Public Pensions Prove Zero Sum Economics

One of the major appeals in Democrat presidential campaigns is to explain to voters that they need Democrats in office to take money away from the rich. This is known as the zero sum theory of economic growth: that at any given time there is a fixed amount of money, and if the rich take too much, less is left for the working class. As long as the rich stubbornly hang onto their fortunes, Democrats argue, the working class will be prevented from making a good living. And since the rich own big corporations, they will pay workers as little as possible. This idea is what Barack Obama had in mind in 2008 when he said he will redistribute money to the working class and poor. But so far this analysis has only been applied to the private sector; the “rich” who own stocks or run corporations. It seems that economists and news media political pundits want to avoid talking about how much wealth is seized by government.

Since the attack on the rich is directed toward individuals who hoard money, it may be interesting to look at government individuals to see how much they are taking from the middle class. If public sector workers, particularly pensioners who are not working, are taking significant amounts of money from taxpayers, then this may also be seen by the zero sum theory as contributing to the shrinkage of middle class incomes. Since Democrats use the rhetoric of income redistribution to get elected, it would be interesting to see how each household is burdened by the money taken from their pockets by public sector unions in Illinois, unions who give all of their campaign money to Democratic candidates in state elections. Of course, Illinois is not the only state dominated by high Democrat taxes and public sector spending but it serves as a good case study of what Democrats do when they have total control of budgets for decades. And it must be kept in mind that public sector unions give 99% of the national campaign donations to Democrats so the impact is national. The results are startling. Today, Chicago’s public sector unions are underfunded, according to the City itself, by $26.8 billion. This is just the City of Chicago. When the state debt is added, the total amount of debt owed by each Chicago household to the city and state rise, according to the Illinois Policy Institute, to $61,000. SEC Commissioner Gallagher stated the number is $88,000. Pension payments to Chicago public union employees have become so high that today all the property taxes paid by the households of Chicago go exclusively to pensions. The operating expenses are paid by additional taxes on things from packs of cigarettes, to gasoline, sales tax, and cable TV bills. Given these facts about how Chicago’s property taxes are used, it’s not surprising that its new Republican governor wants to freeze property taxes to rescue the middle class’s paychecks from Democrats. To this add the national debt. President Obama and his Democrat Party added eight trillion to the debt. Since this is almost half the national debt, it can be said Democrats under his reign have added about $64,500 of debt per Chicago household, according to usdebtclock.org website. You can also find your state there. Illinois Democrats have indentured the taxpayers of the state to turn over historic amounts of their incomes to government, shrinking Illinois’ middle class. All public debt creates taxation and the effects have an impact, sooner or later. The more time allowed for debts to go unpaid, the greater the amount of taxes eventually wasted on interest payments. Since the median household income in Chicago in 2009-2013 was $47,270 the reader can be the judge of whether or not the debt created by Democrats takes money out of the household budgets of Chicagoans. There are very strong indications that the zero sum theory is true, and it is true when the public sector takes money out of the hands of taxpayers’ household. Chicago is now the slowest growing of all major cities. In 2014 Chicago only gained 82 people in population. Residents are fleeing Illinois, taking their purchasing power with them. Illinois is also the slowest state to recover from the recession. Chicago households will have to pay, through taxes, muni bond and unfunded pension debt for decades to come. Far into their lifetimes, and the lifetimes of their children. Zero sum theory is true, but the lion’s share of the proof shows that government spending, not private sector investing, takes money from average Americans. Zero sum theory has been used by Democrats as nothing but a rhetorical tool used to exploit voters’ emotions of envy and greed. But in the end, the greed is exercised by Democrats while taxpayers in Illinois find themselves deep into a hole of government-created debt. The big impact, then, of public debt in the zero sum perspective is that public debt persists over time and grows at very fast rates. Private sector spending only makes the rich get richer if they invest the money and promote economic growth, which helps create middle-class jobs. Democrats love to use this argument, but in the long run it only proves that government suffers from the same human failings imputed to so-called rich people. The difference being that government lacks the constraints on muni bond issuance which restrain the private sector. So the zero-sum theory advocated by progressive economists is correct but misdirected. It is the government, not Wall St., that is taking the money away from the middle class and poor. This is shown by the unprecedented governmental spending and debt experienced by residents of Chicago and Illinois, and the slow economic growth suffered by the middle class and poor due to the seizure of their incomes by taxation at all levels. The most troubling aspect of all this debt is that Democrats and their friends in Chicago media have gone to great lengths to hide and ignore it. The private Illinois Policy Institute has uncovered most of the facts used here, and often had to file FOIA requests. In some cases, they had to take state agencies to Federal court to find out how much they were earning, and how much debt they had accumulated. This is all planned, it is a strategy used by Democrats to con taxpayers into putting them into office; saying they want small class size and to help the elderly; while all along they were secretly passing huge public pension contracts and dumping the cost onto average middle class and poor taxpayers. These facts show two things. One is that these payments are so high that all Chicago households are under a crushing debt burden that takes many thousands per year away from their household budgets. And secondly, these figures provide an opportunity to measure whether this transfer of wealth from households to public pensioners negatively impacts economic grow. Illinois has the most public debt, the lowest credit rating, and the slowest growth.