


Of debt and deadbeats

A new culture war is brewing over capitalism

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Readers' comments



There was an article in WSJ that backs up how the public sector is becoming Europe-like, highlighting what is going on in NYC. The article states "under Mayor Bloomberg, city expenditures grew 40% faster than the rate of inflation even as he imposed record property-tax increases and the city's coffers overflowed with revenues culled from the booming stock and real-estate markets...Bloomberg bestowed raises two to three times the rate of inflation on the city's unionized workers." In addition, NYC's "fixed pension obligations to its workers...have hit a projected $6.6 billion at last count, up from $1.6 billion in 2003." The author continues to assert that the city's tax-funded pension contributions are likely to double or triple over the next five years! This is not sustainable, yet here and many parts of the Northeast are run by large unions supporting public workers.


The banks and bankers should have been ended. The car makers should have been ended. The favoritism is a bad joke on the people who were not part of these favored industries.

Let the banks fall. Let the bankers fall.

Sam in MA

according to Forbes, while some Californian prison guards “sock away $300,000 a year”.

This number seems preposterous. Is there any outside confirmation ?

Patrick in Denver

I'm 25 and really don't trust the government - right or left, to clean up the deficit. The rest of the world is growing impatient with our spending and "voting with their feet" by buying less dollars. Which in turn, is and will continue to devalue the dollar to the point of it being removed as the world's reserve currency. Then America is really in trouble.

Does anyone have any suggestions for attractive countries to migrate to (safe, low taxes, and warm weather)?

Yankee Doodle

If Americans are debating capitailism, whom is their leader, who speaks for these critics? The Socialist Party USA's 2008 presidential candidate received 6,528 votes nationwide and he probably is the best known American political leader to raise capitalism as a national issue. Why not quote him?

The Economist should identify and quote these important national political leaders (and not obscure academics). I do not believe that The Economist can quote them because I do not believe that they exist.

Milwaukee Dave

while many of the comments are correct you overlook two things:
1) Many states are cutting state employee hours by making them take unpaid days off as the states cut their budgets. Cities and counties are doing the same thing. Thus government employees are losing income and jobs in some instances.

2) While people may want the government to do less in general, they don't want any service that touches them to be cut. Our appetite for government services exceeds our willingness to pay for them.

Gary K. Taylor

13 October 2009
Dear Sirs:

Having just read this week's Lexington, I am somewhat perplexed. One year ago, the global financial system was on the verge of total systemic breakdown. We were staring down the barrel of a repeat of the Great Depression of the 1930's. The situation was so bad, that Former Treasury Secretary Henry Paulson (by no means an apologist for government intervention in the economy) was appealing for a 700 billion dollar bailout of the banking system. As bad as the economy is today, it would have been even worse had his Emergency Economic Stabilization Fund not been enacted by Congress. Now, after all this (plus the actions of most other major central banks and foreign governments), people are questioning if there was too much government intervention. Perhaps there is a case to be made that if there had been a little more government oversight before the crisis last year, a lot of this could have been avoided in the first place.

Indeed, there is a "culture war" of sorts going on over capitalism. However, were are missing the point. The issue should not be over capitalism . We are all agreed that a free market is the most desirable paradigm for the economy. The issue is: Do we have a regulated free market in the same way that a football game has referees? Competition in sport and the economy should not degenerate into a bloody "last man standing" slug fest. In the end the spirit of the game and the free market must be preserved, so that we all can look forward to a better day and not another Great Depression.

- Gary K. Taylor


I have come to expect a level of quality from the Economist and frankly this post is rather disappointing.

There are 14 uncited factual claims in the first 4 paragraphs alone.

Mr. Arthur Brooks' feelings are a throwback to the classic Ronald Regan assault on the mythological welfare queen, only now it is misdirection intended to redirect populist anger away from those at fault to these mythological middle class deadbeats who are "taking" bailout funds to the bank with a wink and a evil laugh.

If your neighbors work at AIG, Goldman Sachs, Morgan-Chase, the SEC, Country-Wide or any of the thousands of other banks, investment firms, law firms, accounting firms, offshore banks, predatory lenders, securities ratings agencies or regulatory agencies who were all complicit in the reckless securitization of high risk counter party debt then yea Mr. Brooks has a point.

The truth of the matter is the average Americans neighbor isn't one of those people.

In order for Mr. Brooks feelings to be true - the Fed's promise to insure the Trillions in debt obligations of our largest financial institutions would have gone to individual tax payers instead.

In order for Mr. Brooks feelings to be true - the $700 Billion TARP bailout would have gone to help individual mortgagees to renegotiate their mortgage contracts back to a maintainable and sane amount, instead of subsidizing the largest period of bank consolidation and acquisition since the banking crisis of 1919.

In order for Mr. Brooks feelings to be true we would have had to let hundreds of insolvent banks, including all of the TARP recipients, go through the nationalization and re-privatization process they ought to have gone through as failed banking institutions.

Mr. Brooks' feelings are nothing short of intellectual slight of hand to distract people from the real criminals who crippled our countries economy for the quarter century. There is no truth in Mr. Brooks "analysis" er I mean feelings.

This is the kind of knuckle dragging crap that spews fourth over at Fox News, which perpetually confuses hearsay and feelings for critical expert analysis.

The rest of this article is even worse drivel.

The Tea Parties were dismissed because they are insignificantly small protests that were organized by corporate tool bag Dick Army's anti tax organization Freedom Works and publicized exclusively by Fox News. It is by no means a national movement, just republican astroturfing at its best.

OF COURSE racism doesn't explain Obama's falling approval rating - but neither does the tea-parties which are implied do.

Admitting the insanity of Glen Beck does not in any way make this article any more legitimate or any less crazy than he is.

Its not just "working class" men that are having problems. Lets not forget about the working class women, or the college graduates fighting industry veterans for entry level jobs. None of those problems are being tackled by private industry who created those grievances in the first place, so how is Congress going to make it worse? How is this a LEGITIMATE grievance?

Almost every state and local government is working out massive budget cuts for the next fiscal year and the even more cuts for the following years. States are hemorrhaging departments, services, personnel, and furlough's.

"Cops and firefighters can retire in their 40s and draw defined-benefit pensions for life."

Where? Because I'd like to know where I can risk my life every day to save people's lives and property for 20 or so years and retire with a defined benefit pension I can live comfortably on for the last 25 years of my average American life expectancy barring lung cancer due to smoke inhalation because I was SAVING YOUR ASS? I don't know about you but the LAST thing I want crossing a firefighter or police officer's mind while they are saving my ass is "shit I don't get paid enough to do this."

What's the average take home pay for a New York City Employee? You know the salary they use to put their kids through college, pay local and state sales taxes, social security and medicare taxes? What percentage of that income is spent on housing and the cost of living in NYC?

You might want to consider presenting facts rather than inflammatory bullshit.

"One should not overstate the rage of taxpayers against public servants. Most Americans admire firemen, teachers and cops."

You've certainly done a good job doing the EXACT OPPOSITE of what you caution readers not to do.

So when Obama does hike takes on low and middle class earners we need to make sure we stick it to government employees? Yea awesome idea - lets stick it to the people who save our lives, protect our neighborhoods, and educate the children who are going to have to be absolutely brilliant to pay off all this debt we've incurred bailing out the criminals holding our economy hostage. Sound plan.


Former Republican,

I second your complaints about numbers, I'm a scientist and tend to look for stats backing assertions, but when you get to the news, it's so crappy it physically pains me.

The problem as I see it is that gathering real numbers costs money, takes persistence and requires intelligence to analyze it and make it readable, and also puts your reputation on the line. It's quite easy to back up the statement "some people think that the government wastes their money, but then, some people don't."

The but the biggest problem, and I think this is the only real one, is that most numbers are probably equivocal, and would take the punch out of most headlines. How many are going to buy a 10 dollar weekly mag that has a title page "American attitudes to government spending complex - see breakdown of 20 key questions across 10 demographics inside!"

And I see only 17 people agreed with you so far, alas, I think we are witnessing the economist slowly sliding into the morass of "publish opinion that people already agree with as news" that is now so pervasive. I suspect the holdup is that the economist hasn't quite worked out if it's left or right wing just yet.

Yamhill John

Interesting, Lex, you sure mixed up a mish-mash of issues and ideas. Way too much to comment on it all, so let’s stick to one thread.

I was one of those damned gov’t employees, and now I help suck the system dry by taking my CalPers retirement. But I’d like to present another view of the cost of us feeders at the public trough:

1. Most governments at all levels employee a larger number of educated, trained and experienced people than many business. I would not compare gov’t employees to manufacturing; a better comparison would be to investment, banking and insurance industries. Industries with more, highly educated, trained, experienced and highly paid employees.

2. Government managers are usually much lower paid than business managers of equivalent responsibility. Having worked for cities, I think about city managers and public works directors responsible for overall management of hundreds or thousands of employees and millions to hundreds of millions in budget. Take a look at the average pay for those positions compared to pay for equivalent positions at the average large business.

3. Those over-generous public retirement systems are really taking a hit right now. So are any private retirement systems that are left (not many of those any more). But as the economy recovers so will investment returns. So unless we really get into a depression (still a possibilility), they too will recover. What you and those currently raising the issue often don’t consider or probably don’t know, is that I paid 7.5% of my salary to Calpers, while the cities I worked for were paying in the range of 2% to 5% during my working career because investment returns were so good. A good part of my Calpers defined benefit payments are coming mostly from what I paid in and investment returns (taxable by the way).

Yeah, standing outside looking in it sure looks good being a high paid government employee with a great retirement. You can’t see the years earning just over minimum wage to gain experience, years of working days and attending college at night studying for my PE and MPA, working 10 hour days for five days a week and then working weekends to catch up on little things such as budget planning, employee evaluations, and those special assignments that cities always have.

I didn't feel much like a deadbeat then, and I don’t feel too guilty banking that check every month now.


If the The Economist still wants to be taken seriously, it should stop disseminating outrageous myths about American firefighters and cops having it too good, while turning a blind eye to the real problem.

It should also be remembered that those who fill many highly paid private sector occupations -- from the Wall Street banks to the health insurance companies -- contribute little if anything to the welfare of society, and yet continue to prosper despite the deep recession.


The Sleep of Reason

An interesting hypothesis that merits further analysis.

As a student well committed to the defense of capitalism, I eagerly attribute the rise of state-planning enthusiasts that so permeates the under-30 crowd as a consequence of the fact that these skeptics never lived through the Carter years. My generation has taken Capitalism for granted all these years, and we wrongly assume that minor tweaks in the form of government intervention and regulation can keep the benefits of the Free Market while correcting some of its excesses. This is a flawed premise.

The intransigence of these anti-capitalist nay-sayers supports the idea that this rising skepticism is indeed the new front in the culture wars. My demographic observations are certainly consistent with this hypothesis, but cannot wholly explain it. After all, age is but one aspect of culture. I would be interested to see what variables of culture indicate an aversion to Capitalism namely because I believe that the average Republican voter dislikes the Government, not in the name of the Free Market, but for being gun-controlling secularists.

Perhaps the debate should be framed as cultural, after all, we are fighting for the future of our Nation. It seems to me, that certain cultures are oblivious to the inevitable trade offs that every government action that inhibits the Market in some fashion. I believe the central issue is that America has long accepted that there will be a handful of rich and poor, while in between lies a prosperous middle class with high standards of living. Now it appears that state-enforced egalitarianism by increasing poverty for all is the norm. Perhaps a century years after Frederick Jackson Turner's famous essay, we can now eulogize the end of the Capitalist Frontier in American History.


As a new print subscriber to the Economist, I find the international scope a welcome relief from what you get from American media. The recent stories on Indonesia and mobile money in Africa are cases in point. I noticed the unusual journalistic style (very little attribution to primary sources, for example), but due to their high reputation I gave the magazine the benefit of the doubt and assumed they were doing their footwork and fact checking. But after reading this Lexington piece I have to wonder. To say that government employees are extravagantly overpaid and have been unaffected by the US recession (a central point of the piece) is so clearly false that you have to wonder about the editorial process. My guess is that the columnist is either 1) woefully ill-informed and lazy or 2) hoping to jump to Fox News, where facts do not get in the way of a good anti-government storyline. No matter, there should be fact checking editors reading and catching such whoopers before they get into print. Evidently not. So I wonder whether I should really trust this magazine to keep me accurately informed on global affairs.


Well, I must compliment Lexington on one of his rare half-way intelligent editorials.

It is obvious, however, that he doesn't take the country's mood outside Wasington, D.C., very seriously. It appears that he like many of my liberal friends remain convinced that the deep disappointment, dismay, and frustration Americans have experienced over the last 18 months is confined to "racists" "bigots" "dead-enders" in the disappearing conservative movement. He and they are wrong. Why, it wouldn't surprise me one whit, if Congress were to be up-ended next year and the Republicans are returned to the majority, were he to dismiss the election in shock as "voters having a tantrum."

And I dare say, he's never watched even one Glenn Beck episode or heard Michelle Malkin exposing the men behind the men behind the curtain.

So I ask, if he's not watching the influential among the disaffected, what good are his observations about what's happening in the country?


If there is indeed a California prison guard making 300K, then he is doing it by working 40-plus hours a week in overtime. I don't envy anyone who lives their waking life in prison, even if they're making crazy money doing so. The more typical CA state worker is making around 40-50K. Many make less than 30K. Except for lawyers, Calpers investment managers and doctors, very few make over 100K. The director of the DMV makes about 142K. That's a top senior executive making what any exec in the private sector would consider chump change. Our salaries are of public record and online at http://www.sacbee.com/statepay/. You can find me there if you want. I have an MS in computer science, so compare that with any private sector software engineers you might know with like qualifications.


This is remarkably one-sided, even for a blog. You begin by citing figures from unnamed pollsters to convince your reader that most Americans want less government regulation over private business, despite much evidence to the contrary (check the results of last year's elections, for example). Having taken that bait, the reader is drawn a battle line between your angry, hard-working taxpayers and the dark forces of big government (those Democrats who just recently got swept into power by popular mandate). And then you identify your scapegoat: government employees. You say they have been 'practically unaffected by the recession', adding 'their hours have not been cut' and that they are 'almost impossible to sack.' This is a gross falsehood. Millions of state and local government workers in this country have been either furloughed or laid off entirely. One typical example: California state workers, of which I am one, have been furloughed three days a month, equating to a 15 percent reduction of pay.

If this is indeed a new culture war brewing in America, it is a diversionary one started by corporate-sponsored think tanks and collusive or just plain lazy journalists who don't check facts. The fact is most government employees are indeed feeling the recession along with everyone else. If we are weathering better, on average, than private sector employees, this is only fair because we do not enjoy the fat salaries and bonuses that many private sector employees are rewarded with during good times. We sacrifice the chance of big payouts in exchange for better job security and stable benefits. In other words, we are fiscal conservatives.

You end by saying 'one should not underestimate the rage of taxpayers against public servants'. I would add that self-respecting journalists should not fuel a fire started by right wing pundits. Or perhaps that is too much to expect from a publication catering to the executive banking class. Which brings us to the people whom American taxpayers should really be angry at...

Paul Marks

On the point about "why did you people not attack Bush".

Well, as a libertarian, I was attacking Bush for eight years (often the language I used was so harsh it would not be allowed in an Economist comment section).

Sadly Glenn Beck only really started to attack Bush two years ago (it took time for Glenn to see the light - at least from the libertarian point of view). Michelle Malkin always disliked Bush - but disliked the Democrats even more (the old "lesser evil" argument, which Bush managed to discredit by being such a wild spending .........).

In Congress not enough Republicans opposed the policies of Bush - for every Senator DeMint or Congressman Pence there were two or three Republicans who just went with the flow (over the waterfall). Even with TARP (the ultimate betrayal) some Republicans (including most of the leadership people like Congressman Cantor) could not bring themselves to admit what Bush was - i.e. L.B.J. reborn.

However, as a nonRothbardian I prefer even L.B.J. to the forces he opposed in Vietnam, forces whose ideology is the same as that of Barack Obama. L.B.J. or the Communists - how did the West come to this?

It would have been better if Gore had won in 2000 or even Kerry in 2004, the present situation is so terrible that I can see no way out.

Paul Marks

It should be pointed out that not all Americans in the Marxist tradition are corrupt - for example Barack Obama's first mentor after his mother (who met his father at their Russian language class, not at the "Selma bridge protest" as he has falsely claimed) Frank Marshall Davis taught that Marxism should be combined with strong ethical concepts (Karl himself would have had some problems with that - but it is what "Frank" believed).

Even in Chicago not all Marxists choose to follow Bill Ayers and the rest into the corrupt Machine politics of the city - but Barack went to Chicago already committed to the faction that had decided to be as corrupt as they needed to be. In this he is closer to the tradition of Saul Alinsky than he is to his first teacher (after his mother) Frank Marshall Davis.

Paul Marks

Michelle Malkin makes detailed charges over hundreds of pages of text (building on the work of many researchers) in her "Culture of Corruption".

However, rather than accepting or refuting the charges, "Lexington" just says "silly".

Clearly the establisment (and Lexington represents the relatively "free market" wing of the establishment) have no arguments - and just resort to cowardly abuse when confronted with things (such as the corruption of Barack and Michelle Obama) that they do not want to face up to.


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