In case you hadn't heard, Berkeley took only 9 minutes to fill up the slots for its "innovative" program to pay for rooftop solar installations over time using property taxes.
Proponents lauded this measure, which passed handily, for allowing the average homeowner to pay the hefty $28,000 pricetag for a typical system by tacking on only $182 a month to his property tax bill.
On the surface, this seems like a good deal, and some have even suggested that it could be a model nationwide. Sadly, not only is it a bad deal, it's an environmental disaster.
Now I know you're probably expecting me to attack solar panels from the typical conservative non-environmental perspective. After all, rooftop solar panel installations are a key element of reducing greenhouse gas emissions and saving the planet, right?
Not so fast. I realize that the typical liberal narrative is that the only reason solar panels are not ubiquitous is that greedy capitalists are unwilling to foot the bill to purchase them. Instead, they'd rather pay 10 cents a kilowatt-hour or so for dirty coal power. If only they were willing to cut back a little up front, they'd get 30 years or so of emission and cost-free solar power from each panel they purchased!
Here's the problem. No one ever asks why solar panels cost so much more to produce per lifetime kilowatt-hour than do coal-fired power plants.
Well, let's think about it. First, someone has to locate and purify a certain type of silicon. Then, an industrial process must be used to produce a large crystal structure from that silicon material. Finally, since many of the panels produced don't measure up to quality standards, relatively few make it through the process.
What's the common denominator at each step of this process? Energy. It turns out that solar panels require a vast amount of energy to produce -- starting with the bulldozer digging up the silicon, through the energy required to purify it, the energy to produce the crystal and then the wasted energy when panels fail to operate.
So, when you pay $28,000 for a solar panel, most of that money is going to purchase fossil fuels which are burned to produce the energy for making that panel.
When you think about it, this is true for pretty much all alternative energy schemes (with a few exceptions, such as hydroelectric and geothermal). Any time you're relying on a complicated and expensive device to generate your power, it's a good bet that the cost of that device is largely energy-related. So, if the device costs more than the cost of the energy it "saves" you, you're probably wasting energy.
In other words, unless you get $28,000 of energy out of your solar panel, you've probably hurt the environment. Unfortunately, that takes at least 10 or 15 years to do, even with optimistic assumptions about energy production. And, this all assumes your panels don't break.
Oops.
What rooftop solar panels really amount to is a bet against future technological progress. What you're saying is, "I'd rather burn up $28,000 worth of fossil fuels right now than burn them slowly over time in the hope that things get more efficient into the future."
Also, you're saying you don't think technological progress is likely to produce solar panels more efficiently in the future.
Doesn't make a lot of sense, does it?
The real solution to our energy dilemma is to search for cost effective alternative sources of energy. Cost effectiveness is absolutely critical, because if something makes financial sense it's a good bet that you're getting more energy out of it than you put in. And this should be the gold standard for environmentalists.
Environmentalists need to start thinking like capitalists. A capitalist looks at an investment and asks, "What return on investment can I expect here?" An environmentalist should look at a new energy technology and ask, "What return on energy does this technology give me?" So, if the device costs 1 million kilowatt-hours to build, it better generate far more than 1 million kilowatt-hours over its lifetime.
In my opinion, if you want to save the planet using solar power, you should encourage the government to fund basic research, or throw some money into one of the many nanotechnology-based solar startups throughout the Bay Area. Both of these avenues make sense, because they can potentially find ways to produce solar panels for a fraction of the cost (and therefore energy) required to produce today's panels.
But the worst thing you can do is purchase today's inefficient environmentally unfriendly solar panels.
Let's hope Berkeley's program doesn't become a model for the nation. If it does, we're in for a world of hurt.
Saturday, November 29, 2008
Monday, November 17, 2008
Nirvana Realized: Oakland At 837 Cops
By now most readers have heard the news that the Oakland Police Department graduated a new class of cops, bringing the total staffing above the magic 800 number for the first time in recent history. At the same time, there's a fair bit of bellyaching that this accomplishment will not make a significant difference to the city.
There also is some discussion of how this feat serves as some sort of vindication for Mayor Dullums. Let me counter that assertion first and then move on to the question of what this will mean for Oakland residents.
Ron Dullums is the political equivalent of a fair-weather fan. The issue with him is not that he didn't manage to survive long enough to witness the promised increase in policing. It's that he did very little to support it -- and indeed opposed it -- until it became clear that it was the only alternative left.
But just as the president frequently gets credit for "running the economy," though he does nothing of the kind, Dullums has received some totally undeserved accolades here. Fair enough. Hopefully it makes him sleep better at night.
But on to the issue of the 837 cops. I'll admit that the first thing I noticed when reading the announcement was these cops' starting salary: $70,000 per year. I'm sure that number ignores the cost of benefits and retirement, which typically adds about 50 percent to a civil servant's cost. So, these cops are cosing us about $100k per year each.
That's quite a price to pay for rookie cops, especially when you consider that New York pays its rookie cops just $36,000 a year.
Sit back and think about that for a moment. Our leaders are chortling that they managed to hire police by offering to pay them double what they would earn in NYC (which, incidentally, has a higher cost of living than the Bay Area).
And, what do you want to bet that Oakland is not rationally reserving money for these officers' retirement pay? Given what we've seen throughout California in recent months and years, I'd be pretty surprised to see anything reasonable on that front.
Still, I'm glad to see the number of police increase, and I continue to support any well-written proposition to increase them further -- provided it uses regressive taxation as did Measure Y.
Doing so is a true win-win for Oakland residents. First, spending money on police will decrease crime.
Now I know that Dullums likes to say things like, "We can't arrest our way out of this problem." I disagree. I think we can and should arrest people like crazy to get this problem under control.
If I were an anti-social element looking for a city to loot, I'd absolutely factor my chances of getting caught into my decisionmaking. As criminals learn that Oakland is serious about rounding up criminals, they will go elsewhere. It's simple self-preservation.
But that's just the start of it. By diverting tax money from liberal social programs to the police -- no matter how inefficiently it is done -- the city is sending out a clear message to the poor: Get Out.
The same goes for regressive parcel taxes which hit hardest those who can least afford them.
This is exactly what Oakland needs to do. Tax the poor and stop spending money to support them. Our city lies at the gateway to San Francisco. We have Bart stations which will whisk a business commuter to Market Street in under 15 minutes. What we need is an environment more conducive to getting those people to live here. That means keeping prices cheaper than San Francisco (we've got that covered, courtesy of the housing crash), and it means making the streets livable.
So, I applaud whatever forces have brought this about, and I hope to see more of the same. May our better-policed city flourish!
There also is some discussion of how this feat serves as some sort of vindication for Mayor Dullums. Let me counter that assertion first and then move on to the question of what this will mean for Oakland residents.
Ron Dullums is the political equivalent of a fair-weather fan. The issue with him is not that he didn't manage to survive long enough to witness the promised increase in policing. It's that he did very little to support it -- and indeed opposed it -- until it became clear that it was the only alternative left.
But just as the president frequently gets credit for "running the economy," though he does nothing of the kind, Dullums has received some totally undeserved accolades here. Fair enough. Hopefully it makes him sleep better at night.
But on to the issue of the 837 cops. I'll admit that the first thing I noticed when reading the announcement was these cops' starting salary: $70,000 per year. I'm sure that number ignores the cost of benefits and retirement, which typically adds about 50 percent to a civil servant's cost. So, these cops are cosing us about $100k per year each.
That's quite a price to pay for rookie cops, especially when you consider that New York pays its rookie cops just $36,000 a year.
Sit back and think about that for a moment. Our leaders are chortling that they managed to hire police by offering to pay them double what they would earn in NYC (which, incidentally, has a higher cost of living than the Bay Area).
And, what do you want to bet that Oakland is not rationally reserving money for these officers' retirement pay? Given what we've seen throughout California in recent months and years, I'd be pretty surprised to see anything reasonable on that front.
Still, I'm glad to see the number of police increase, and I continue to support any well-written proposition to increase them further -- provided it uses regressive taxation as did Measure Y.
Doing so is a true win-win for Oakland residents. First, spending money on police will decrease crime.
Now I know that Dullums likes to say things like, "We can't arrest our way out of this problem." I disagree. I think we can and should arrest people like crazy to get this problem under control.
If I were an anti-social element looking for a city to loot, I'd absolutely factor my chances of getting caught into my decisionmaking. As criminals learn that Oakland is serious about rounding up criminals, they will go elsewhere. It's simple self-preservation.
But that's just the start of it. By diverting tax money from liberal social programs to the police -- no matter how inefficiently it is done -- the city is sending out a clear message to the poor: Get Out.
The same goes for regressive parcel taxes which hit hardest those who can least afford them.
This is exactly what Oakland needs to do. Tax the poor and stop spending money to support them. Our city lies at the gateway to San Francisco. We have Bart stations which will whisk a business commuter to Market Street in under 15 minutes. What we need is an environment more conducive to getting those people to live here. That means keeping prices cheaper than San Francisco (we've got that covered, courtesy of the housing crash), and it means making the streets livable.
So, I applaud whatever forces have brought this about, and I hope to see more of the same. May our better-policed city flourish!
Tuesday, November 4, 2008
Voting Is A Waste Of Your Time
Rather than submitting a list of endorsements or suggestions for your review this election day, I'd like to suggest that you reconsider the value of even participating in the process at all.
There's been a lot of discussion of various platitudes this election season, as there is every four years. I see people on the television telling me that they expect some resurrection of "hope" or "change" if one candidate or another wins the election. The same thing goes, to a lesser degree, for local elections.
As with most vague statements, these slogans bear little connection to reality. In fact, I've found that most Bay Area people I've spoken with can't even articulate any specifics when I ask how their candidate will affect their life.
If you think about it for a moment, you'll realize that this isn't too surprising. What a preposterous concept for someone to think that some action by the government can give them "hope."
Now, don't get me wrong. I do believe that people are affected by whom they select to lead them. It's just that I believe people make systematic errors by selecting leaders who tell them what they want to hear instead of those who might do something that would improve conditions.
This is exacerbated by the fact that nearly everything government does or can do causes harm. So, when a politician promises to "do something," this nearly always translates to "hurt people." When the government does manage to do something which improves conditions, more often than not it is an accident.
There is an old saw that every urban community and every urban school district is dominated by Democrats. So why then do those in urban areas seem to blame Republicans for the ills they suffer? The same goes for suburban Republican voters.
The bottom line is that voters follow predictable patterns, repeating the same simple mistakes time and again. In this way, politics is just like capitalism. Just as people guide the economy through their largely random purchases, so too do they guide the government through largely random voting patterns.
So, there is largely no point to voting. Doing so wastes your time. Elections almost never come down to a single vote. And, even if "your" candidate wins, you have no concrete or meaningful way to translate that election win into predictable positive consequences for you.
As one friend put it, democracy is the American religion. In church, people pray to a higher power, hoping their conditions will change -- yet nothing predictable ever comes of it. In America, we cast ballots thinking it will make some difference. Yet the vote of any individual is irrelevant.
So why even bother spending time writing about political issues? I have a couple answers to that. First, I believe local politics has a better chance of being relevant to an individual than do state or national politics. Also, just as a matter of statistics, a local blogger might shift enough views to cause one or another proposition to pass. That is why this blog largely focuses on the local.
More importantly, I view politics as an excellent source of good humor. I enjoy watching politicians repeatedly lie to constituents about their plans to "solve" various problems. It is great fun to watch debacles like the Mandela Foods Cooperative.
Of course, the only reason why I can view the terrible actions of our local politicians with such good humor is that none of them really affect me -- aside from taxation, that is. And, as readers of this blog know, I view local taxation as somewhat positive as much of it is regressive, which drives out the poor and improves the community.
If I lived in inner-city Oakland and had to send my kids to the crazy liberals' school-shaped laboratories, I would probably feel different. I'd probably be angry, and I'd probably buy into messages of "hope" coming from above.
There's been a lot of discussion of various platitudes this election season, as there is every four years. I see people on the television telling me that they expect some resurrection of "hope" or "change" if one candidate or another wins the election. The same thing goes, to a lesser degree, for local elections.
As with most vague statements, these slogans bear little connection to reality. In fact, I've found that most Bay Area people I've spoken with can't even articulate any specifics when I ask how their candidate will affect their life.
If you think about it for a moment, you'll realize that this isn't too surprising. What a preposterous concept for someone to think that some action by the government can give them "hope."
Now, don't get me wrong. I do believe that people are affected by whom they select to lead them. It's just that I believe people make systematic errors by selecting leaders who tell them what they want to hear instead of those who might do something that would improve conditions.
This is exacerbated by the fact that nearly everything government does or can do causes harm. So, when a politician promises to "do something," this nearly always translates to "hurt people." When the government does manage to do something which improves conditions, more often than not it is an accident.
There is an old saw that every urban community and every urban school district is dominated by Democrats. So why then do those in urban areas seem to blame Republicans for the ills they suffer? The same goes for suburban Republican voters.
The bottom line is that voters follow predictable patterns, repeating the same simple mistakes time and again. In this way, politics is just like capitalism. Just as people guide the economy through their largely random purchases, so too do they guide the government through largely random voting patterns.
So, there is largely no point to voting. Doing so wastes your time. Elections almost never come down to a single vote. And, even if "your" candidate wins, you have no concrete or meaningful way to translate that election win into predictable positive consequences for you.
As one friend put it, democracy is the American religion. In church, people pray to a higher power, hoping their conditions will change -- yet nothing predictable ever comes of it. In America, we cast ballots thinking it will make some difference. Yet the vote of any individual is irrelevant.
So why even bother spending time writing about political issues? I have a couple answers to that. First, I believe local politics has a better chance of being relevant to an individual than do state or national politics. Also, just as a matter of statistics, a local blogger might shift enough views to cause one or another proposition to pass. That is why this blog largely focuses on the local.
More importantly, I view politics as an excellent source of good humor. I enjoy watching politicians repeatedly lie to constituents about their plans to "solve" various problems. It is great fun to watch debacles like the Mandela Foods Cooperative.
Of course, the only reason why I can view the terrible actions of our local politicians with such good humor is that none of them really affect me -- aside from taxation, that is. And, as readers of this blog know, I view local taxation as somewhat positive as much of it is regressive, which drives out the poor and improves the community.
If I lived in inner-city Oakland and had to send my kids to the crazy liberals' school-shaped laboratories, I would probably feel different. I'd probably be angry, and I'd probably buy into messages of "hope" coming from above.
Friday, October 31, 2008
Oakland: Where Property Taxes Soar And The City Burns
My advice to the prospective Bay Area homeowners: Don't move to Oakland.
Or, if you can't tear yourself away from the prospect of horrible schools, murder as a way of life and a mayor who looks and sounds like Ronald McDonald in grayscale, at least make sure you read the fine print.
As October ends, we unlucky Oakland homeowners receive our annual property tax assessments. They read like a comedy routine -- as if the government designed them to cause the gap between amount paid and services received to be as wide as possible.
Actually, now that I think about it, that is exactly the objective of liberal government, and Oakland does it well.
Let's take a look at some aggregate numbers and then dive into the specifics of Oakland's annual property extortion. This information is all available at the Alameda County property tax site. The numbers provided are for a typical house, and they do vary from house to house.
These tables are pretty self explanatory. Most other East Bay cities have numbers that look similar to Fremont and Hayward. By choosing to live in Berkeley or Oakland, a homeowner is paying an outrageous and indefensible amount of tax.
There is no reasonable explanation for why these cities need to tax citizens so much more than other cities -- no explanation other than pure shameless liberalism, that is. The only tax with some explanation is the high parcel tax rate in Piedmont, which pays for one of the country's best public school systems and is well worth paying for.
How do Berkeley and Oakland get away with this? Simple. Because many higher-income residents choose to live here to be close to their jobs in San Francisco or on the peninsula, those cities can charge a higher tax without providing them any return on investment. Think of it as a toll or an entry fee.
The situation becomes even more absurd when looking at the specifics of Oakland's parcel taxes:
The 1.33% ad valorem tax is one of the highest in the state (if not the highest -- I haven't had time to check). Along with the real estate transfer tax, it helps ensure that Oakland real estate remains depressed. That tax is so high because city agencies -- schools included -- have managed to max out their credit cards on bonded projects which, as usual, haven't managed to help any of the city's obvious problems.
Meanwhile, Mayor Dumbledore and his buddies continue to lobby for even higher property taxes. It's an ugly situation, and one which should discourage anyone from buying a house in Oakland.
One piece of advice for homeowners just receiving their tax extortion notice. Each parcel tax has a phone number next to it. I strongly suggest you call each one to verify that you should in fact be paying that tax. I own a vacant lot in the city which Oakland repeatedly attempts to tax for items which specifically exempted vacant lots.
I have reason to believe this practice is widespread. And why not? It makes the city plenty of money.
So, call those numbers and demand a refund if the taxes have been levied in error. If the taxes are accurate, at least you've wasted the time of someone in city government.
A minor victory indeed, but at least it means you'll have received some sort of service from the city. Just don't get used to it. Pay your taxes and shut up. This is Oakland.
Or, if you can't tear yourself away from the prospect of horrible schools, murder as a way of life and a mayor who looks and sounds like Ronald McDonald in grayscale, at least make sure you read the fine print.
As October ends, we unlucky Oakland homeowners receive our annual property tax assessments. They read like a comedy routine -- as if the government designed them to cause the gap between amount paid and services received to be as wide as possible.
Actually, now that I think about it, that is exactly the objective of liberal government, and Oakland does it well.
Let's take a look at some aggregate numbers and then dive into the specifics of Oakland's annual property extortion. This information is all available at the Alameda County property tax site. The numbers provided are for a typical house, and they do vary from house to house.
Ad Valorem tax rates:
Berkeley - 1.26%
Oakland - 1.33%
Piedmont - 1.17%
Fremont - 1.11%
Hayward - 1.10%
Parcel taxes:
Berkeley - $1,183
Oakland - $740
Piedmont - $3,407
Fremont - $355
Hayward - $205
These tables are pretty self explanatory. Most other East Bay cities have numbers that look similar to Fremont and Hayward. By choosing to live in Berkeley or Oakland, a homeowner is paying an outrageous and indefensible amount of tax.
There is no reasonable explanation for why these cities need to tax citizens so much more than other cities -- no explanation other than pure shameless liberalism, that is. The only tax with some explanation is the high parcel tax rate in Piedmont, which pays for one of the country's best public school systems and is well worth paying for.
How do Berkeley and Oakland get away with this? Simple. Because many higher-income residents choose to live here to be close to their jobs in San Francisco or on the peninsula, those cities can charge a higher tax without providing them any return on investment. Think of it as a toll or an entry fee.
The situation becomes even more absurd when looking at the specifics of Oakland's parcel taxes:
- $80 annually goes to pay for one of the Bay Area's worst library systems -- one which still doesn't even have free wi-fi.
- $110 goes to the "LLAD" which is a well-known fraud and slush-fund for local politicians to grease their supporters.
- $200 goes to schools through Measure E. Residents would do just as well to light two hundred dollar bills on fire. Oakland schools are garbage.
- $88 goes to the Violence Prevention tax. As far as I can tell, they should rename this the "Violence Promotion Tax." Evidently, the more we pay, the more they rob and murder us.
- If you live in the hills area, $65 goes to pay for your own private fire department, because the city government refuses to pay for those pesky middle-class people's fire protection.
The 1.33% ad valorem tax is one of the highest in the state (if not the highest -- I haven't had time to check). Along with the real estate transfer tax, it helps ensure that Oakland real estate remains depressed. That tax is so high because city agencies -- schools included -- have managed to max out their credit cards on bonded projects which, as usual, haven't managed to help any of the city's obvious problems.
Meanwhile, Mayor Dumbledore and his buddies continue to lobby for even higher property taxes. It's an ugly situation, and one which should discourage anyone from buying a house in Oakland.
One piece of advice for homeowners just receiving their tax extortion notice. Each parcel tax has a phone number next to it. I strongly suggest you call each one to verify that you should in fact be paying that tax. I own a vacant lot in the city which Oakland repeatedly attempts to tax for items which specifically exempted vacant lots.
I have reason to believe this practice is widespread. And why not? It makes the city plenty of money.
So, call those numbers and demand a refund if the taxes have been levied in error. If the taxes are accurate, at least you've wasted the time of someone in city government.
A minor victory indeed, but at least it means you'll have received some sort of service from the city. Just don't get used to it. Pay your taxes and shut up. This is Oakland.
Thursday, October 30, 2008
Want Free Bart Rides? Just Take The Elevator
I know election season is in full swing, with other local bloggers offering endorsements of the various propositions. I may do so before the election next Tuesday, but in the meantime I want to discuss something that has a more direct impact on my everyday life.
From time to time, I need to ride the Bart elevator to get from street level to the platform. In certain stations -- generally those without a mezzanine section -- this requires first entering into the paid zone and then getting on the elevator. Not so in stations such as those along Market Street in San Francisco.
In those stations, probably to save money, the elevator runs from the street level, to the mezzanine and straight through to the Bart platform. This means that someone who rather not pay to ride Bart can simply take the elevator.
I'm sure my readers know what's coming next. I sometimes encounter honest users of these elevators -- those who take the time to stop on the mezzanine level and run the Bart ticket through the reader before proceeding to the train. However, more often I get on the elevator to find someone riding straight to the platform level, obviously not intending to pay.
I'd say this happens more than 50 percent of the time I use the elevator on Bart. I've noticed a similar experience with Muni in San Francisco. Needless to say, a casual inspection of these criminals reveals common threads. Most are young males, and none of them appear either to notice or care that they're doing something wrong.
I've asked a few friends why they think these people are so oblivious to the clear criminality of their actions. The response I found most compelling was simply that they have nothing to fear from society.
What if they find a police officer waiting for them on the platform? Well, so what. They'll probably get a ticket which they'll then refuse to pay.
What if they then are arrested? Well, so what again. Maybe they'll spend a few days or weeks in jail.
To me, this behavior is an excellent indication of the Bay Area's need for stricter enforcement of day-to-day "quality of life" crimes. Not only do these criminals deprive Bart of revenue; they send an exteremely negative message to everyone else about what we are willing to tolerate.
Essentially what toleration of this behavior says to the average citizen is the typical liberal message: Everyone must abide by the rules except for certain classes of the "downtrodden," defined by economic circumstance or ethnic background. This then demoralizes those who follow the rules, and it attracts children who might be attracted to the anti-social lifestyle.
By the way, I've noticed a very strong Bart Police presence throughout the system. This is probably an overreaction to supposed terrorist considerations. But what a shame it is that no one can be bothered to make sure everyone plays by the most basic of rules -- paying your fare.
From time to time, I need to ride the Bart elevator to get from street level to the platform. In certain stations -- generally those without a mezzanine section -- this requires first entering into the paid zone and then getting on the elevator. Not so in stations such as those along Market Street in San Francisco.
In those stations, probably to save money, the elevator runs from the street level, to the mezzanine and straight through to the Bart platform. This means that someone who rather not pay to ride Bart can simply take the elevator.
I'm sure my readers know what's coming next. I sometimes encounter honest users of these elevators -- those who take the time to stop on the mezzanine level and run the Bart ticket through the reader before proceeding to the train. However, more often I get on the elevator to find someone riding straight to the platform level, obviously not intending to pay.
I'd say this happens more than 50 percent of the time I use the elevator on Bart. I've noticed a similar experience with Muni in San Francisco. Needless to say, a casual inspection of these criminals reveals common threads. Most are young males, and none of them appear either to notice or care that they're doing something wrong.
I've asked a few friends why they think these people are so oblivious to the clear criminality of their actions. The response I found most compelling was simply that they have nothing to fear from society.
What if they find a police officer waiting for them on the platform? Well, so what. They'll probably get a ticket which they'll then refuse to pay.
What if they then are arrested? Well, so what again. Maybe they'll spend a few days or weeks in jail.
To me, this behavior is an excellent indication of the Bay Area's need for stricter enforcement of day-to-day "quality of life" crimes. Not only do these criminals deprive Bart of revenue; they send an exteremely negative message to everyone else about what we are willing to tolerate.
Essentially what toleration of this behavior says to the average citizen is the typical liberal message: Everyone must abide by the rules except for certain classes of the "downtrodden," defined by economic circumstance or ethnic background. This then demoralizes those who follow the rules, and it attracts children who might be attracted to the anti-social lifestyle.
By the way, I've noticed a very strong Bart Police presence throughout the system. This is probably an overreaction to supposed terrorist considerations. But what a shame it is that no one can be bothered to make sure everyone plays by the most basic of rules -- paying your fare.
Friday, October 24, 2008
Why All Our Cities Are Bankrupt
Article after article has hit the wire in the past couple months about cities in distress forced to cut budgets. Pundits frame the issue in a variety of ways, but by and large people are of the view that after this period of belt-tightening, things should return to business as usual.
I am pleased to see localities finally forced to live within their means, and I am doubly happy to see them not immediately look for new sources of tax revenue. But I do not agree with the standard assessment of the problems' roots. I believe government has reached the outer limits of largess and will be forced to trim back time and again to avoid Vallejo's fate.
Actually, I think many cities will fail. There will be more than a few bankruptcies.
The standard line is that we have a revenue shortfall due to a decrease in consumer spending, falling house values and less real estate turnover. There is no question that this state of affairs has brought governments' problems to our attention, but it is not the core of the problem.
As things stand today, most cities are effectively bankrupt, as is the state of California. Consider this: The Wall Street Journal reported recently that the California retirement system (CalPERS) lost 20 percent of its money in the recent stock market turmoil. That means the pension plan is only 68 percent funded.
But it gets worse. That 68 percent figure is based on assumptions about future performance of the assets in the retirement system. According to Pensions & Investments magazine, the retirement system expected to generate a going-forward rate of return of just over 9 percent per year the last time it revised its asset allocations in December of 2007.
Will they accomplish this objective? Possibly not, if the current recession drags out as long as many think it could. As one economist describes the situation, "CalPERS must pay out hundred-cent dollars to meet its obligations, and as things stand they just don't have the money."
This situation is not unlike what has destroyed the American auto industry. Everyone criticizes General Motors for selling big SUVs -- and rightly so. What people ignore is the fact that GM must do this because those are the only vehicles which generate sufficient profit to pay its massive retirement-system obligations. One amazing thing about GM that most people don't know is that they have nearly 10,000 employees they pay not to work. It's called the "Jobs Bank," and it should sound very familiar to anyone who has witnessed the explosion of social programs in recent decades.
GM's coming bankruptcy is a consequence of insane union contracts -- the exact same type of contract which is only now beginning to lay low cities like Oakland and states like California.
The city of Oakland has employees who, upon serving the city for 30 years, will receive 100 percent of their retirement-level pay for the rest of their life. So, someone who becomes a fireman at age 25, works until age 55 and lives until age 85 will spend as much time being paid not to work as he did working.
So, while it's nice to see the Oakland City Council cutting its own salary by 5 percent, they really are just rearranging chairs on the Titanic, as usual. As I've mentioned previously, I expect to see a slew of large tax increases sometime soon.
I also think it's possible citizens will refuse to go along. Perhaps if the media spent some time educating about the preposterous deals unions have negotiated at the state and municipal level, they will make the right decision.
So what happens then? Sadly, I think the best course of action is bankruptcy. That's the only situation in which these terrible bargains can be renegotiated. I think it's very telling that the unions were the major opponents of Vallejo's bankruptcy. They knew that allowing the city to go bankrupt would be perhaps the only situation that could threaten their sweetheart packages.
Unions have a long history in our country of bleeding companies and municipalities as dry as possible. They very frequently refuse to negotiate even with companies on the brink of bankruptcy -- witness the frequency of bankruptcies in the airline industry. Ironically, they accuse their employers of greed as they take the greediest position one can possibly take: "I would rather kill you than receive every penny I can get from you."
So it is with our cities and states. The years to come will not be pretty, but we can hope the coming rash of insolvencies will spell the end of the evil government employee union.
I am pleased to see localities finally forced to live within their means, and I am doubly happy to see them not immediately look for new sources of tax revenue. But I do not agree with the standard assessment of the problems' roots. I believe government has reached the outer limits of largess and will be forced to trim back time and again to avoid Vallejo's fate.
Actually, I think many cities will fail. There will be more than a few bankruptcies.
The standard line is that we have a revenue shortfall due to a decrease in consumer spending, falling house values and less real estate turnover. There is no question that this state of affairs has brought governments' problems to our attention, but it is not the core of the problem.
As things stand today, most cities are effectively bankrupt, as is the state of California. Consider this: The Wall Street Journal reported recently that the California retirement system (CalPERS) lost 20 percent of its money in the recent stock market turmoil. That means the pension plan is only 68 percent funded.
But it gets worse. That 68 percent figure is based on assumptions about future performance of the assets in the retirement system. According to Pensions & Investments magazine, the retirement system expected to generate a going-forward rate of return of just over 9 percent per year the last time it revised its asset allocations in December of 2007.
Will they accomplish this objective? Possibly not, if the current recession drags out as long as many think it could. As one economist describes the situation, "CalPERS must pay out hundred-cent dollars to meet its obligations, and as things stand they just don't have the money."
This situation is not unlike what has destroyed the American auto industry. Everyone criticizes General Motors for selling big SUVs -- and rightly so. What people ignore is the fact that GM must do this because those are the only vehicles which generate sufficient profit to pay its massive retirement-system obligations. One amazing thing about GM that most people don't know is that they have nearly 10,000 employees they pay not to work. It's called the "Jobs Bank," and it should sound very familiar to anyone who has witnessed the explosion of social programs in recent decades.
GM's coming bankruptcy is a consequence of insane union contracts -- the exact same type of contract which is only now beginning to lay low cities like Oakland and states like California.
The city of Oakland has employees who, upon serving the city for 30 years, will receive 100 percent of their retirement-level pay for the rest of their life. So, someone who becomes a fireman at age 25, works until age 55 and lives until age 85 will spend as much time being paid not to work as he did working.
So, while it's nice to see the Oakland City Council cutting its own salary by 5 percent, they really are just rearranging chairs on the Titanic, as usual. As I've mentioned previously, I expect to see a slew of large tax increases sometime soon.
I also think it's possible citizens will refuse to go along. Perhaps if the media spent some time educating about the preposterous deals unions have negotiated at the state and municipal level, they will make the right decision.
So what happens then? Sadly, I think the best course of action is bankruptcy. That's the only situation in which these terrible bargains can be renegotiated. I think it's very telling that the unions were the major opponents of Vallejo's bankruptcy. They knew that allowing the city to go bankrupt would be perhaps the only situation that could threaten their sweetheart packages.
Unions have a long history in our country of bleeding companies and municipalities as dry as possible. They very frequently refuse to negotiate even with companies on the brink of bankruptcy -- witness the frequency of bankruptcies in the airline industry. Ironically, they accuse their employers of greed as they take the greediest position one can possibly take: "I would rather kill you than receive every penny I can get from you."
So it is with our cities and states. The years to come will not be pretty, but we can hope the coming rash of insolvencies will spell the end of the evil government employee union.
Thursday, October 23, 2008
Oakland Schools and their 'Bill For Nothing'
I've returned to the blog world from days spent lamenting the coming taxation apocalypse. Luckily, the turmoil in financial markets is providing much-needed opportunities to purchase stocks that one can hold for the long term, thus escaping Mr. Obama's taxation tsunami.
In my absence, the East Bay looks none the better, except for the nascent victory glow coming from Liberals who mistakenly believe the coming years will be brighter as a consequence of the coming election.
Amid this situation, I couldn't help but chuckle at the Oakland Tribune's "expose" on the profligate ways of the local school district. My favorite part of the piece was not the total of $840k which allegedly has been misspent.
No, it was the reference to the school system's purchase of documents from an attorney that were, according to the article, "virtually identical to forms ... received from the city of Piedmont."
This might be the first time I've ever seen anyone doing anything with the Oakland school system mention the existence of Piedmont. That city's mere existence appears to be a pox on Oakland -- demonstrating that a school system with similar pay, similar weather and a similar location can do quite well, so long as it is blessed with better prepared students. And, by better prepared I mean those with families who prioritize their education.
I've railed several times about Oakland's unwillingness to bring together the best prepared students in the city into some sort of magnet program. To my knowledge, the school district still refuses to even consider the idea, sticking instead to outdated notions such as busing and "diversity."
Well, one careful reader brought to my attention that there is one school in the district making a stab at such a thing. I wanted to give it credit where credit is due, and I wanted to encourage the district to broaden its scope.
The program I'm referring to is the Paideia program at Oakland Tech. Several things stand out about this program. If you take a look at the program's website, you'll see that they actually publish their former students' colleges. That's very helpful information, as it demonstrates that the program has done an excellent job placing several of its students.
On the downside, the program appears only to have around 40 graduating kids per year. I'm certain a city like Oakland has 10 or 100 times as many students who could fit into such a program. Why doesn't the district set aside a school for this purpose? Everything I've read suggests they have plenty of extra facilities, considering the rate with which they've lost students.
In my absence, the East Bay looks none the better, except for the nascent victory glow coming from Liberals who mistakenly believe the coming years will be brighter as a consequence of the coming election.
Amid this situation, I couldn't help but chuckle at the Oakland Tribune's "expose" on the profligate ways of the local school district. My favorite part of the piece was not the total of $840k which allegedly has been misspent.
No, it was the reference to the school system's purchase of documents from an attorney that were, according to the article, "virtually identical to forms ... received from the city of Piedmont."
This might be the first time I've ever seen anyone doing anything with the Oakland school system mention the existence of Piedmont. That city's mere existence appears to be a pox on Oakland -- demonstrating that a school system with similar pay, similar weather and a similar location can do quite well, so long as it is blessed with better prepared students. And, by better prepared I mean those with families who prioritize their education.
I've railed several times about Oakland's unwillingness to bring together the best prepared students in the city into some sort of magnet program. To my knowledge, the school district still refuses to even consider the idea, sticking instead to outdated notions such as busing and "diversity."
Well, one careful reader brought to my attention that there is one school in the district making a stab at such a thing. I wanted to give it credit where credit is due, and I wanted to encourage the district to broaden its scope.
The program I'm referring to is the Paideia program at Oakland Tech. Several things stand out about this program. If you take a look at the program's website, you'll see that they actually publish their former students' colleges. That's very helpful information, as it demonstrates that the program has done an excellent job placing several of its students.
On the downside, the program appears only to have around 40 graduating kids per year. I'm certain a city like Oakland has 10 or 100 times as many students who could fit into such a program. Why doesn't the district set aside a school for this purpose? Everything I've read suggests they have plenty of extra facilities, considering the rate with which they've lost students.
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