January 18th, 2011
(Thomas Sowell discusses abolishing the Fed on
Judge Napolitano’s show.)
Government budget crises can be painful, but the political rhetoric
accompanying these crises can also be fascinating and revealing.
Perhaps the most famous American budget crisis was New York City’s, back
during the 1970s. When President Gerald Ford was unwilling to bail them out, the
famous headline in the New York Daily News read, “Ford to City: Drop Dead.”
President Ford caved and bailed them out, after all. The rhetoric worked.
That is why so many other cities and states — not to mention the federal
government — have continued on with irresponsible spending, and are now facing
new budget crises, with no end in sight.
What would have happened if Ford had stuck to his guns and not set the
dangerous precedent of bailing out local irresponsibility with the taxpayers’
money? New York would have gone bankrupt. But millions of individuals and
organizations go bankrupt without dropping dead.
Bankruptcy conveys the plain facts that political rhetoric tries to conceal.
It tells people who depended on the bankrupt government that they can no longer
depend on that bankrupt government. It tells the voters who elected that
bankrupt government, with its big spending promises, that they made a bad
mistake that they would be wise to avoid making again in the future.
Legally, bankruptcy wipes out commitments made to public sector unions, whose
extravagant pay and pension contracts are bleeding municipal and state
governments dry. Is putting an end to political irresponsibility and legalized
union racketeering dropping dead?
Politics being what it is, we are sure to hear all sorts of doomsday rhetoric
at the thought of cutbacks in government spending. The poor will be starving in
the streets, to hear the politicians and the media tell it.
But the amount of money it would take to keep the poor from starving in the
streets is chump change compared to how much it would take to keep on feeding
unions, subsidized businesses and other special interests who are robbing the
Letting armies of government employees retire in their 50s, to live for
decades on pensions larger than they were making when they were working, costs a
lot more than keeping the poor from starving in the streets.
Pouring the taxpayers’ money down a thousand bottomless pits of public and
private boondoggles costs a lot more than keeping the poor from starving in the
Bankruptcy says: “We just don’t have the money.” End of discussion.