The Arithmetic of Ruin: A Morality Tale About Spending, Not “Stuff”
End Serfdom by Spending Restraint: Property Rights Begin with Fiscal Discipline
By Economist Jon Paul Morrow who still believes arithmetic is not a partisan idea…..
There is a comforting fiction in American politics: that prosperity is a pile of things the government dispenses, rather than the fragile surplus produced by men and women who build, risk, and work. In this fable among fables, spending is kindness and restraint is cruelty. But arithmetic—cold, indifferent arithmetic—does not bend to stories. When outlays outrun output, when promises outrun the payer, decline is not a “maybe.” It is a date on the calendar.
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Property taxes deserve to go; no free citizen should rent his home from the state in perpetuity. But even that righteous reform dodges the central villain: spending. Our trajectory is not undone by the things we lack, but by the burdens we insist on carrying—and forcing others to carry. The 600-pound gorilla is simple to name and costly to confront: the growth of government compensation and benefits at the federal, state, and municipal levels.
This is not a jeremiad against public service. It is a reckoning with incentives.
How a Paycheck Becomes a Privilege
Every economy has classes. Not in the Marxist sense, but in the Adam Smith sense: groups whose incentives align—or collide—with the creation of wealth.
The working private sector must earn revenue before it can spend it. Every new hire must pay for himself. Every benefit must clear the cash register.
The public sector spends first and collects after, by force of law. It hires to fulfill mandates, not customers. It adds benefits by statute, not by sales. It pays employees by compassion of what they believe they are worth and not by what the market will bear.
Over time, that difference compounds. Narrative hardens into norm. “Competitive pay” morphs into guaranteed pay—plus pension, plus post-retirement medical, plus step increases untethered to productivity, plus arbitration rules that ratchet costs upward in boom years and never reset in lean years. What began as parity becomes privilege.
Add three accelerants to the fire:
Davis–Bacon and prevailing-wage scaffolds that inflate baseline costs for “public” work, then treat those inflated costs as the new “market.”
Defined-benefit pensions priced with rosy interest assumptions, where today’s applause is bought with tomorrow’s taxes.
Cadillac health plans that decouple consumption from price and guarantee medical inflation faster than revenue growth.
None of this is conspiratorial. It is Public Choice 101 (feelings): concentrated benefits, diffused costs. A motivated minority bargains for more with a self aggrandizing union lobby that is sacrosanct and untouchable; an atomized majority pays more. In the private sector, the firm that overpays relative to productivity goes bankrupt. In the public sector, defined now as the much ballyhooed social construct that the government that overpays raises taxes, borrows, or paper-clips services.
The result is an aristocracy of pay stubs: not by birth, but by statute.
“Worth” vs. “Afford”: The Economic Distinction We Keep Dodging
Yes, the police officer who saves a life is “worth” a fortune. So is the paramedic, the firefighter, the teacher who turns a child’s life around. But societies cannot pay by worth; they must pay by what they can afford. This is not callousness; it is stewardship. A household cannot set its mortgage by how “worthy” its owners dreams are. Neither can a state.
Two iron rules:
Rule #1: Obligations > Taxes breaks you. When the effective growth rate of obligations (including pensions and OPEB) exceeds the growth rate of the tax base, insolvency is a timetable problem, not a philosophical one.
Rule #2: Monopoly plus moral hazard equals sprawl. When a service monopoly sets its own cost structure, and someone else pays, costs drift up, never down.
Ohio is living too close to both.
Meanwhile, we congratulate ourselves for “attracting big business,” the press conference trophy. The unseen: a regulatory thicket that chokes small, organic enterprise—the real shock absorbers of a diverse economy. When storms come, an economy balanced on a few headline firms is an economy on a pinhead and one doomed to economic pain for the working class.
The Ohio Fix: A Free-Market Blueprint for Government
If we want a state that can weather storms and grow opportunity, we must discipline the one variable fully under our control: our own spending trajectory. Start where the compounding is most punishing: compensation and benefits.
1) Constitutional Guardrails on Base Pay
Cap base pay for state, county, and municipal positions by category and function, indexed to inflation and population growth (or to statewide median wages). - in simple terms - if the working class isn’t benefitting or growing the government aristocracy does not grow.
Allow performance stipends (bonuses) within narrow, transparent limits.
Require a supermajority voter referendum approval for any cap override. Require a voter referendum to approve all collective bargaining agreements and they can only be voted on in presidential election years during the general election.
Why it works: It converts compensation growth from a default to a deliberate act. It aligns public pay with what the community can sustainably afford, not what is emotionally “deserved.”
2) Close the Era of Defined-Benefit Pensions
Freeze defined-benefit accruals prospectively; honor what’s earned, but stop the compounding.
Move all new and current employees to defined-contribution (401k-style) plans with portable, realistic transparent employer matches.
Use realistic discount rates for legacy liabilities; publish them on a public dashboard quarterly.
Why it works: It ends the political habit of promising benefits the promiser won’t be in office to fund. It returns retirement to a knowable, funded stream—like the private sector.
3) Market-Aligned Healthcare
Move to high-deductible health plans with HSAs and fixed employer contributions.
Offer tiered options but peg the state’s share to a median private-sector plan in Ohio.
Disclose the per-employee cost on every pay stub, every month.
Why it works: It reconnects consumption with price and breaks the “more benefits, fewer votes” cycle.
4) End the Cost-Inflation Bias in Public Projects
Audit Davis–Bacon implications and seek federal flexibilities; where state rules add layers beyond federal minimums, repeal them.
Require open competition and transparent unit-price benchmarking for public works.
Publish a bid-to-final-cost variance report for every project.
Why it works: It restores actual market prices to public procurement, not shadow prices set by regulation.
5) Put the Budget on a Diet That Can Last
Adopt a population-plus-inflation cap on total state and local outlays, with automatic taxpayer refunds for excess collections.
Enforce zero-based budgeting every third budget cycle; no program is “entitled to continue” without a case.
Create a Rainy-Day First Rule: 1% of general revenue automatically flows to reserves until a conservative target is met—no votes required.
Why it works: It changes the default from “spend the surplus” to “save the surplus.”
6) Free the Small Business Engine
One-in, five-out regulatory sunset: for every new rule added, five obsolete rules must be repealed.
Permit clocks with deemed-approved deadlines for low-risk enterprises.
Liability shields for micro-entrepreneurs complying with clear, published standards.
Why it works: It grows the base that pays for everything else without subsidies, press releases, or gimmicks.
The Moral Case, Not Just the Math
We should never apologize for demanding that the state live within its means. There is no virtue in promising what cannot be paid without hollowing out the future. There is no nobility in indulgence disguised as compassion.
The moral law here is simple:
You may not spend tomorrow’s children to flatter today’s constituencies.
You may not pledge what your neighbor must pay when you are gone.
You may not force a shopkeeper to close so that a spreadsheet can smile.
A government worthy of free people lives by the same rules as the governed: it tells the truth about costs, it binds itself to discipline, and it prizes opportunity over optics.
A Closing Word to Ohio’s Legislators
Do the hard thing while it is still a choice. Cap base pay. Close the defined-benefit era. Standardize healthcare to the real market. Purge the cost-inflation scaffolds. Lock spending to what Ohioans can actually afford, not to what lobbyists can imagine.
This is not austerity; it is stability. It is the precondition for low taxes, broad ownership (yes, including abolishing the property-tax leash), and a thriving small-business ecosystem that makes the next downturn survivable rather than existential.
Prosperity is not a pile to be divided. It is a fire to be tended. Stop feeding it wet promises. Give it air: discipline, transparency, limits, and liberty. The rest—the growth, the opportunity, the dignity—will follow.
One example of the distorted government/private sector ratio that I have seen during my 45 years in elective politics: View any county seat in Ohio and notice that once thriving retail sites now house government or quasi-government departments and agencies staffed by those whose incomes and benefits are described by you.