pre-boom levels. This is the opposite of profligacy, but not the same thing as austerity. I feel the same way about keeping a standing army about that is much too large, or too many cops on the beat. It costs taxpayers money, and these days it costs them money they don’t actually have because politicians won’t bother to raise the taxes required to carry out their spending projects. When I say these cuts will lead to prosperity, I don’t mean that they’ll lead to an uptick in the current economy, I mean they’ll pave the road for future prosperity by not passing on more and more debts and obligations to future generations. There is a difference between debt which is used to invest in the future and debt which creates a future that is almost certainly a fiscal disaster.

I don’t begrudge the unions. I’m not fond of the concept of organized labor in the government even if I’m sympathetic to why these unions organized in the first place. But if we are to begrudge anyone, we should probably begrudge the legislatures and city councils and various other elected officials who signed off on these ludicrous promises to begin with. They took on debts that were not only unsustainable and that they were not personally liable for, but which benefited them politically as well.

And at some point other people will be liable for these promises. In the near term it may be public sector workers who lose their jobs because people up the ladder have fat pensions that have to be paid for. In the long term, who knows? Higher taxes, higher unemployment, or depressed wages and benefits for future workers (or all of the above) are all likely enough outcomes.

Whether Chris Christie is up to the task of fixing all of this is impossible to say. Like Mark, I’m far from certain that the privatization programs proposed will work. Some do and some don’t. And cutting spending is tricky. I’ve said before limiting government is much harder than expanding it, and a big reason is that limiting, cutting, etc. cause harm in the short term. The benefits of these actions are often not felt in the short span of time most elected officials stay in office.

Cuts to transportation, education and services for the poor I’m especially sensitive to. Indeed, one of my ongoing concerns with public spending is that more and more tax dollars will go into salaries and pensions for government employees and not to important services for those who really do need them. This isn’t necessarily the case in Arizona, but it certainly looks that way in New Jersey and California.