Not Far-sighted

On Sunday night, 60 Minutes ran a piece attack public workers and repeating claims by reactionary NJ Governor Chris Christie that public workers are to blame for the large holes in state budgets. Dean Baker absolutely demolishes the CBS piece and Christie’s logic. As is often the case when it comes to the current round of deficit hysteria and public servant bashing, the people who are most committed to this narrative are congenitally disinclined from including the Wall Street created financial crisis from their analysis of what brought us to the situation we are in today (as they perceive it).

Way back in the last decade the United States had a huge housing bubble. The Wall Street banks made money hand over fist making and selling the loans that fueled this bubble. The economic policymakers and regulators who were supposed to prevent the growth of such dangerous bubbles, people with names like Greenspan, Bernanke, Paulson, and Geithner, assured the public that everything was just fine. When they were proved horribly wrong, they then congratulated themselves for avoiding a second Great Depression.

This background is important to any story on the financial problems facing state and local governments, since it is 90 percent of the picture. It also would be good if the public remembered this history, since many of the people who either profited from the bubble or failed to take measures to counter its growth are now at the forefront in demanding that state and local governments sharply reduce their budgets and that public sector employees take big cuts in pay and benefits.

This cuts to the core of what the attacks on relatively low-wage public servants ignore. It’s not the guy at the DMV’s fault that Wall Street recklessness blew a whole in his pension fund. Making workers pay off Wall Street’s bad bets is not a bizarre theory for the Banksters to put forward, but it is strange to hear CBS posit it is a logical and necessary response to Wall Street blowing up the American economy.

Things get even better when Baker sets his sights directly on Christie.

Interestingly, New Jersey Governor Chris Christie is presented as a heroic visionary in this story because of his willingness to make cuts in areas like public and education and to force workers to take pay cuts. In one instance he is shown telling teachers complaining about cuts in their benefits that they should get another job if they are unhappy with their pay.

While such an approach may be an effective short-term strategy it is absolutely disastrous in the long-term. At any point in time it will be difficult for long-time workers to leave their jobs with the state and find comparable employment elsewhere, especially in the midst of the worst downturn in 70 years. However, as new workers come into the labor force, lower pay and worse benefits in the public sector will make these jobs less attractive. This means that New Jersey’s schools and other public agencies will have less choice in selecting their workforce, which is likely to lead to a deterioration in the quality of education and other public services. This is not obviously far-sighted thinking.


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