My friend John Hawkins posts on Interviewing Thomas Sowell On Basic Economics
We’re getting very close to the point where we could have states default on their debts for the first time. What should happen then?
They should go bankrupt. I’m looking forward to it.
There are three possibilities — bankruptcy or bailouts or ruinous taxations. Of the three, bankruptcy is the one that makes the most sense because it’s the one that conveys the most accurate knowledge — which is that they’ve run out of money and couldn’t cover all the promises they made. That fact should be revealed to all for future reference. The other thing about bankruptcy is that it’s the only thing I know of that can get rid of these ruinous public sector union contracts with these extravagant pensions. Those pensions are so popular because the politicians can promise the pension now and get votes now without losing the votes of taxpayers now, because they don’t set aside enough money to cover the pensions. Then they simply kick the can down the road and leave it to somebody else to figure out what to do when the money runs out.
Go read the full interview!