Reason: The public sector is killing the private sector

posted at 2:45 pm on March 31, 2010 by Ed Morrissey

“We’re twisting arms! We’re threatening people!” Normally, one would be tempted to call the government to stop people making these kinds of threats. Unfortunately, as Reason TV reports, those people are the government.  In fact, the public sector has become the one growth industry in the Great Recession, with hardly a blip in its job expansion.  But it comes at the expense of the private sector, and what’s more, it creates a permanent lobbying class for even more government expansion:

1. They cost too much. As USA Today recently noted, federal employees make on average almost $8,000 more than their private-sector counterparts. When you add in benefits, the gap spreads to about $30,000. State and local government workers make around the same as private-sector counterparts, but their health and retirement packages mean they make significantly more in the end.

2. We can’t fire them. The private sector has shed positions in response to slackening demand and the economic downturn. That sort of adjustment is painful but necessary, as it allows the economy to adjust to changing circumstances and workers and employers to move into new activities. Because it is guaranteed certain amounts of tax revenue and has a non-market mind-set, the public sector is largely insulated from such forces and keeps or even adds workers despite changed conditions. The result? We keep paying for things that we don’t use, need, or want.

3. They create a permanent lobby for expanded government and higher taxes. Look at California, where teacher unions have spent over $211 million dollars on elections in the past decade. One result is that 40 percent of California’s budget must be spent on education, regardless of the number and needs of students. Over the last 10 years, taxpayer contributions to public-sector pension funds has increased by 2000 percent!

But the entire story can be told in this chart:

As government increases, so does its reach into the lives and wallets of Americans in every walk of life.  Instead of being public servants working at critical tasks, they have become the taskmasters — and increasingly unaccountable for their actions.  Every mandate creates a new bureaucracy, and every bureaucracy creates a human cost when it comes time to cut it back.  This is an increasingly dire cycle for Americans who value their independence and liberty.


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Now splash in the article from the headlines –

Public sector takes over everything, but you’re going to have to do with reduced services… citizen…

http://hotair.com/headlines/?p=77656

Most of the painful adjustments to our standard of living are ahead — and trust me, loss of Saturday mail service is the least of it. Inevitably we’re talking about higher taxes, higher interest rates, reduced government benefits and services, delayed retirements, higher prices for imported goods and slower growth, all of it lasting several years until things are brought back into balance. The only question is whether we will begin to make these adjustments voluntarily, gradually and fairly, or wait until they are imposed on us, harshly and unfairly, during the inevitable crisis that follows.

And you realize we don’t have to wait 4 years to turn into Communist Russia.

We’re already here.

Skywise on March 31, 2010 at 2:49 PM

Dilbert’s boss realized that if you could put everyone on the government’s payroll, we could reduce unemployment to 0%!

Tonus on March 31, 2010 at 2:49 PM

You’re killing independent George!

UltimateBob on March 31, 2010 at 2:49 PM

All I’ll say is for the time I was living in Michigan the population steadily decreased to the point that for years running more U-Hauls leave the state on one-way trips than any other state in the union. During the same period, the state government did not see a corresponding drop in employment even though it stands to reason that few people and a smaller tax base would necessitate fewer state workers.

highhopes on March 31, 2010 at 2:50 PM

“2. We can’t fire them.”

You know…

… It might just be me, but if we fix problem #2, that should take care of #1 & #3.

Seven Percent Solution on March 31, 2010 at 2:50 PM

Frank Herbert
BuSab

evilned on March 31, 2010 at 2:51 PM

Dilbert’s boss realized that if you could put everyone on the government’s payroll, we could reduce unemployment to 0%!

Tonus on March 31, 2010 at 2:49 PM

That was the math used in Soviet Russia. 100% employment, free state-provided healthcare, a worker’s paradise where everybody was working for the common good of the state……

See where the jug-eared traitor is going here?

highhopes on March 31, 2010 at 2:51 PM

highhopes on March 31, 2010 at 2:50 PM

But look at how well Michigan has recovered since then!

Oh, wait…..

UltimateBob on March 31, 2010 at 2:52 PM

But will the American people say no to “free services” that has been ingrained in their psyche??? That is the tipping point. No one minds “soaking the rich” to pay for these things…I just wish every citizen got a detailed printout that spelled out exactly how much money (to the penney) that the government took from them over the course of the year. Maybe that would jingle some bells.

search4truth on March 31, 2010 at 2:52 PM

Da comrade … just like mother Soviet Union, all peoples work for state and be happy.

darwin on March 31, 2010 at 2:52 PM

UltimateBob on March 31, 2010 at 2:52 PM

What is hilarious is these “Super Pro-Business” Ads that the state of Michigan is running right now. I live on the border of Indiana/Michigan, and I’ve been laughing at the audacity.

search4truth on March 31, 2010 at 2:54 PM

You’re killing independent George!

UltimateBob on March 31, 2010 at 2:49 PM

A George divided against itself cannot stand!

Knucklehead on March 31, 2010 at 2:54 PM

New government motto:

In Soviet US, public serves us!

Daggett on March 31, 2010 at 2:56 PM

Related photo parody: Government Celebrates Takeover of Stimulus Bill

Mervis Winter on March 31, 2010 at 2:57 PM

You know being in the military and responsible for 20-30 people and Millions of dollars in resources, I would have been court marshaled to the Nth degree if I had done half of what some of these public officials do. I am responsible to use my Government Purchase Card to buy the resources needed for training. I have to keep records in triplicate and always have someone auditing my paperwork. On top of that I have to go through annual ethics training. Why can’t these people be held to the same standards?

Spinstra on March 31, 2010 at 2:58 PM

What is hilarious is these “Super Pro-Business” Ads that the state of Michigan is running right now. I live on the border of Indiana/Michigan, and I’ve been laughing at the audacity.

search4truth on March 31, 2010 at 2:54 PM

You mean the ads with Jeff Daniels (of “Dumb and Dumber” fame). I always wondered what was behind that Michigan Business Development initiative or whatever they call it. Do they just use taxpayer dollars to prop up businesses? In other words, more crony capitalism?

UltimateBob on March 31, 2010 at 2:59 PM

The Oregonian has two articles about government spending in the last two days. The first was that the governor told the schools not to spend the money they were given in February and the second is that furlough days increased cost due to overtime for employees covering for those furloughed.
OMG! The idiots are totally running the asylum. California here we come!

ORconservative on March 31, 2010 at 3:01 PM

No union should be able to lobby unless their pension plan is 100% funded. Gov’t employees should be banned from lobbying. The union is to protect members and represent them to management. All unions are out of control and screw their membership to advance union leaderships power, control and wallets.

tim c on March 31, 2010 at 3:02 PM

Let’s not leave out the future plans for private industry as seen by the US department of energy.

Freddy on March 31, 2010 at 3:03 PM

Skywise on March 31, 2010 at 2:49 PM

We should put the US postal service on a path to planned retirement. Have it stand down as the private sector stands up. Go to alternating weekdays, and then even to once a week delivery.

Count to 10 on March 31, 2010 at 3:03 PM

Every bureaucracy in government should be evaluated every five years and sorted into one of the following categories:
a) Has accomplished its purpose, and should be eliminated.
b) Has made laudable progress towards its purpose, and should be extended for five years.
c) Has failed to advance towards its purpose, and should be replaced — and everyone involved with it barred from government service for five years.
d) Has not accomplished its purpose in 10 years (see c).
e) Has no purpose, and should be eliminated.
f) Has a purpose that cannot be accomplished (e.g. “to help the poor”), and should be broken up into smaller, results-driven agencies, with the top three levels of previous management barred from government service for five years (for not providing direction).

cthulhu on March 31, 2010 at 3:03 PM

And you realize we don’t have to wait 4 years to turn into Communist Russia.

We’re already here.

Skywise on March 31, 2010 at 2:49 PM

And it won’t take as long as the USSR for the whole system to come tumbling down. No private sector = no tax money = insolvency = government collapse.

docdave on March 31, 2010 at 3:03 PM

Government employees should not be allowed to unionize.

If they are, they should not be allowed to vote.

BowHuntingTexas on March 31, 2010 at 3:06 PM

You’re killing independent George!

UltimateBob on March 31, 2010 at 2:49 PM

A George divided against itself cannot stand!

Knucklehead on March 31, 2010 at 2:54 PM

Funny. Funny.

WashJeff on March 31, 2010 at 3:06 PM

Isn’t transforming the country fun? I’ve never been so angry, concerned, worried, frightened and all at the same time!

It’s better than going to Busch Garneds!

darwin on March 31, 2010 at 3:06 PM

Most of today’s public doesn’t know that the “public sector” means the government become authoritarian vs. your life, your work, your business, all of American industry as the “private sector”.

Vocabulary matters.

maverick muse on March 31, 2010 at 3:07 PM

[The] public sector is largely insulated from such forces and keeps or even adds workers despite changed conditions.

This part of government, at virtually all levels, I’ve never understood. Why is it so hard to say, “there are some good, worthy things we would like to do, but times are hard and we can’t do it all, so we have to prioritize and suspend some programs until the economy improves”?

Instead, faced with the possibility of cuts, politicians almost invariably throw a temper tantrum and threaten police, fire, etc, cuts in critical services.

jwolf on March 31, 2010 at 3:07 PM

2. We can’t fire them.

I worked for the Dept. of the Army as a civilian for a year in the 90′s. A fellow worker would party all night then take a gov vehicle and hide in the woods and sleep most of his shift. He was caught but couldn’t be fired, pissed me off so bad that I resigned.

farright on March 31, 2010 at 3:08 PM

Gillespie of the black leather jacket speaks the truth again. Has he had that thing surgically graphed to his body?

DFCtomm on March 31, 2010 at 3:08 PM

Government employees should not be allowed to unionize.

If they are, they should not be allowed to vote.

BowHuntingTexas on March 31, 2010 at 3:06 PM

Thank JFK for our government employee unions.

maverick muse on March 31, 2010 at 3:08 PM

Instead, faced with the possibility of cuts, politicians almost invariably throw a temper tantrum and threaten police, fire, etc, cuts in critical services.

jwolf on March 31, 2010 at 3:07 PM

I would call their bluff and say go ahead, scumbag.

darwin on March 31, 2010 at 3:08 PM

UltimateBob on March 31, 2010 at 2:59 PM

Yep, that’s the ad. I was stunned that Lloyd Christmas didn’t come from the back of the camera and whack Daniels in the back of the legs with a cane for spreading that crap.

search4truth on March 31, 2010 at 3:09 PM

I would call their bluff and say go ahead, scumbag.

darwin on March 31, 2010 at 3:08 PM

Didn’t they do just that in California.

DFCtomm on March 31, 2010 at 3:10 PM

Michigan: What are the odds that we can get along?
Non-Union Business: Pretty much one in a million.
Michigan: So you’re telling me there’s a chance….YAH!!!!

search4truth on March 31, 2010 at 3:12 PM

Speaking of government employee unions, it will be they who officially brow beat America into card check along with the arm breaking labor unions, no private votes at public elections.

maverick muse on March 31, 2010 at 3:12 PM

What a disaster. Every stinking government employee is an expense to the taxpayer and a dragging anchor. The government has to begin to shrink it’s size before it is too late, if it isn’t already.

saiga on March 31, 2010 at 3:13 PM

Most government jobs are nothing more than masked welfare. They don’t hire anyone with any snap.

saiga on March 31, 2010 at 3:14 PM

A simple expansion of government jobs or spending doesn’t come explicitly at the cost of the private sector, at least not anymore. Back in the days of capital controls, government spending could wind up sucking up all capital to the point that any private demand simply could not be met…not enough dollars to go around. Once we made finance and monetary policy global, we largely alleviated that pressure.

The funny thing is, guys like Krugman keep telling us we’re in a liquidity crisis, that China is crowding out capital that could go to service increased demand if it were only spent. My political economy professor laughed when i asked if demand could get stifled by public spending in an open system…if GLOBAL public hoarding and self payments could really use up so much currency that it actually impedes demand…yet we may actually be at this point.

So I suppose this issue could go 2 ways. Krugman could be right, and we’re in for a Nixonian adjustment of the global monetary scheme, or capital from abroad can still enter the united states to make up for lower private levels of investment. Interesting times…

ernesto on March 31, 2010 at 3:17 PM

Didn’t they do just that in California.

DFCtomm on March 31, 2010 at 3:10 PM

did they? Where?

darwin on March 31, 2010 at 3:17 PM

Obama will use the “drill here, drill now” strategy he’s flirting with to engage his special public sector cap and trade deals for his favorite private sector permission slips.

Remember who said it first. This is how he’ll initiate cap and trade, to be required to open for drilling.

maverick muse on March 31, 2010 at 3:23 PM

“The American people will never knowingly adopt socialism, but under the name of liberalism they will adopt every fragment of the socialist program until one day America will be a socialist nation without ever knowing how it happened.”

– Norman Thomas, American socialist

Cybergeezer on March 31, 2010 at 3:24 PM

darwin on March 31, 2010 at 3:17 PM

Bankrupt CA cities cut back police they choose to let go instead of letting up with the eco-sanctions or cutting back on bureaucrats behind desks “making decisions” on the budget.

maverick muse on March 31, 2010 at 3:25 PM

Most government jobs are nothing more than masked welfare. They don’t hire anyone with any snap.

saiga on March 31, 2010 at 3:14 PM

Sounds like you have firsthand experience;
Good workers are shunned and castigated by their coworkers, their union, and management.
Efficiency is the antithesis of union organization.

Cybergeezer on March 31, 2010 at 3:29 PM

Bankrupt CA cities cut back police they choose to let go instead of letting up with the eco-sanctions or cutting back on bureaucrats behind desks “making decisions” on the budget.

maverick muse on March 31, 2010 at 3:25 PM

Geez … well, if it was going to happen anywhere it’d be California. Most other places wouldn’t stand for that.

darwin on March 31, 2010 at 3:30 PM

If I were a government worker in one of these inflated 0bowma sponsored programs I would not get too comfortable.
The people I intend to vote for will take an axe to those budgets and get out financial house in order.

Exempt are military and Border Patrol.

FireBlogger on March 31, 2010 at 3:31 PM

One answer is to outlaw unionizing government workers. I know it will never happen, but how is it that government workers can unionize? In a private sector union, the union must make concessions based on the health of the business. Unions cannot negotiate more revenue for the company. Public sector unions have no such checks on them. If the police union calls a strike, does a town go without law enforcement? Does tax revenue stop being collected?

It is a self feeding industry. Taxes pay the union workers salaries. A portion of which goes to the union via dues. The union bosses are therefore also, technically government workers. They lobby for contracts with govt. officials, who are also payed by through taxes. Therefore, we have two government entities haggling over the price it is going to cost a third party (private citizens) for a service. As long as the citizens don’t revolt, the union and govt. officials are going to take as much as they can get away with. Starts to sound a lot like mob “protection” doesn’t it?

drocity on March 31, 2010 at 3:32 PM

So I suppose this issue could go 2 ways. Krugman could be right, and we’re in for a Nixonian adjustment of the global monetary scheme, or capital from abroad can still enter the united states to make up for lower private levels of investment. Interesting times…

ernesto on March 31, 2010 at 3:17 PM

Thanks, you just made me realize why this was such a big deal -

http://www.zerohedge.com/article/its-official-america-now-enforces-capital-controls

Offset Provisions – Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation’s domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It’s the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose – the law now says so. Capital Controls are now here and are now fully enforced by the law.

Welp, that takes care of private foreign capital flows…

Skywise on March 31, 2010 at 3:32 PM

Cybergeezer on March 31, 2010 at 3:24 PM

Exactly. The public vocabulary has already undergone the socialist revisionism, socialism pirating “liberalism” for the affect of “compassion,” or even “progressive”–the root of American socialist propaganda.

We’ve reached the point of public/private indifference to words, that the change of vocabulary is no longer necessary since definitions can be arbitrarily altered to propagandize socialism, and the gullible attach themselves to the fraud, anxious to get something for nothing.

We are getting something for nothing. We’re getting a whole heap of trouble and debt for nothing we’ll ever “enjoy”.

maverick muse on March 31, 2010 at 3:36 PM

“The public sector is killing the private sector”

I guess that it’s Obama’s turn to declare “mission accomplished”!

orlandocajun on March 31, 2010 at 3:38 PM

Dennis Prager has a great bumper-sticker line: “The bigger the government, the smaller the individual.”

So true!

liberty0 on March 31, 2010 at 3:40 PM

ernesto on March 31, 2010 at 3:17 PM

Nixonian global monetary adjustment? That sounds optimistic. When push comes to shove, with our debt, and with everyone else’s debts, it may likely be closer to the Great Depression that was also a global affair between WWI and throughout WWII. But at least that Great Depression still functioned under the gold standard, and our Treasury was the envy of all Europe. Now, there’s nothing behind the paper dollar but DEBT.

maverick muse on March 31, 2010 at 3:43 PM

Why can’t governors sign executive orders to kill state employee unions. What will they be sued over?

PrezHussein on March 31, 2010 at 3:49 PM

did they? Where?

darwin on March 31, 2010 at 3:17 PM

They didn’t pass any of the tax referendums even though the government threatened to cut police, firemen, and even to release criminals. I don’t think a single one of them passed.

DFCtomm on March 31, 2010 at 3:54 PM

We The People seem to be recognizing how awful our government is. The question is whether it is too late to do something about it. We’ll find out this November.

GaltBlvnAtty on March 31, 2010 at 4:04 PM

This all part of the “fundamental transformation” promised by then-candidate Obama.

Why is anybody surprised by this?

PoodleSkirt on March 31, 2010 at 4:20 PM

Every Culture Has A Tipping Point We Already Passed Ours.

Dr Evil on March 31, 2010 at 4:23 PM

Welp, that takes care of private foreign capital flows…

Skywise on March 31, 2010 at 3:32 PM

Capital controls!! :D

If you can’t beat the mercantilist, join him!

Interesting times up ahead. Though our problem isnt really hot capital outflows, at least not now anyway. But in general, this seems to be the prescribed liberal maneuver, both with regards to capital flows as well as other trade issues: Give the mercantilists (China) a taste of their own medicine. Neo-mercantilism is the name of the game.

ernesto on March 31, 2010 at 4:32 PM

The Private Sector has problems of it’s own take a look at who Apple wants to Promote Che’ and boycott Glenn Beck.

Dr Evil on March 31, 2010 at 4:33 PM

Interesting times up ahead. Though our problem isnt really hot capital outflows, at least not now anyway. But in general, this seems to be the prescribed liberal maneuver, both with regards to capital flows as well as other trade issues: Give the mercantilists (China) a taste of their own medicine. Neo-mercantilism is the name of the game.

ernesto on March 31, 2010 at 4:32 PM

It’s not our current problem but it’s going to affect any foreign capital influx. What foreign company is going to want invest money here if the US can reach back into your accounts and grab more of it?

Skywise on March 31, 2010 at 4:34 PM

This all part of the “fundamental transformation” promised by then-candidate Obama.

Why is anybody surprised by this?

PoodleSkirt on March 31, 2010 at 4:20 PM

Do you see anyone here that looks or sounds surprised?

Midas on March 31, 2010 at 4:49 PM

Atlas Shrugged….The Only Way To Get Rid Of These Tools Is Too Starve Them Out. They are counting on our GDP to pump all the tax revenue into the bureaucrats pockets.

Dr Evil on March 31, 2010 at 4:55 PM

Sooner or later the bill will come due.

TN Mom on March 31, 2010 at 5:04 PM

jwolf on March 31, 2010 at 3:07 PM

We have a proposition on the ballot here in Arizona to increase the sales tax for exactly 3 years to help School, fire, police and medicade funding. If we lack the funding sources now to do the above what happens in 3 years when the sales tax expires. No long term thinking allowed in the government.

chemman on March 31, 2010 at 5:45 PM

Government employees should not be allowed to unionize.

If they are, they should not be allowed to vote.

BowHuntingTexas on March 31, 2010 at 3:06 PM

They could be stopped at any time as they have no right to unionize. They currently can because of an executive order issued by JFK I believe. They (Government sector unions) should all be disbanded as government workers are protected by the civil service commission and laws.

whbates on March 31, 2010 at 6:25 PM

In the early 80′s, I crossed the United Teachers Los Angeles picket lines so that I could get to my classroom and teach my students – as I was hired to do. Sorry for boasting…but I am still very proud of my decision.

redwhiteblue on March 31, 2010 at 10:21 PM

Government employees should not be allowed to unionize.

If they are, they should not be allowed to vote.

BowHuntingTexas on March 31, 2010 at 3:06 PM

I’d say government employees should not be allowed to vote. Period.

petefrt on April 1, 2010 at 8:23 AM