Supreme Court Justice Louis Brandeis once described the states as “laboratories of democacy” — that is, in our federalist system, individual states were free to experiment with different policies and diverse approaches to common problems. The idea was that, from the results of those experiments and the testing in state “laboratories,” sound policies could be distinguished from unsound.
Brandeis’ concept is playing out in Rhode Island, and in this case, the experiment has produced results that should give every other state pause. As this New York Times article explains, Rhode Island and its cities are in desperate financial straits because the pension obligations owed to public employees have become crippling and are consuming ever-larger shares of governmental budgets. A combination of rank politicking, ridiculously over-optimistic investment return projections, shrinking tax revenues, and longer-lived retirees have forced Rhode Island and its municipalities to choose between meeting its pension obligations and providing essential government services. One city, Central Falls, has already declared bankruptcy, and the state itself has had to take special measures to try to protect its bond rating.
I mention this unfortunate story because it seems pertinent to Ohio’s impending vote on Issue 2, which relates to how compensation, health care benefits, and pension benefits should be decided for public employees. As we consider Issue 2, it is important to keep in mind that government does not exist simply to provide benefits for public employees. I don’t want to see Ohio become another Rhode Island, where pension and health care benefit costs are bringing down local governments or are imposing such all-consuming obligations that roads and bridges may go unrepaired.
Huh – and I thought California was the U.S. state most akin to Greece. See, for example, the last section of Michael Lewis’s recent book, Boomerang, and/or last year’s book, California Crackup.
Thanks again for the buffet of posts.
Maine faces similar challenges in unfunded obligations.