In Charles Dickens’ classic “A Christmas Carol”, Ebeneezer Scrooge is offered a horrifying view of his future if he does not change his ways. It is frightening, but it is a gift which saves his life, and that of Tiny Tim. Greece is offering America a similar view of our future, and the only question now is whether we will learn from their nightmare and change our course, or face a similar or worse fate.
There are many causes of the economic crisis in Greece, just as their are many causes to our economic issues in the United States. But at its core in both cases, the most significant issue is unsustainable public sector spending, dependence, and gluttony. We are likely a decade or two away from becoming Greece, but with each passing year the hole we dig becomes deeper and deeper, and increases the agony of our future extraction.
What is the situation in Greece? The best paid category of Greek citizens are government employees. They retire as young as age 51, have extremely generous pensions approaching the level of their last year of salary, and they have short work weeks and low productivity expectations. Government in Greece accounts for 40% of the country’s economic output. In essence it has a private sector only for purposes of supporting the public sector, instead of vice-versa.
As you read through that description, you probably thought to yourself “that’s our situation here in America!”, and you would be correct. We have public servants working shorter days, shorter years, with out-of-proportion salaries with phenomenal benefits, all of which far exceed those of the typical American taxpayer of similar or better education and skills. As with Greece a few years ago, our unfunded liabilities and commitments to public sector workers are a ticking time bomb, ready to explode on taxpayers.
In America, a police officer can work 20 years and retire with a committed annual income equivalent to that of having $8 million in a 401k account. Start at 21, retire at 41, and enjoy 40-50 more years at over $100k/year, with full health benefits. Or, become a teacher in New York’s Westchester County, and retire at age 50 with a 6 figure income and full health benefits.
Many of these pensions and health benefits are “unfunded”, and disasters await towns, villages, counties, states, and the Federal government. When these bombs detonate, they will do so in the form of unbearable tax increases which lead to riots and collapses of certain local economies, or less likely in the form of drastic reductions to committed benefits to public sector retirees.
We need leaders to step up here and address this problem before it gets any worse. The message from the nightmare is clear, the only question is if politicians are hearing it and willing to act. Up to now, several Republicans are trying but most poorly articulate the nature and magnitude of the problem. As for Democrats, they attack anyone who talks about any kind of reductions, and one only need witness the brutal attacks on Scott Walker and Chris Christie to see what awaits anyone who sees the nightmare and calls for preventative action.