In reading Governor Corzine's plan for relief for New Jersey's economic future, it reminds me of one of the most fundamental problems confronting virtually every segment of American Society today, Rewarding Failure.
In New Jersey we have seen over $20 Billion dollars spent on school districts that continue to under educate the students entrusted to them. Yet, the superintendents and supervisory staffs pull down salaries well in excess of $150,000.00. That is a reward for those responsible for failure. This is a great message to send to students who we are trying to get to achieve academically. Why should we expect them to achieve in the classroom when the people in charge of the classroom are rewarded for not excelling at the management level? We continue to spend, spend and spend, with no change in the results.
On the national scene, we have seen a virtual meltdown of the American economic system. We have seen one of the largest insurers in the world, AIG, go into bankruptcy. Then we see the government pour over $100,000,000,000.00 into it to try to save it while executives planned expensive retreats to San Diego and England where they were supposed to go Quail hunting. Now they're back for a second helping.
The company is going bankrupt. Yet the people who are responsible are not held accountable. Instead, they are given a ton of taxpayer dollars and are left in their management positions. What is this other than Rewarding Failure?
Banks failed because they over extended credit on bad loans and people are seeing mortgages go south because they over extended themselves by borrowing more than they could afford. Yet, now the Congress and our Governor want to buy up those bad loans and make the banks and borrowers whole with taxpayer dollars.
And those taxpayer dollars are coming from people who obey the rules and are fiscally responsible. What about them? This is just another example of Rewarding Failure.
I recently saw where the governor wanted to invest $500,000,000.00 from state managed cash and pension funds in community banks to encourage lending.
Is this the Wizard of Wall Street, who headed Goldman Sachs? This is exactly what got the national economy into this mess in the first place. Community banks will be forced to make bad loans to people who have poor or no credit and it will all be done with, not only tax payer money, but money from the pension system. Playing games with the pension system is not an option.
This is the same governor who put two of his buddies on the state pension investment board back in June. They then invested $200,000,000.00 in Lehman Brothers who promptly went into bankruptcy. In the words of the old TV show once hosted by the late Johnny Carson, "Who Do You Trust?" Given this history, would you trust Governor Corzine with $500,000,000.00 worth of pension funds? Not sure? Consider the following:
If you calculate the losses in the current system the market has lost 40% of its value and is still falling. The state pension system had a value of about $68 Billion dollars. If it lost 40%, then the value is down to about $41 Billion dollars. Should he be allowed to take money out of the system for any reason?
Current NJ economic actions have failed and are following the same track as Congress in Rewarding Failure. The only difference is that this time the governor is reaching deeper into the taxpayer pocket and trying to convince you that it ok to fleece the sheep.
Now he is waiting for $4 Billion from Washington. He said in his state of the state message that he wanted to end the reliance on one shot gimmicks. Well, if you want to play games with the pension system and wait for New Jersey's share of TARP funds, both of which will only happen ONCE, if we're counting in base 10, what happens next year? Or better yet, what is the next governor going to do next year?
The only solution is to stop spending beyond your means and cut back, the same way that every household does and hold people accountable for their actions. These plans are built on taxpayer money which does not exist and pension funds that belong to someone else. Not only is it no way to run a railroad, it is an even worse way to run a government.
Unfortunately, all these fiscal Rube Goldberg's do is continue the pattern of Rewarding Failure.