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Wednesday, June 02, 2010

Lunchtime reading: Two Americas 


There are two Americas, but they are not necessarily those made famous by John Edwards:


There are, indeed, two Americas: the increasingly straitened world of the private sector, where jobs are competitive, money is scarce, and job security is, for many, nonexistent; and the lush world of the government employee, where competition is more or less unknown, salaries and benefits often double those available to private workers, retirement is ten or more years earlier than in the private sector, and it may take a felony to get fired. This is the central economic conflict of our time, between lavishly compensated and ever more gluttonous government employees, and wealth-creating private citizens who are increasingly unable to support their public-sector masters in the style to which they have become accustomed.

Indeed. Fixing this will be the political work of the next generation, and ought to dominate the platform of the right until balance has been restored.

20 Comments:

By Blogger MTF, at Wed Jun 02, 01:17:00 PM:

And the terrible fact is that the "lush world" of government work is a total mirage.

Some people, like the President, Hillary and the leadership of their party think it's not a mirage, it's real, just as Michael Moore seems to honestly believe that state medical care is better in Cuba than for-profit medical care in America. These are the same idea, differently expressed.

Don't be persuaded by Hillary when she describes the overweening social problem of our age as "too low taxation"! Look at New Jersey, California, New York and Greece. Listen to those who have to live under these systems. Listen to the great Luis Tiant, a refugee from Cuba!  

By Anonymous The Truth is Out There, at Wed Jun 02, 02:56:00 PM:

Repost from below:
"There's a fault line in our politics between those who get government checks vs those who pay for them. Both parties straddle this fault line -- the Republicans say they don't, but in practice they do. So there's a chance for political realignment, but the current state of DC and the parties plays against this."

There's two basic ways for governments to finance themselves: (1) autocratic dictate -- e.g. Egyptian pharaohs, 20th century communist states, and (2) market-based taxation. e.g., King Henry VIII, present day Canada.

I submit that massive deficit spending is actually making the USA look more like a hybrid of (1) and (2).

Our current deficit is $1.4 trillion in dictated activity. If we assume at $50,000 per head, Obama-Pelosi have 28,000,000 of us doing their bidding at their command. The pharaohs never had more than 100,000 at one time dragging rocks in the hot sun.

We can't sustain a hybrid of (1) and (2). We could double taxes on our top 5% earners and still not close the gap we already have, even with no "John Galt" effect.

So do some of us get to work for Obama's Borg -- paid in scrip, and the rest of us told to f*ck off? Or do we go back to free enterprise?

There's no way to make the numbers square without it looking radical by today's standards. Canada is an interesting case study in how to do it.  

By Anonymous Billy Bob Corncob, at Wed Jun 02, 07:27:00 PM:

Retirement 10 years earlier?

I think the rule of thumb in gov't is that those who skate have it good, except for conscience; those who are responsible get nickel and dimed to death.

It ain't no picnic being a lawyer for 24 years, having to do your own Fed Ex's, and trying (multi-tasking, I might add) to figure out how to fend off New York and DC law firms staffed with numerous lawyers on a single case, not to count their paralegals and (real) secretaries, the food brought in late at night, and the taxi ride home paid for by the client....

Trust me, government work is no walk in the park, for those who care about the job.

Please reconsider the post.

As someone who is working at the price of a carpenter, or less, with my Yale Law degree (hourly), I take exception to this annoying, one-sided post. As do those of us who work hard. You're getting a bargain, bucko.  

By Anonymous Anonymous, at Wed Jun 02, 07:39:00 PM:

This for example is like the stats that say women make 59 cents for every dollar a man makes, but fail to correct for orange-apples job differences:

"state and local government employers spent an average of $39.83 per hour worked ($26.24 for wages and $13.60 for benefits) for total employee compensation in September 2009. Total employer compensation costs for private industry workers averaged $27.49 per hour ($19.45 for wages and $8.05 for benefits). In other words, government employees make 45% more on average than private sector employees."

For example, government positions have much larger pools of lawyers vis-a-vis the population as a whole.

The only differential I've seen is in risk-adjusted terms.  

By Anonymous Anonymous, at Wed Jun 02, 07:51:00 PM:

Billy Bob, as one of "those of us who work hard" I salute you but don't expect me to believe that yours is the most common situation. There are just too many stories and stats and personally known anecdotal evidence for that.

Then there is this to consider:

Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representative who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions. In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.  

By Anonymous Billy Bob Corncob, at Wed Jun 02, 08:08:00 PM:

Been to 7-11? How hard is Mr. Slurpee working? LOL. Of course, Mr. Slurpee probably has a baccalaureate from the University of Bombay.

Well, the iron law is undoubtedly true (except in US Attorney's Offices, which in my experience are pretty good about maintaining their sense of purpose).

There are many things to say, pro and contra. I would ask TH however to link to a post several years ago in which he compared his dad's salary as a full professor to that of a partner of the same age and year of college graduation, but at Sullivan & Cromwell.

Parts of government suck. We all know that. That's why single payor sucks. Parts of corporations suck - particularly large ones, which are themselves bureaucratic and tend to over-reward those at the top by multiple factors of their worth.... of course, what is "worth." I say Jack Welch was working for Jack, not GE, given his compensation.

But many in government (like professors at public universities) work as hard as anyone anywhere, and, on an hourly basis, work for pittance (a billiard ball consequence of Baumol's Cost Disease).

Trust me. I'd love a great secretary. But she's not paid twice, or even more, than those in the private sector.

It's a more complex problem though.

I just want, if I could, to put a paypal account so you can all contribute to my retirement fund, as I endure sleepless nights and over-worked conditions, all for you private sector "wealth creators".

Oh? Can we have our kind of wealth without a regulatory system in place. Think fire codes.  

By Anonymous The Truth is Out There, at Wed Jun 02, 09:25:00 PM:

"I take exception to this annoying, one-sided post."

We can't afford the government that we now have, let alone the trajectory that we're on. It's a big MACRO issue.

Your retort is about your own MICRO situation. I'm sure that there are some good hard-working public servants in Greece too. Boo hoo.

We do need a regulatory system -- but we don't need new regulations as a means to central planning. We don’t need the kinds of things that Obama and Pelosi have been pissing away billions upon billions upon. Do you know what you could do with a trillion dollars? -- even a fraction of that -- were it well spent.

My point above is that the federal government will need to get even bigger -- so that we turn into something like Communist China -- or much smaller. The middle way is unfinanceable through taxes as we've know them.

We could manage our way to an OK outcome over a decade if we all acted like grown-up Canadiens. But that's not gotten happen. Instead we'll need a crisis.  

By Anonymous The Truth is Out There, at Wed Jun 02, 10:25:00 PM:

"Think fire codes" .... indeed.

Billy Bob, you've made yourself the defender of government. So please defend the government on this:

I have a couple of posts just below about the BP Deepwater leak. They're here

Here's a shorter version:

1) The federal government taxed Gulf oil drillers to fund a Master Plan that called for offshore fire booms, and then never bought the equipment.

2) If we'd spent the last few weeks going balls out to manufacture and place nearshore boom we'd be in a much happier place.

Either could have mitigated the damage substantially. Instead, no one in the federal government has done a single thing to actually mitigate the damage.

I could add many, many examples of where the federal government has f*cked up in the last decade in ways that define reason and common sense. But it just grows bigger, more stupid and more unaccountable.

I've been afraid that in a few years the USA may turn into something very un-American. I don't expect to get a dime out of Social Security or Medicare years from now, but that's actually far down my list of worries.

But I'm supposed to forget all that because you work extra hard to turn out nice motion papers?  

By Blogger Assistant Village Idiot, at Wed Jun 02, 11:25:00 PM:

The Truth Is Out There - your comments are just ignorant. You misrepresent what Bill Bob said, pretending that he was defending all of government as a fine thing, in no need of correction, and supplying your own anecdotes about where it certainly does.

As in BBC's comments and Pournelle's Law, everything called "government" is not all of a piece. Firemen are government, but so are Diversity Instructors. Soldiers are government, but so are people writing brochures on Wellness that no one reads.

I work at the state hospital in NH - okay, maybe NH is in itself an exception - where we do work the private hospitals don't want to, and when they try, cost 50% more. I don't make a lot. The health care is above-average. A lot of my great benefits is tied up in oodles of vacation days I can't take, because we're always understaffed. I've known people who coast, and folks that are useless who should be shaken from the public teat. Pretending that a general reduction in salaries is going to fix that is absurd. It might help some. We need reduction in government function first - but as many of government's current functions are required by law that's not as simple as it sounds.

But as I said, maybe I just work for the wrong part of the government.  

By Anonymous The Truth is Out There, at Thu Jun 03, 10:14:00 AM:

"those who get government checks vs those who don't"

I was describing a MACRO political phenomenon. That's where the political fault line lies right now. Republicans have pretended to represent the latter, but haven't. Few of our federal elected officials have.

My long-standing rant puts GE and CEO Immelt in the "those who get government checks" camp.

My long-standing rant is that my town government is actually run well, and maybe better than most big companies. New York City is now run reasonably well for something so big and with so many missions. The NYPD and FDNY do a great job -- Homeland Security is useless.

New York State isn't well run -- it's been corrupted by municipal unions and others "who get government checks." Several blue states like New York will go broke because of this, and will want federal bailouts.

The federal government is out of control. In ten years, it'll either be half as big ... or twice as big. (Obama wants the latter, which would require a radical change in the relationship of US citizens and their state.)

I have a college friend who teaches high school in Pennsylvania. He was a big fan of Obama in 2008. Along the way I've been telling him that Obama-ism could cost him his pension. He doesn't think I'm crazy anymore, for saying that.

Hard working government employees should be even more Mad As Hell than I am, but politically few of them will line up on my side of the fault line. (Bill Bob and AVI just showed this.) Their unions certainly won't.

The cleavages aren't just "gov't employees" v "private sector employees and the unemployed." Demographic cohorts factor in this, etc., etc.

And so it goes ....  

By Blogger MTF, at Thu Jun 03, 10:17:00 AM:

Speaking of ignorance, it's instructive to read this thread and see the blind defensiveness of people defending their own particular work when the point did not concern individuals and their specific jobs. It made an importnat argument that the productive economy is being subsumed by the government economy. Why that would be controversial I cannot imagine. Perhaps you can't like or appreciate the rhetoric, but that's politics so I can only say "get used to it."

In the meantime, dial down the defensiveness. Neither TH or Powerline has criticized the individual work effort of anyone here, only the obvious danger presented to the Republic of having so many, and so many richly paid, government workers while the productive economy goes begging.  

By Blogger MTF, at Thu Jun 03, 10:25:00 AM:

Public employment costs money. Let's not forget: every dollar absorbed by the Treasury is a dollar that can't be invested in a productive asset.  

By Anonymous Boludo Tejano, at Thu Jun 03, 11:02:00 AM:

Billy Bob Corncob
I just want, if I could, to put a paypal account so you can all contribute to my retirement fund, as I endure sleepless nights and over-worked conditions, all for you private sector "wealth creators".

From a USA Today article on comparable salaries.

The typical federal worker is paid 20% more than a private-sector worker in the same occupation. Median annual salary:
Federal Private Difference
$66,591 $55,500 $11,091
These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis.


Looks to me as if we taxpayers are already contributing to your retirement fund, so I will not be using PayPal to fund you. Better salary- though not for lawyers ($123,660 for the Feds versus $126,763 in the private sector)- and better benefits. What’s not to like, unless you are a taxpayer?

Trust me. I'd love a great secretary. But she's not paid twice, or even more, than those in the private sector.
Here is comparable private sector versus federal salary secretaries: $44,500 for the Feds, $33,829 for the private sector.
I don’t have data on health, pension and other benefits for secretaries in the private sector compared with the Feds. However, you can make reasonable estimates from the above data.One estimate I came up with said that with salary and benefits, the secretary working for the Feds made 80% more than the private sector secretary. Maybe not twice as much, but still a rather substantial difference. Are we supposed to give the Feds brownie points for the secretary working for the Feds not making twice as much with benefits compared to the private sector?

Data is from a USA Today. The article has a chart for various occupations. In roughly 80% of occupations, the Feds pay more. The comparison is not the same for state and municipal employees: state earn 5% less, city earn 2% more compared w private sector, but that is without considering benefits.

I don’t doubt that many Federal employees work very hard. However, they generally are paid better than the private sector. And with better benefits. And with more job security. That is an equation for taxpayer resentment. I would think that even a graduate of Yale Law could understand that, even while he is blogging to recuperate from his sleepless nights.  

By Anonymous Mad as Hell, at Thu Jun 03, 06:16:00 PM:

Billy Bob,

We'll give you a Mulligan, if you want it.  

By Blogger Assistant Village Idiot, at Thu Jun 03, 09:20:00 PM:

MTF, neither TH nor Powerline made a blanket criticism, but commenters did, one in particular. He has partially stepped back, which is fine - we don't have to be in precisely the same spot.

Step back a moment yourself. "Blind defensiveness?" Seriously? D'ya just skim over the parts that don't fit your narrative? As to rhetoric, I attacked precisely at the matters of overgeneralization and misrepresentation. Tone is sometimes relevant, but I didn't even bother mentioning it here.  

By Blogger maia, at Fri Jun 04, 06:54:00 AM:

As a state government employee I can tell you that money is scarce and job security is just as fragile as the private sector. You are correct that it is difficult to be "fired" - and that is a problem. However, RIFs( Reduction in Force)are a very real threat in many states.  

By Anonymous The Truth is Out There, at Fri Jun 04, 10:02:00 AM:

"Employers in the U.S. hired fewer workers in May than forecast and Americans dropped out of the labor force, showing a lack of confidence in the recovery that may lead to slower economic growth. "

Almost all the job gains were temp census workers, at a time when we're running unprecedented deficits -- which by itself should be hugely stimulative. The unemployment rate declined to 9.7%, because of a drop in those said to be looking for work.

The private sector is frozen scared. Hiring will be anemic at best until this ends. It may get worse before it gets better. Banning all new oil drilling for six months won't help.

The only good aspect to this is that it'll hang on Obama and the Democrats come November. Whether to extend unemployment benefits will be a tough call.

One number I look at is actual IRS receipts vs Obama's 2010 budget. If "actual" continues to be more like 2009 -- not more like 2008 as Obama has assumed -- it means the bottom is dropping out of the budget. This would be because the private sector is frozen scared ... isn't earning like it should ... and so isn't kicking into the IRS like it should.

In the long run, how do we sustain government revenues so we can pay Billy Bob and his secretary?  

By Anonymous TTIOT, at Fri Jun 04, 11:07:00 AM:

Buffett: Municipal Debt Meltdown Will Hit US

Add investment legend Warren Buffett to the list of those who warn of a municipal debt meltdown.

Many municipalities have promised overly generous retirement and health benefits to public workers without any viable plans to bring in the money necessary to pay for those benefits.

“There will be a terrible problem, and then the question becomes will the federal government help,” Buffett said at a hearing of the U.S. Financial Crisis Inquiry Commission in New York, Bloomberg reports."  

By Anonymous Ignoramus, at Sat Jun 05, 09:43:00 AM:

AVI: [one commenter in particular did make] "blanket criticism" He has partially stepped back, which is fine - we don't have to be in precisely the same spot."

I suppose AVI meant me. But I didn't step back from my main point at all ... which is that the politics will likely turn into "us vs them". Billy Bob confirmed this to me. Those who work in the public sector -- along with others "who get government checks" will resist needed cuts and reforms, especially over pensions. They even have attitude. It's their world, the rest of us just pay for it.

This is going to make the political process a lot nastier and more protracted, and the outcome potentially more unfair to very large swaths of Americans -- public workers and retirees included.

Speaking from my side of the political fault line -- I didn't wake up one morning to say "let's screw government workers and pensioners." Instead I -- and 300 million other Americans got a big problem dropped on us. The demographic / economic math doesn't work -- not even close. To deny this is to invite disaster. We could go at it rationally -- like grown-up Canadians -- but we won't. Because we're shithead Americans.

We've got about 50 million on Social Security. We've got about 25 million government workers.

"Four to one baby, one in four. They got the guns, but we got the numbers." We don't have the organization, the lobbyists, the unions ... hell, we don't even have a political party right now. But that'll change ... eventually.

I can't predict the outcome. One path is for the federal government to keep guaranteeing everything. But that's unsustainable. We could see a major city or Blue state go broke soon -- if the Democrats do another bailout, they'll get killed politically. But if the Republicans get back in power, they're not yet constituted to deal with it either.

One of the bullshit mantras of the left is that "we're all in this together." But go look at one worker's paradise ... Michigan. It's dying to support a food chain that puts UAW retirees on top. But doesn't Jennifer Granholm look cute .....

That's where we're headed if we don' stop it. The longer we don't deal with it, the more radical an outcome we'll get.  

By Anonymous Ignoramus, at Tue Jun 08, 08:22:00 PM:

Dead Air? ... Radio Nowhere?

At least I got new handle, inspired by AVI.  

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