How Do You Bankrupt a State?

Well, here is an idea.  Let our (Illinois) governor run things.  Pat Quinn is entertaining the option of borrowing $15 billion to pay overdue bills and balance our budget deficit.  He is loathe to raise taxes, which I find laudable.  Perhaps it is more accurate to say that I would find it laudable if it were a principled stand against large government. We can lay that one to rest.  He is afraid citizens will stage an uprising if he tries.  Principles have nothing to do with it.

He is beholden to the unions, and so is also loathe to bring up the radical idea of negotiating on pensions and public-sector wages.  My thought processes are fairly straightforward, so walk through this one with me.  No additional income plus no cost reduction equals…wait, don’t tell me…borrowing! Yepperooni, Quinn wants another credit card.

Sadly, most of us will, if Quinn gets his wish, breathe a sigh of relief and go on about our business.  At least for a while.  The truth is that we citizens of this fair state are falling asleep on a financial bomb.

Lest you think that I, as a professor at a state university, believe I should be saved first, let me clear the air.  I have always said that higher education should be privatized top to bottom.  We have been drifting in that general direction for some time now as the ratio of state money to private donations and tuition has decreased.  Quinn may just be granting my wish, albeit in a more precipitous fashion than I had in mind.

As far as I know there is no mechanism in place for a state to declare bankruptcy, though cities apparently can.  This is where we are headed, folks.  In droves.  In my particular case, let me share a premonition I have had that sends my colleagues into spasms on the floor.  The whole system is coming apart at the seams.  Quinn’s borrowing will not address the fundamental problem underlying our budget deficit.  Public entities, including universities, will be broke.  Dead broke.  What then?

No one knows for sure.  I am investing in canned goods and a really nice metal detector, just to be safe.  Dumpster diving may be a career alternative as well.  Shoe shining, assuming anyone still has shoes.  Of course, I am engaging in hyperbole, right?  Maybe not.  When I entered this profession, I thought that a nice side benefit to having the career I was meant for was the relative stability of my job.  Between dishonest deans (elsewhere, not Illinois State) and incompetent state governments (pretty much everywhere), I have come to realize that I am just as vulnerable as anyone to the vagaries of economy and idiocy.

All doom and gloom?  Perhaps not.  Why do we think that the state is our only savior?  Why are we cowered down by the prospects of the failure of an institution that has proven itself unworthy and dangerous over and over?  When the solid waste encounters the breeze generator, we will have to do what people did before the Leviathan.  We will have to figure out how to provide through private means the things we have come to depend on the state for.  We will have to knuckle down and build schools (ones that work this time), roads, and bridges.  We will have to reach down deep to reclaim the spirit that tamed a continent.

And if we don’t?  Lurking in the dark corners of this crisis are the real Evil Ones.  Plenty of would-be tyrants wait in the wings to tell us all they they have the answer.  Plenty of sheep will follow.  When the world we know lies in ashes around us, we will be faced with the most profound choice of our lives.  Will we embrace liberty and build a world fit for free humans or slink into slavery and false comfort?  Look around you and see what the gradual erosion of our independence has done to us.  There, did that make the choice easier?









About Terry Noel

I am an Associate Professor of Management and Quantitative Methods at Illinois State University. My specialty is entrepreneurship.
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1 Response to How Do You Bankrupt a State?

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