STUMP » Articles » "Rights" vs. Reality: When Will "They" Ever Learn? » 10 May 2017, 11:54

Where Stu & MP spout off about everything.

"Rights" vs. Reality: When Will "They" Ever Learn?  


10 May 2017, 11:54

I will detail why I put scare quotes around “rights” in my blog title, later.

Let’s start with Greece, which I haven’t written about in a while.

Greek Court Finds New Pension Cuts Unconstitutional:

ATHENS – Greece’s deal with international lenders to get release of more monies from a delayed third bailout of 86 billion euros ($93.68 billion) hit a roadblock when a Greek court ruled pension cuts that are part of it are unconstitutional.

Sources told the newspaper Kathimerini that The Plenary of the State Audit Council found the cuts to main and supplementary pensions go against the European Convention of Human Rights.

The council also reportedly decided that the fiscal bill containing the cuts, to be implemented from 2019, contravenes Greek legislation as it has been tabled to the audit council without an actuarial study.

A bill, outlining the pension cuts and other measures agreed with creditors is due to go to a vote in Parliament next week.

It wasn’t clear whether Prime Minister and Radical Left SYRIZA leader Alexis Tsipras, who reneged on anti-austerity vows and promises to restore pensions but has continually cut them, would ignore the court as has happened in Greece previously when political leaders didn’t like a decision, including other court rulings against previous pension cuts.

Greece’s coalition government, which includes the pro-austerity, far-right, marginal, jingoistic Independent Greeks (ANEL), came to power in January, 2015 on the back of pledges to also reverse pay cuts, tax hikes and privatizations but would up doing the opposite under pressure from the Troika of the European Union-European Central Bank-European Stability Mechanism (EU-ECB-ESM)

That’s nice.

Where is the money going to come from to pay for those pensions?

The leverage of “we’ll take our ball and play elsewhere” doesn’t really have the shock value of the UK leaving the EU. Yes, the Greeks “owe” a lot of money to various EU players. I put “owe” in scare quotes there, because if they keep shoveling money in Greece to pay their bills back… I mean, what the hell?

No, I’m not digging into all the various things the EU has been doing to try to juggle the various insolvent balls, to keep any of them from hitting the ground, but they’re reaching a limit soon.


Walter Russell Mead on the Cruelty of Blue, Remarking on the Puerto Rico bankruptcy:

Years of false promises, years of “compassionate government”, years of ignoring arithmetic, comes to this: Puerto Rico in the grip of a massive, man-made disaster.

This could have been avoided by sensible and timely cuts, by turning a deaf ear to public sector union demands for wages and salaries, by a series of small but definite steps away from the blue model, welfare state governance. But the press, certainly including the NYT which is now reporting the disaster, would have attacked any politicians taking these steps as “harsh”, or “cruel to the poor”.

Now Puerto Rico is in a deeper hole, with much more suffering than any of the moderate cuts would have imposed.

Unfortunately, a number of cities and states on the mainland are walking down the Puerto Rican highway toward bankruptcy and disruptive adjustment. There, the liberal press is still hailing the politicians who are willing to plunge their cities and states into chaos for the sake of popularity: the press often calls them bold, innovative and visionary. They have a lot of ideas about the things they want to do with other peoples’ money, while people who insist that budgets must be cut, and that pension obligations be met, are still being attacked for everything from racism to sadism.

It is a lot of fun until the music stops.

It is cruel to make promises that you know you cannot keep.

It is cruel to set up expectations that people’s needs will be met by some third party, when one knows perfectly well the money will run out.

It is extremely cruel to keep telling people: “Don’t worry! These pensions are guaranteed!”, and when it turns out it meant bupkis to throw up one’s hands in the immortal emoji: ¯\_(ツ)_/¯

There are various lawsuits from various parties in the Puerto Rico case, and I assume there will be more. At least with regular municipal bankruptcy, there is a long case history that would end up dismissing most of the side issues (as what happened with the Detroit bankruptcy), but I have no idea what sorts of side lawsuits would be forestalled.

Besides, I’m not a law person.

I’m a reality person.


I do not believe in positive “rights” in that the government cannot guarantee that it will do something.

It can guarantee that it will not do something: not infringe on your free speech rights, not quarter soldiers in your house, not take your guns away – those sorts of things are called negative rights, which, funnily enough, are the ones that can actually be guaranteed.

Though many governments seem to have issues with not doing things, due to what various people in government want to do, there is no reality problem with any government, including extremely insolvent ones like Venezuela, to not take action in various ways. They can just sit there and do nothing. Doing nothing is very easy.

Guarantee not to do a thing? No problem.

But government cannot guarantee it will make money appear.

[Or, I should say, money that’s worth anything to appear. It could print more paper money/issue more to reserve banks. Ask various governments how that turned out.]

Governments can, through various legal processes, give certain people precedence in grabbing at tax money, but they cannot guarantee how much tax money there will be to grab. You can call that guaranteeing of precedence to be a right, but I don’t consider it a right. Thus my scare quotes in the post title.

The Greek courts can scream all they want that cutting benefits is unconstitutional. They can’t will money into being to pay the full benefits. Similarly for the various lawsuits coming out of Puerto Rico.

Any courts for any government can scream about benefit cuts. All that does is make sure the money runs out faster.


I have multiple links to various commentators talking about how Illinois, California, New Jersey, profligate-state-here must learn from Puerto Rico’s problems.

Here is a sampling:

Walter Russell Mead above has a similar takeaway in his closing paragraphs.


I am not making fun of these authors, especially as many know the litany I am about to spit out. But I do not really see anything special about Puerto Rico going bankrupt magically waking up profligate pols and the people who think they’ll get their full pensions, even though those pensions have increasing contributions and decreasing funded ratios.

Why will “they” learn from Puerto Rico?

“They” did not learn from Prichard, Alabama. (oh, it was so small)

“They” did not learn from Greece. (especially as that hasn’t even been close to being resolved.)

“They” did not learn from Rhode Island. (the problem is fixed! Sort of.)

“They” did not learn from Detroit. (Oooooh, a Grand Bargain! Let’s get us one of those.)

Sometimes folk songs aren’t wholly insipid, even if the lyrics are simple:

No, “they” didn’t learn to stop war, and “they” haven’t learned to stop being profligate.

“They” still think that future people will come through, somehow, even though current people aren’t generating that many current babies to be future taxpayers. Maybe there will be some fancy technology that will fix that. Perhaps the robots to take the place of the nonexistent people can be taxed to support retirees. Or maybe they’ll just hand out robots in lieu of pension payments.

Hey, as long as we’re fantasizing, why not something fun?

But there will be similar excuses made from the Puerto Rico affair (such as: their pensions were essentially pay-as-you-go; there was lots of corruption; there were structural issues to their economy), to indicate why this has nothing to teach with regards to their particular insolvent localities’ issues.

No, Madigan will not have a Road to Damascus over Illinois finances, the Spirit of Well-Funded Pensions is not about to visit the New Jersey legislature in a Financial Pentecost — and Jesus isn’t going to come to Trump to say “You know, those entitlements are a real problem.”

“They” will keep nattering about their “one cool trick” to make it all work out, and “they” will be so “surprised” when it all unravels, as it has in Puerto Rico (and Greece, Detroit, Prichard, Rhode Island…) And then “they” will walk away, because it’s not their problem anymore.

Compilation of Puerto Rico posts

The State of the States: a Compilation

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