BETWEEN THE LINES: Texas Legislature faces uphill battle
As I write this, the Texas Legislature is convening with the pending budget shortfall a top priority. If it is any consolation, our economic woes pale in comparison to those of California, Illinois and New York, but misery is poor company.
Headlines in newspapers across large metropolitan areas warn of severe cutbacks in public education, which inevitably will lead to teacher layoffs and reductions in payroll. Wall Street is apparently ignoring what looks like a drastic reduction in employment in the public sector, as the stock market continues its upward thrust after the collapse of 2007-2008.
State governments unfortunately don’t have the luxury of their national counterparts to raise the debt ceiling and print more money, as they must balance the books like the rest of us stiffs. It is only logical that one cannot spend what they do not have over the long haul.
In economics, this malady of ignoring the warning signs and being overly optimistic about the future can, on rare occasions, reach an insane level referred to as a mania. The most famous one was the Tulip Mania in the Netherlands between 1636-1637. At its height, individual tulips sold for more than 10 times the annual earnings of a skilled craftsman.
The story is briefly referenced in the 1987 movie "Wall Street" by Michael Douglas’ character, Gordon Gekko, and repeated again in the 2010 version. The housing bubble, which began in 2005, and in many ways is still playing itself out, is an example of just such a mania.
Meanwhile, governments around the world have their work cut out for them. No group will be immune from the surgeon’s knife. Since pension and retirement benefits constitute a significant liability to the public sector, expect some reductions down the road. Government programs such as Social Security will not be exempt, either. The flavor of the day will be uncertainty, as different constituencies line up to protect their own interests.
Saving a million dollars here or there will not solve the problem, nor will the elimination of all earmarks.
As a youngster, I used to watch a popular TV series called "The Millionaire," starring Marvin Miller as Michael Anthony, who was the liaison for wealthy philanthropist John Beresford Tipton. Each episode Tipton would give away a million dollars to a complete stranger, and the storyline would reveal how the recipient’s life was changed by the unexpected gift, which usually was for the worse.
In 1956, a million dollars was a lot of moolaa — not so today, for millions begat billions, and billions begat trillions, which is far too many zeroes for most of us to comprehend. So saying the federal deficit is $14 trillion does not register to most Americans. However, that it has gone from $8 trillion to $14 trillion in a matter of two years does get everyone’s attention, as we can extrapolate the end results without having to be an economist. The question we should all ask is how does that translate to me?
The details will inevitably surface down the road, but suffice to say we have lowered our expectations about the future. What form that might take remains to be seen, but for the first time in my six decades of living, the future no longer looks as bright as it once did, and I find no comfort in realizing we have nobody to blame but ourselves. Our forefathers warned us about the arrogance of political power.
It is too bad we were such poor students of history.
Laughlin is a Christian Libertarian. He is an economist, teacher, father, husband and most recently a grandfather. He has written a weekly column for The Tribune for 12 years. He and his wife Gina reside in Meadowlakes. To contact him, e-mail ablaughlin@nctv.com. He is an independent columnist, not a staff member, and his views do not necessarily reflect those of The Tribune or its parent company