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San Jose budget: $3,190,187,604 Pop: 1,016,479 $3138/cap Dallas TX budget: $2,806,427,228 Pop: 1,281,047 $2190/cap Jacksonville FL budget: $2,166,068,795 Pop:

San Jose budget: $3,190,187,604 Pop: 1,016,479 $3138/cap Dallas TX budget: $2,806,427,228 Pop: 1,281,047 $2190/cap Jacksonville FL budget: $2,166,068,795 Pop: 861,252 $2515/cap Closest cities I could find on wikipedia. San Jose gets plenty of money from its citizens. Like most of CA, it has fallen into a pension liability trap. Wringing more money out of people who have lived there for decades will only drag it on for a few more years until they have to stop making fully-funded pension promises they can not keep long-term.

maxerickson 11y ago
In Holy Fire, Bruce Sterling had young people unable to get their hands on "old money" and thus frozen out of many interesting parts of the economy. I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything.
- lsc 11y ago
  >I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything. This is, in a nutshell, the basic populist argument in favor of inflation.
  - epicureanideal 11y ago
    Except inflation doesn't really help. If you own property, as I do, inflating money 2x just means my property goes up 2x in value.
    - lsc 11y ago
      we were talking about bonds (or I guess annuities) in the previous message. Debt, essentially. If you owe money at a fixed interest rate, an increase in the rate of inflation helps you very directly, and hurts your creditors very directly, because you get to pay your debt back with cheaper dollars. If you really expect your real-estate to exactly follow the CPI, I expect you will be disappointed. (or maybe excited... for the last two decades, at least, real-estate has massively outpaced inflation.) Pensions, and really, most things are more complex, just 'cause there's usually something that attempts to compensate for inflation, but the point being that in general, inflation is good for debtors and bad for creditors. Most of the historical arguments in favor of inflation run along the lines of a partial repudiation of debt. Go read Bryan's "Cross of Gold" speech for an especially punchy example.
      - maxerickson 11y ago
        I meant bonds in a figurative sense, not just financial instruments.
      - iofj 11y ago
        Whilst there are occasional examples where debt actually makes debt free or even negative value for the creditor, the examples are few and far between. Generally, you will read about such examples in the normal, non-financial press. That's how rare they are. A mortgage's interest rate is designed to outpace inflation, so it almost always does.
        lsc 11y ago
        Hmm? If you take out a fixed-rate 30 year mortgage that is pricing in inflation at two percent, and inflation moves to six percent several years later, you are in much better shape than you would be otherwise, as you get to pay back that loan with cheaper money. If you buy a 10 year t bill expecting two percent inflation, and inflation goes up to six percent, you are going to be pretty disappointed. I know that lately inflation has been hard to find... but it's pretty uncontroversial that these sorts of things happen when the rate of inflation changes. Now, maybe you are saying that inflation, as long as it doesn't change doesn't matter, and while I still disagree, you have much stronger ground to argue from.
lsc 11y ago
yeah, but to fix a road, you've gotta pay market rates for labor. median income in Jacksonville FL: $47,424 median income in Dallas, TX: $56,498 Median income in San Jose, CA: $77,000 So... you're gonna pay more to get anything done in San Jose... not just for the guy with the shovel, but for the whole bureaucracy. >Like most of CA, it has fallen into a pension liability trap. Wringing more money out of people who have lived there for decades will only drag it on for a few more years until they have to stop making fully-funded pension promises they can not keep long-term. The thing to understand about pensions is that they are essentially annuities. Promising someone a pension in the '80s, when you could simply back such things up with T-bills or inflation protected T-bills, was a pretty reasonable thing to do. Interest rates were high. The real return on investment was high. You would get a reasonable return from buying an annuity, it was not a crazy thing to do at all. The problem is that the risk-corrected rate of return of money is dramatically lower now, as one would expect in a situation with negative interest rates, so pension promises made to people like my parents, who worked for the state and negotiated those pensions in the '80s, look ridiculous now. I actually looked into getting the same jobs they had... I could do the job, but the pensions they'd offer me if I signed up now are shit compared to what my dad got. I guess my point is that at least for the jobs I have researched (state-funded computer-nerd gigs) their new promises line up with the current economic reality. Certainly, if the city is still offering defined-benefit pensions, that ought to be stopped, because annuities are simply something that aren't supportable in the current economic situation... but considering the situation at the state, I kinda doubt that the city is offering defined-benefit pensions.

maxerickson 11y ago

In Holy Fire, Bruce Sterling had young people unable to get their hands on "old money" and thus frozen out of many interesting parts of the economy. I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything.

lsc 11y ago
>I wonder if in reality we will have the reverse, where young people of the future refuse to live under bonds created in the past and old money just isn't worth anything. This is, in a nutshell, the basic populist argument in favor of inflation.
- epicureanideal 11y ago
  Except inflation doesn't really help. If you own property, as I do, inflating money 2x just means my property goes up 2x in value.
  - lsc 11y ago
    we were talking about bonds (or I guess annuities) in the previous message. Debt, essentially. If you owe money at a fixed interest rate, an increase in the rate of inflation helps you very directly, and hurts your creditors very directly, because you get to pay your debt back with cheaper dollars. If you really expect your real-estate to exactly follow the CPI, I expect you will be disappointed. (or maybe excited... for the last two decades, at least, real-estate has massively outpaced inflation.) Pensions, and really, most things are more complex, just 'cause there's usually something that attempts to compensate for inflation, but the point being that in general, inflation is good for debtors and bad for creditors. Most of the historical arguments in favor of inflation run along the lines of a partial repudiation of debt. Go read Bryan's "Cross of Gold" speech for an especially punchy example.
    - maxerickson 11y ago
      I meant bonds in a figurative sense, not just financial instruments.
    - iofj 11y ago
      Whilst there are occasional examples where debt actually makes debt free or even negative value for the creditor, the examples are few and far between. Generally, you will read about such examples in the normal, non-financial press. That's how rare they are. A mortgage's interest rate is designed to outpace inflation, so it almost always does.
      - lsc 11y ago
        Hmm? If you take out a fixed-rate 30 year mortgage that is pricing in inflation at two percent, and inflation moves to six percent several years later, you are in much better shape than you would be otherwise, as you get to pay back that loan with cheaper money. If you buy a 10 year t bill expecting two percent inflation, and inflation goes up to six percent, you are going to be pretty disappointed. I know that lately inflation has been hard to find... but it's pretty uncontroversial that these sorts of things happen when the rate of inflation changes. Now, maybe you are saying that inflation, as long as it doesn't change doesn't matter, and while I still disagree, you have much stronger ground to argue from.

lsc 11y ago

yeah, but to fix a road, you've gotta pay market rates for labor. median income in Jacksonville FL: $47,424 median income in Dallas, TX: $56,498 Median income in San Jose, CA: $77,000 So... you're gonna pay more to get anything done in San Jose... not just for the guy with the shovel, but for the whole bureaucracy. >Like most of CA, it has fallen into a pension liability trap. Wringing more money out of people who have lived there for decades will only drag it on for a few more years until they have to stop making fully-funded pension promises they can not keep long-term. The thing to understand about pensions is that they are essentially annuities. Promising someone a pension in the '80s, when you could simply back such things up with T-bills or inflation protected T-bills, was a pretty reasonable thing to do. Interest rates were high. The real return on investment was high. You would get a reasonable return from buying an annuity, it was not a crazy thing to do at all. The problem is that the risk-corrected rate of return of money is dramatically lower now, as one would expect in a situation with negative interest rates, so pension promises made to people like my parents, who worked for the state and negotiated those pensions in the '80s, look ridiculous now. I actually looked into getting the same jobs they had... I could do the job, but the pensions they'd offer me if I signed up now are shit compared to what my dad got. I guess my point is that at least for the jobs I have researched (state-funded computer-nerd gigs) their new promises line up with the current economic reality. Certainly, if the city is still offering defined-benefit pensions, that ought to be stopped, because annuities are simply something that aren't supportable in the current economic situation... but considering the situation at the state, I kinda doubt that the city is offering defined-benefit pensions.