Yesterday I posted to this blog about how career politicians are all Keynesians. It makes perfect sense from their perspective. Allowing for the true idea of an independent free market that is responsible for all of the economic goods that are produced in this country leaves them feeling mighty impotent. In order to buy votes and curry the worship of the sheeple living in this land they adopt and propagate the Keynesian idea that government is the source of all economic growth. Only one day has passed since I wrote that post and I already have a perfect example of what I was describing. Let me tell you about it.
PERA is the Public Employees Retirement Association. I suspect most states have a PERA that is responsible for the future retirement benefits of state government employees. PERA in Colorado is an extremely generous retirement pension that far outstrips the promised future benefits from Social Security. State government employees do not participate in federal Social Security so they count upon PERA as their Social Security substitute.
I have known several people over the years who dedicated their lives to working for Colorado state government in one form or another. Mostly they were career government school teachers. They have told me about their expected PERA benefits and I have always been amazed at how much money they are about to receive when they retire, especially when I compare it to my expected returns from federal Social Security. As a result of the huge payouts they have been promised, state taxes rarely are sufficient to fund the future promise to pay those benefits.
According to the Denver Post, "PERA is funded at about 64% and is facing a $26 billion funding gap -- about the same as Gov. John Hickenlooper's proposed budget for the entire state. A measure that would allow the state to issue risky pension-obligation bonds would have taken funding levels closer to 70 percent or 80 percent, PERA says. That measure died on the Senate floor in May." So there you have it. State government employees are being promised the moon but they are only being currently funded at about two thirds of what is needed to deliver on those promises. Who do you think is going to eventually cough up the cash to cover those shortfalls when they come due? Right! The taxpayers. There is no conceivable way that PERA beneficiaries would agree to take a reduced benefit so the state of Colorado will have to pass a tax increase to pay the future pensions of state government employees. To top it all off, I am yet to meet a state government employee who did not whine incessantly about being overworked and underpaid. Government employees do not live in the real world.
In order to deflect the criticism that is coming their way for grossly overpaying retirement benefits to state employees, PERA representatives have concocted a hair-brained Keynesian economic theory about the benefits they are paying and will pay future retirees. The Denver Post reported that, "Colorado's Public Employees' Retirement Association released a study Monday saying that the $3.5 billion in annual PERA retirement distributions impact the state economy to the tune of a whopping $5.2 billion. This is due to the 'multiplier effect' -- the spending of retirees' dollars in their local economy, according to the study....Boulder based Pacey Economics was commissioned by PERA to do the study....The report estimates for every dollar paid to retirees, about $1.70 is put back into the economy. And, it says, 29,350 jobs are sustained statewide due to the more than 90,000 retirees who spend more than $3.5 billion paid annually in PERA distributions."
Did you catch the Keynesianism in the above report? It is just another version of the ridiculous doctrine which declares we can spend ourselves to prosperity. If the report is true then it necessarily follows that wealth is created by consumer spending. And if some consumer spending creates some wealth, then more consumer spending creates even more wealth. Since PERA beneficiaries are taking the huge sums of money that are being taken from the taxpayers and given to them, they are allegedly creating as much wealth as a gigantic profit seeking corporation might. One PERA representative actually stated that retirees spending their PERA money is the equivalent of a new business coming to town.
I think any rational and sane person who does not work for the government or draw a government retirement check can see that if $3.5 billion in PERA benefits creates $5.2 billion in economic growth, why do we stop at a measly $3.5 billion? Let's double the amount being paid to the retired government employees and thereby double the economic growth. Indeed, why should we stop at a mere doubling? Let's tax 85% of the money earned by Colorado citizens and give it to PERA retirees. The resulting economic growth will be mind boggling. We will all be wealthy beyond our wildest dreams. All we have to do is give all of our money to the government and then let them distribute it to their favorite people. The "multiplier effect" will then come into play and we will all soon be billionaires. Who knew that managing the economy for everyone's benefit could be so easy?