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    Detroit & Stockton Bankruptcies Expose Democracy's Great Flaw – Short-Term Politics Trumps Long Term Planning

    07/28/2013
    Democracy and Power 106: A Politician Receives No Reward for Good Policy or Penalty for Bad Policy

    It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong. —Thomas Sowell

    In a democracy, a politician has no ownership-interest in the state. There is no financial gain for wise, policy decisions, nor  is there financial loss for bad decisions.

    A politician’s rewards are immediate – power, prestige, and perquisites.

    Detroit & Stockton Bankruptcies Expose Democracy's Great Flaw – Short-Term Politics Trumps Long Term Planning

    Detroit and Stockton are bankrupt cities.  Why?  Universally, elected politicians focused and cared about their next election and not their community.  To retain their political power, politicians must please their voting constituents.  Thus, elected politicians please their active voters and stick the burden on future generations.  Politicians buy the votes of present-day constituents, and stick the debt on our children and grandchildren.  It is the great flaw of all popularly elected governments - Detroit, Stockton, California, Illinois, Greece, Spain, the United States of America and most of the other democracies.

    Through the decisions made over many years by many politicians, the citizens of Detroit and Stockton are living in despair and danger because their cities are bankrupt.  Claire Groden in Real Clear Politics describes Stockton's situation: 

    At night, Stockton, Calif., becomes a ghost town. Streets lined with boarded-up buildings and rubbish-strewn parks are mostly empty except for drug dealers and their customers, says Dave Macedo, president of the local firefighters’ union. Even in daylight, shootings break out with regularity, and the city of 300,000 was ranked the 10th most dangerous in the country in 2012. “It’s the wild, wild West out there,” says Macedo. Or rather, the wild, bankrupt West.

    Similarly, Detroit is violent and desolate

    The common denominator between Detroit and Stockton is the lack of long-term planning – particularly financial planning.  Again, as stated before, the many years the politicians making promises they could not keep to their constituents.  The promised retirement and medical plans for government employees is probably the most damaging. 

    Now, these cities are financially bankrupt and are unable pay their contractual promises.  Hence, the residents of Detroit and Stockton are subjected to violence, rubbish and decay.  Retired government employees will most-likely not receive all of their promised benefits.  All of this is happening because of terrible governance.  Yes, there are allegations of corruption, which contributed to the decline. 

    However, the great flaw of democracy is that politicians are focused on the next election and not on the community.  Most municipal elections are four year terms, and there is virtually no planning beyond the next election.  Additionally, politicians – past and present - pay no penalty for bad decisions.  

    As, Thomas Sowell wrote, "It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong."

    [This is the first of many blogs on bankrupt democracies.]