Wednesday, June 19, 2013

More Blue on Blue Violence as Detroit Circles the Drain




Government unions and their long term lovers, cities, counties and municipalities run by Democrats, with whom the government unions have been in bed for decades, suddenly discovered they've all got herpes.  And now the bondholders in Detroit are infected!

There's now a big fight between the government unions and the bondholders - who pay for all the big government programs - over who brought the herpes home and who has to pay for the treatment.  Of course, no matter who wins they all lose.  Which is probably good for America in the long run but in the short term it will be painful as we transition from the failed blue social model to a model that works in a knowledge economy.

Professor Mead, who has been tracking the inevitable implosion of the blue social model - at work in California, New York and Illionois and brought to us on a national scale by President Obama - explains the importance of the blue civil war as follows:

If the unions win, it could lead to an implosion in the municipal bond market across the country as lenders realize that money lent to struggling cities may never be paid back. As Walsh notes, this outcome would upend standards that “such bonds are among the safest investments and that for ‘general obligation’ bonds cities could even be compelled to raise taxes, if that’s what it took to make good.” This would be disastrous for other cities, which would find it much harder to borrow money, and would likely need to pay exorbitant interest rates to do so. 
If the unions lose, however, it would deal a major blow to support from their own members. Detroit’s pensioners would begin to wonder why they pay dues to a union that can’t guarantee the pensions or benefits they were promised. A similar dynamic all but destroyed unions in the private sector as striking union members saw their jobs shipped away to China.
Welcome home chickens.  Don't crap in the grain bins!


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1 comment:

Brian O' Hanlon said...

Sounds like an Irish type of mess.

American socialist, Mike Davis, interviewed by Bill Moyers are few years back, spoke about the cooperation between unions and policy makers in the depression era - which didn't think has happened today.

Two people I have heard talk about these problems - Judith Stein at New York University in his history of the 1970s recent book, and Richard Buchanan, now at Case Western Weatherhead management school (trying to set up a design school for the first time, within a management school), . . . explain things quite well, and how the rust belt got to where it has done.

I liked the writings of Annalee Saxenian on Boston route 128, and its demise too. Dan Bricklin podcasts on knowledge economy etc, whenever you can get your hands on them, on this kind of subject are interesting also.