Not your father's pay raise

Monday - 2/6/2012, 2:00am EST

In August 1980, the giant American Federation of Government Employees union had its national convention in Honolulu. During one of the day sessions, the AFGE president got a long-distance call from the White House. It was about the pay raise the president was going to give feds in two months — one month before the presidential election.

The AFGE president relayed the word to the union's delegates. The pay raise was going to be 9.1 percent.

They booed, hissed and stamped their feet in righteous indignation. Why?

Because 9.1 percent, back then, was chump change. Inflation was running in the double digits. Interest rates were so high the average person couldn't get a loan to buy a house. Leaders of all the other federal unions were enraged and insulted by the measly 9.1 percent pay raise.

Times change.

Given the inflation rate at the time and the sad state of the economy, the delegates were probably correct to boo a mere 9.1 percent raise. Union leaders were probably correct to say that 9.1 percent was an insult. They weren't being ungrateful, just realistic.

Fast forward to now.

Inflation is low (and we've had long periods of deflation). The economy is in pretty sad shape.

Back in the 1980s, we were worried about Japan eclipsing us. They were buying up huge chunks of valuable real estate — from Hawaii and California to New York City. They were buying up large sections of land, in Illinois and the rich, black soil of the midwest, to grow soybeans. Europeans had just gone through a long period of laughing at the diminished U.S. dollars that tourists were trying to spend.

Now, we are looking for ways to bail out the Euro. Thanks largely to the earthquake and killer tsunami in Japan, American cars are back. Both in quality but even more so in quantity. Especially GM, which because of taxpayer bailouts is also known as Government Motors. Although you, as a taxpayer, are technically a share-holder, don't look for dividends on your share of the shares. And don't try to sell them yourself.

The other good news for us is that unlike the 1970s and 1980s we are no longer in danger of becoming an economic satellite of Japan.

But we might wind up as a province of China — now that our big worry is our massive debt to China. And if they could hopefully, loan us some more Renmibi? Also, if it's not too much trouble, could they remove some trade barriers and devalue their currency? Then, we can sell them stuff so that we, in turn, can import (as in buy) more of the stuff, like electronics and cars, that were once made here.

It all makes perfect sense if you don't think about it too hard.

The Defense Department is looking at a proposal that would hold down future raises for its civilian workers to spare the armed forces from even more damaging budget cuts. In the government, when Defense gets a cold, all other federal agencies sneeze and get the sniffles. If the Defense proposal sticks, it likely to be applied to workers at IRS, Interior, GSA, TSA and other civilian departments


NEARLY USELESS FACTOID

By Jack Moore

Sorry to ruin the anthropological dreams of your childhood, but the South American walking palm tree can't actually walk, Life's Little Mysteries reports. The tree's "unusual root system" — a number of roots split off, making it appear as if it has many legs — has fueled speculation that the tree is mobile.


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