A New Civil War Is Growing In Our Country

Nearly every school age child learned at least a little bit in school about the Civil War.  That armed conflict during the 1860s was fought over slavery.  There was of course the moral disagreement regarding forced labor of human beings.  But economics played a huge part in that conflict.  Like so many things, money was part of the equation.

In his latest book, Robert Kiyosaki discusses a new debate going on in America.  I've noticed this rift long before reading his book.  But he helped bring it into focus as I read, "Why "A" Students Work For "C" Students And  "B" Students Work For The Government."

We pulled several pages out of "Fix It", by Dr. Chauncey Crandall.  There was so much heart health value in that book.  I could have just skimmed a short review and suggested you read it, but by posting the pages, you get a real feel for the value contained in the pages.

Robert Kiyosaki's new book has the same value but this time from a financial education standpoint.  And it is a perfect fit for our "Teach Your Children Well", series.  

The New Civil War

This new civil war is between public servants and those they are supposed to serve.  We saw an example play out in Detroit.  The city is beyond broke.  The debt load from pensions and other "benefits" owed to retired city employees are crushing the city.  The concern for me is that this mountain of debt was created by incredibly short sighted city officials who caved in to unsustainable union demands.  They did so in the self serving interest of keeping themselves on the government payroll by getting reelected.

So decisions made years ago that provided pension amounts far higher than many private sector jobs and extended benefits that covered entire families are now preventing  current citizens from having the same access to government "services."    Cities and states cannot hire the same number of people to do the same jobs because they are forced to pay out massive amounts of money to retired employees. 

Robert Kiyoski made several good observations in the chapter we are highlighting right now.  Before we go much further, please realize that he is not criticizing government employees.  He is merely pointing out the lack of financial intelligence that led us to this point.  He is describing how elected officials made choices years ago that are affecting current citizens in a negative way.  And many are sick of seeing pension amounts far higher than can ever be paid without huge cuts to new budgets.  Hence, we have a new civil war.

I bring you this page to help you teach your children about the importance of not only understanding their role in the political process but also so you can teach them to take care of their current and future assets.

Most of you remember the situation in Wisconsin.  The  newly elected governor made good on his promises to cut government workers retirement benefits and pay scale.  The state could not afford this level of expenditure.  The news made national headlines as people took sides in this debate.  This new civil war got hotter as everyday people were made more aware of the disparity in pay for government employees compared to many private sector workers. 

This debate has spread to other states now.  More people are beginning to question why their tax dollars are being spent to provide such overly generous retirement packages to public employees while they have to live with lower levels of service.

Here are a couple more examples from his book.   California is the poster child for ridiculous retirement agreements.  He writes, "In 2011 alone, California spent $32 billion on public employee pay and benefits, which is up 65% over the past ten years.  At the same time spending on public education is down 5%."

Here is an example from San Bernadino, which by the way is also bankrupt.  That city has a population of 210,000, one third of which live below the poverty level.  This qualifies them for the title of poorest city of it's size in that entire state.  And in that city a senior police officer is allowed to retire before age 60.  He or she will get a one time $230,000 payout and a guaranteed $128,000 per year pension. 

Two months before San Bernadino declared bankruptcy, their city council doled out an additional $2 million to retiring city employees.   How would you feel if your town pulled that entitlement spending trick?

Here is another case that adds fuel to this new civil war.  There is a retired government employee  claiming elder abuse because his pension has been reduced from $45,000 per month, to just below $9700 per month.  That is still around $115,000 per year.   I don't feel too sorry for him. 

Here is an example from Ohio.  The government pension liability for that state is now 35 % of Ohio's entire gross domestic product level.  Is that sustainable?  I don't see how.  Entitlement mentality on display.

The Dilemma Of Paying The Bill

Warren Buffet calls the costs of public sector retirees a "time bomb" and "the biggest single threat to America's fiscal health."  The  lack of financial intelligence and the outright greed involved in the decision makers of these deals will affect all of us.

This new civil war will create bigger divisions as young people are forced to bear the economic brunt of these past "negotiations."  Their incomes are not going up at anywhere near the level of retirement payouts to departing government employees. 

I always kind of cringe when I hear a union autoworker complain about greedy car companies sending jobs to other countries.  Their own lack of historical perspective is discouraging.  Those companies never wanted to ship jobs out of America.  There was no American loyalty that inspired them to keep their plants in this country.  It was all about economics.  Why pay to ship everything back and forth and deal with foreign governments?

They moved out of America because of staggering labor costs, related to pay and even more so related to future retirement compensation.  Those management teams share the blame as well.  Had they shown even a little financial acumen back then, they would faced down the union's totally irresponsible demands.  But they didn't.

Had "union leaders" really had the vision to look out for their future members they would have seen how these contracts could not go on forever.  But greed and power were the order of the day.  So the jobs moved to Mexico or somewhere else. 

Teach your children to think long term.  Teach them to research so they learn the facts.  Maybe they will be able to fix this civil war for the generation that follows them.

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Just below is a quote from "Don't Sweat The Small Stuff" by Richard Carlson.  The chapter title is "Open Your Heart To Compassion." 

"Every day we are given hundreds of opportunities to practice compassion in action.  We can learn to be less reactive and live with more patience.

We can smile when others are serious.  We can drive our cars more carefully, pick up litter on the streets, recycle, and reduce our consumption.

We can resolve conflicts rather than create them, and we can become less judgemental and more inclusive.  When someone is aggressive, we can teach them to be more peaceful.  Instead of waiting for an example, we can be the example.

The more compassion that enters your heart, the happier and more peaceful you will become.  By knowing that you are doing your part to create a better world-whatever form that takes-you will fill any void that exists in your life, and you will begin to find the peace you are looking for."

What's New?

Just below is an article from Peter Schiff about passing the buck from one administration to the next.

Owning The Bubble

Just below is a link to look up your congressional representatives.   Let them know you expect accountability.

Congressional Representative Look Up