January 12, 2011
Rhode Island, by Example
Further to my point about a new political wave starting local, the landscape of Rhode Island politics stands as a stark example and testing ground:
... while the state has been trying to work through the desperate finances of its smallest city [Central Falls], it has also been working with three other economically distressed communities — North Providence, Pawtucket and Woonsocket.And there is growing concern that other communities, also trying to cope with cuts in state aid and rising costs for salaries, benefits and pensions, may also be on the brink of being unable to pay their bills.
The backroom operations and self-dealing maneuvers of public sector unions have created an unsustainable structure, not only in the direct taxpayer costs that they impose, but also in the degree to which they hinder the progress that Rhode Island has to make, as in our shoddy public education system. Worse, it is exceedingly unlikely that the new governor and the General Assembly are going to take the sort of actions that they would have to take to turn things around, following my mantra of mandates, regulations, and taxes. Even if a reform impulse were to strike the state's leaders, the establishment's hand is simply too strong not to turn reforms their way by legerdemain.
Policies must change at the town level, and new, less corruptible, leaders must be found and nurtured through the system.
Yes, policies must change at the town level and new leaders must be so nurtured. But absent concurrent changes of policies at all levels -- local state, and federal -- I find it hard to be very optimistic.
The need for top-down, in addition to bottom-up, solutions seems inescapable. For example, as increasing numbers of municipalities around the country falter financially (as analyst Meredith Whitney and others are predicting), query whether a solution can be found by Congress to warrant the setting aside of the more egregious pubic employee salary and pension obligations around the country. Simultaneous movement away from defined public employee benefit plans (pensions) in favor of defined contribution plans (e.g., 401k's) would also go a long way towards preventing more public pension abuses.
Complicating all of this is the extraordinary post-WWII availability of seemingly endless financial credit and the ever-creative and ultimately destructive financial engineering proposals from Wall Street.