The Second Runner-Up In This Year's Dodo Derby

We’ve been talking a lot about the state of the state this week. The state, as a viable political concept, seems to be breaking down. At the very least, it is beginning to be called into question. Take a look at states in Africa…states in the Middle East…in Europe…even states within “The States.”

From toppled state governments in the MENA region to insolvent nation states across Europe’s periphery and flat broke states back in the US. Whether ruled by tyrannical, autocratic minority or tyrannical, democratically elected majority, the model of The State just doesn’t seem to work. The reason is simple enough: violence doesn’t work. Voluntary trade does. The state – being, by definition, an agent of force – is always and everywhere a net detractor from a market’s productive capacity. This rule holds equally true in the Libyan Desert as it does in fifty different state capitols scattered across the US.

Which brings us to the main reason for this little interjection… The Second Runner-Up in this year’s Daily Reckoning Dodo Derby: The States Edition.

Let’s see… First we had ten finalists. We read them out over the weekend, in alphabetical order – California, Connecticut, Illinois, Louisiana, Massachusetts, Mississippi, New Jersey, New York, Ohio and Wisconsin.

Then, on Monday, we announced fifth place: Connecticut. We just couldn’t resist recognizing a state with the sometimes moniker of “The State of the Steady Habits” for out of control spending that saw it’s debt/GDP ratio soar to within a fraction of a percent of Greece’s. Great stuff, really.

Yesterday, we gave a tip of the hat for New Jersey. Although the Tax Foundation has found that New Jersey homeowners pay three and a half times the national median, the state is still on schedule to deliver a $10.5 billion budget shortfall for the year. Then there’s the union-won benefits, unfunded pension and healthcare liabilities, soaring debt/GDP level. Yep, Jersey for fourth.

Today we raise a glass to this year’s Second Runner-Up…

Writes one reader from today’s state:

“I am appalled at the continued political patronage hiring here. A recently retired State Senator was, at 75 years old, just handed a job at the local community college…paying $120,000 per year! And we are laying off teachers, police, and firefighters.

“Also, politicians refuse to give a Civil Service exam to fill state jobs, as required by law. They say there is no money for this. They then hire based strictly on political connections, disregarding any qualifications. They end up having to hire additional people to actually do the job. Budgets for some departments were actually higher than requested in exchange for political jobs – see the ongoing scandal in the Probation Dept. Some politicos may actually go to jail over this one.”

The state our Fellow Reckoner is referring to suffers under one of the highest debt/GDP ratios in all the land…a whopping 20.53%. Maybe you’ll guess it from this email, from another local resident:

“Our state and its ‘Big Dig’ has retired this dubious trophy years ago. When Tip O’Neil announced that he had 90% financing on our downtown boondoggle and we would only have to pay 100 million of the 1 billion cost, little did he know (or did he?) that the final cost would be $14 billion. Oh wait… We forgot the interest…dooooh… Make that $22 billion. And the screw-ups continue, whether it’s the Big Dig, our caddy driving governor giving freebies to a company that left for China, drunken pols, druken firefighters, pols sticking cash down their bras that only the feds can seem to find while our AG is clueless, three consecutive speakers of the house that have been convicted of felonies or are awaiting trial and grossly incompetent judges and pols that come from a one party state.”

Couldn’t guess? Here’s our Reckoner again, with the answer in slogan form:

“The new state slogan should be ‘Massachusetts: Incompetence, corruption, criminal behavior… We’ve got it all!’”

Congratulations go to Massachusetts, “The Bay State.” You’ve earned this year’s Second Runner-Up in our Daily Reckoning Dodo Derby: The State Edition.

That means there are still two more prizes up for grabs…and seven finalists still in the running. More tomorrow…

Joel Bowman
for The Daily Reckoning

The Daily Reckoning