WebHot: Don’t Blame Workers for Bankruptcies

As more American cities sink into the quicksand of bankruptcy, a veritable Scapegoats’ Olympics has been inaugurated – crowd-pleasing blame games that usually point fingers at workers. Harold Meyerson was having none of it the other day, however, in an L.A. Times op-ed:

“From reading the voluminous accounts of the fiscal woes of Stockton and San Bernardino, you’d think that municipal unions and feckless city officials are primarily what led these cities down the path to fiscal ruin.”

For evidence, Meyerson quotes editorials and columns appearing in the O.C. Register and Sacramento Bee, both of which confidently laid the blame on the pensions of unionized public employees. Of course, the unchallenged narrative among the chattering classes has been all about spineless city governments caving in to unions whose greedy members expect to enjoy a paid retirement when they’re too old to work. Unchallenged, that is, until Meyerson stepped in with his counter-argument.

“What sets Stockton and San Bernardino apart,” he wrote, “is a far narrower set of circumstances: They were at the epicenters of the American housing bubble and the American housing bust.”

Meyerson sardonically examines the nature of that bust as it pertains to the Inland Empire and Central Valley, and how the meager job growth in parts of those regions has been mainly limited to employees hired for warehouse work through temp agencies. Implicit in the economic geography sketched by Meyerson is that an archipelago of permanently low-income cities is emerging in California,  stretching from its valleys to coastal towns like Vallejo. The question seems to be whether the threat of these failed cities to our economy will expand – or burst like the bubble that created them.