By now, you’ve probably heard that Detroit has declared bankruptcy. The only thing that has surprised me was how long it took the city to realize that they needed to take that action.
For years, Detroit has been a total mess. Third world countries have provided better services, like police and fire support, and half the street lights haven’t been on for some time. But, the question we should be asking is, “How did they get there?”
Last time I checked, the Democrats were still blaming President Bush for everything, but this might be kind of hard to do since the Democrats have run that city for decades.
The answer, however, is pretty straightforward and it’s not a political one, its basic economics. Once again, economics 101 enters into the real world and slaps politicians who want to ignore reality. What economists know that politicians don’t is that if you continue to spend more money than you earn (or take in), then eventually you will find the land of financial ruin.
In Detroit’s case, they have promised big pension benefits that they cannot pay for. They continue to operate a budget that represents a deficit; this means they have to borrow money to pay current bills and they’ve made no serious attempt over the years to adjust either their spending or promises.
It doesn’t require the mind of Einstein to recognize that this is not good.
Here’s a good question – what other governmental entity do you know of that is following the Detroit financial plan?
Answer – how about our national Congress and Senate?
All you need to do is to go to www.usdebtclock.org and you will notice that our federal government is doing exactly what Detroit did before it all fell apart. Specifically, they have promised big pension benefits that they cannot pay for. They continue to operate a budget that represents a deficit (so they have to borrow money to pay current bills), and they made no serious attempt over the years to adjust either their spending or promises.
Today, in Detroit, we are seeing what happens when you do this. The question now is, at what point will the same thing happen to America? It doesn’t much matter if you are a Republican, Democrat, liberal, or Tea Party member. Economics will overrule and dictate the financial stability of a city, state, or government.
I suspect we will see more cities fall, if we don’t have the masses demanding fiscal responsibility at all levels of government. Sometimes, you get what you deserve, or, as my farmer grandfather might have said “You will reap what you sow.”
Please, America . . . wake up.