Category Archives: Bailouts

Really Greg Mankiw??? Is this your: Fun Fact of the Day: California Edition

Usually I agree with Greg Mankiw. At least he’s usually worth reading.  I read this post and chuckled and thought that’s California big spending for ya’, but on reflection it started to bug me

I’m not sure the example he use’s here is not very fair, and fact its taking a pot shot at first responders.


Greg Mankiw’s Blog

via Fun Fact of the Day: California Edition.

Here is a small clue that might help explain California’s fiscal problems:

According to a [Newport Beach] city report on lifeguard pay for the calendar year 2010, of the 14 full-time lifeguards, 13 collected more than $120,000 in total compensation; one lifeguard collected $98,160.65. More than half the lifeguards collected more than $150,000 for 2010 with the two highest-paid collecting $211,451 and $203,481 in total compensation respectively….Lifeguards are able to retire with 90 percent of their salary, after only 30 years of work at as early as the age of 50.

Note that the discussion is about lifeguards with total compensation in six figures. That’ll seem like a lot many people and an example of California’s big spending. Is it?

Several issues occur to me here.

First, this refers to “total compensation” not wages and salary. In other words it includes contributions for pensions, health insurance and benefits as well as wages. Not emphasizing that fact makes the post a little unfair.

That point may be more important in that I suspect it includes a life insurance component. Lifeguards have an image of glamour. You set in your chair and watch good looking beach goers right?   Here’s that perception.

But I have to think that there’s an element of risk that may be reflected in expensive insurance for the lifeguard’s survivors in the worst case.   Their health insurance may be expensive as well.

The early retirement is mentioned as well, but wouldn’t you expect that, maybe want it.  A lifeguard is going to be in their physical prime one hopes, and I’m not so politically correct as to suggest that won’t usually imply younger than 50.  (I’m not well over 50, so don’t call me an agist!)

Finally, in fact these guys are in fact first responders.  They may have more than rudimentary emergency medical training.  If you’re drowning, I don’t think you’d sneer at they’re being overpaid.

A lot of this is just skepticism about what the Mankiw post seems to assume:  big salaries, for easy work and likely not the skilled a work at that.  I haven’t confirmed the basis for my skepticism, but I think in bashing public workers a lot assumptions are being made with no facts.  That’s not fair.

If you want see some real lifeguard action that might emphasize that lifeguarding may be glamorous, but is a real job, not a cartoon then check this out.

Breaking up is Hard to do but necessary??? Break Up the Banks, Arnold Kling | EconLog | Library of Economics and Liberty

What we need is:

a simple rule that makes possible free market competition without the distorting effect of implicit government subsidies: “Our proposed approach does not require any restrictions on activities of banks or on the location of those activities of any kind. Our only restriction is on the size of financial institutions.”


Break Up the Banks, Arnold Kling | EconLog | Library of Economics and Liberty.

Were the auto bailouts a good idea?


Former FTC colleague Todd Zywicki doesn’t think so:

The Obama administration’s economic policy, therefore, returns us to the thinking of the 1950s and ’60s — to an economy in which big business, big labor, and big government are tied together in a relationship of mutual succor and support.
The auto bailouts exemplify this new reality. Sold as a means of revitalizing the economy, they are in fact a means of transforming the relationship between the state and the market in a way that empowers large players at the cost of economic growth. The overall effect of such state capitalism is a kind of controlled stasis, in which the preservation of old jobs takes priority over the creation of new ones. Managed decline, rather than dynamic growth, is the defining feature of the Obama economy.

Were the auto bailouts a good idea?
Luke Froeb
Tue, 22 Mar 2011 20:22:00 GMT