Proposition B opponents: city salaries grow from magic beans
I just received a flier in the mail today from the opponents of San Diego’s Proposition B pension reform. According to the government unions (the flier was paid for mainly by the AFL-CIO), proposition B will “cost more than you think” because:
Too costly: Prop B also freezes city worker’s salaries, pulling money out of the local economy and costing San Diego’s small businesses.
This is that famed multiplier that politicians think bureaucrats add to taxes: the city taxes small businesses, pays city workers from those taxes, and then city workers take a fraction of that to buy things from small businesses. Thus, increasing taxes to increase city salaries helps small businesses.
Not taking that money from small businesses in the first place will help San Diego’s small businesses even more!
This is just another version of the broken windows fallacy: taking a portion of someone’s income and ignore what they would have done with it, counting only what the ultimate recipients will do with it, after it gets filtered through a bureaucracy.
In response to California 2012: 2012 is going to be a very important election for San Diego. Do we continue to reform the city’s financial state, or do we resume the path to insolvency?
- According to Beneficiaries, All Government Spending Is Worth the Investment: James M. Hohman
- “The increasingly sophisticated reiterations of old Keynesian models still fail to pass the inspection of basic economics, and still fail to address the most basic question, ‘where is the money coming from?’”
- Another Log for the Government Spending Multiplier Fire: Tad DeHaven at The Cato Institute
- “For the most part, it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending.”
- Correcting the Keynesians on the Broken Window Fallacy: Robert P. Murphy at Free Advice
- “There is no ambiguity in the passages I’ve put in bold. Bastiat is clearly saying that not only would it make the community poorer, but that it would not stimulate industry or boost overall employment, if somebody smashed a window. (Presumably repelling an alien invasion or replacing shoplifted goods wouldn’t give a different answer.)”
- Government Spending Is No Free Lunch: Robert J. Barro
- “What's the flaw? The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out.” (Memeorandum thread)
- The stimulus debate revisited: Vuk Vukovic at Don’t worry, I’m an economist!
- “The finance industry on the other hand was caught up in a bubble. The exit strategy was an immediate bailout, but for whom? Only for those companies that invested enough in political campaigns. The result of the bailout was another huge distortion sent to the market.”
More broken windows
- Growing from the ruins of a rotting industry
- There’s something incredibly liberating about kicking the ass of a moribund industry.
- Paul Krugman & President Obama furiously fix economy
- Improving Mexico’s economy: “Fast and Furious” gun-running plan from New York Times economist Paul Krugman.
- Broken windows at the ATM
- I had my own personal broken window this week. Not a big fan of obstructing progress for make-work jobs.
- The Bureaucracy Event Horizon
- Government bureaucracy is the ultimate broken window.
More Election 2012
- Romney-Ryan 2012: It’s the only way to be sure
- A highly partisan environment has one major advantage: it means we have a choice.
- Stephanopoulos: No bias in media
- George Stephanopoulos must have forgotten what he wrote in his autobiography if he doesn’t believe there’s a liberal bias in the media.
- A tale of two speeches: Condi Rice and Paul Ryan
- Rice and Ryan. Now there’s a ticket.
- Fair and open competition—closed and bitter politicians
- The arguments against Proposition A are based on a law that passed less than a month ago, in response to Proposition A. That response is a prime example of why we need to break the chain that locks government unions to politicians.
- Poll gives Obama his worst marks yet
- Six months before election day, Americans have a bleaker view of the country’s direction than at any time in more than three decades, and they attribute it to President Obama’s handling of gasoline prices and the rest of the economy.
- 15 more pages with the topic Election 2012, and other related pages