Apolitical Government Reform
Not as a libertarians, but as a good government fiscal conservatives, who value government and government programs, how might we respond to charges of right wing radicalism? How might we respond to charges that we are biased against working people, or want to destroy the middle class, or are a tool of the super-rich? If you want to keep good government programs, but want to make government more financially efficient, how to respond to charges of resenting government workers, or wanting to change the deal on government workers, or not appreciating government workers? Focusing on the state and local government entities here in sunny California, here are some thoughts:
(1) Public employees used to take jobs that paid less than private sector jobs. Up until about 20 years ago, the trade-off was clear: Government workers exchanged a lower salary for better benefits, a pension that was better than social security, and job security. This was a fair exchange, and the system worked just fine.
(2) Over the past 20 years, during the economically unsustainable internet bubble followed by the real-estate bubble, public sector unions stirred up envy among public sector employees, prodding them into demanding unsustainable increases to their compensation to match the private sector. Since these bubbles have burst, these unions use their nearly absolute power over California’s state and local politicians to maintain unsustainable levels of public sector employee compensation.
(3) We now have a situation where public employees have, in most cases, better base salaries than in the private sector, and enhanced pension benefits that now are about five times as generous as social security.
(4) It is absurd for anyone to compare public sector workers to the wealthy. Of course wealthy people will have more wealth than middle class workers. Public sector workers need to compare themselves to private sector workers. In California, the private sector worker makes, on average, about half as much in total compensation than the public sector worker. It strains credulity – and is downright arrogant – to suggest this entire differential can be attributed to superior education and skills.
(5) The people who are being denied a chance to experience upward mobility are the private sector small businesspeople who create jobs, and the people who they hire. Entrepreneurs personally carry legal liability and financial risk for their businesses. They work all the time. When the economy strains under the financial enslavement caused by the partnership of Wall Street banks with government debtors, private sector businesses can’t thrive, and their employees make less.
(6) The wealthy are not right-wing or left-wing. There is as much money donated to left wing causes by wealthy individuals as to right wing causes. The distortion in our democracy is not caused by wealthy individuals, who are ideologically diverse and whose contributions benefit both sides of political and economic questions.
(7) It is necessary to make a distinction between wealthy entrepreneurs who create products and services people voluntarily consume and which improve people’s lives, and wealthy bankers and financial middlemen who have used their political influence to overbuild their industry and become a drain on the economic health of America.
(8) The biggest source of funds to Wall Street bankers and financial middlemen, by far, is the deficit spending of governments. When a government issues bonds, the money goes through Wall Street. When a government pension fund expropriates taxpayer’s money, the beneficiaries are Wall Street brokerages.
(9) The agenda of public sector unions is perfectly aligned with the goals of Wall Street banks. Create bigger government payrolls and pay government employees more. Borrow money and raise taxes to accomplish this. Issue interest bearing bonds to cover deficits and transfer tax revenue into pension fund accounts.
While arguing for more efficient government, it is important to explain how government spending impacts the middle class private sector worker who now has to pay half of their income in taxes (sales, property, income, and “hidden taxes” buried in every utility and telecom bill) so that middle class government employees can earn twice what they make, while Wall Street bankers get obscenely rich managing the government debt and government employee pension funds. And while having no bias against the wealthy, it is necessary to make a distinction between wealthy people who have earned their wealth through entrepreneurship, and those who are wealthy because they are part of the Wall Street cabal that enables and profits from the unionized government bias to tax, spend, and borrow.
Edward Ring is a contributing editor and senior fellow with the California Policy Center, which he co-founded in 2013 and served as its first president. He is also a senior fellow with the Center for American Greatness, and a regular contributor to the California Globe. His work has appeared in the Los Angeles Times, the Wall Street Journal, the Economist, Forbes, and other media outlets.
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The INCREASE of the gov employees salary is what has really been the game changer. The 3%@50 pension did too, but even a 3%@50 pension is not going to kill a muni with a $40K base salary.
Back in the 1980’s cops and FF’s made a GOOD decent middle class wage. I had friends both jobs-cop/ff and in the construction trades, unionized, who average $30K-$40K in salary. The trades are HARD work, much harder physically than cop or FF job. The average salary for a cop or FF was $33K-$39K (highest paid police dept in the state in 1985 was San Jose at $39K, average salary was $32K-$34K)). LAUSD was starting teachers at $29K with NO post graduate training, but most of the new teachers had a credential which was 1 year of post grad study and that raised the pay $3K, to about $32K starting-for 185 working days.
The gov jobs then, like now, had great benefits. These gov jobs were CLEARLY middle class, even when you included the gold plated benefits, and one reason was b/c the salary was middle class, for teachers even modest compared to today. Today it is very common for many PD&FD in the state to have BASE salaries above $100K. Benefits double the base salary. That is clearly in the top 3%-5% in the nation. So things have changed a LOT between 1985 and 2011 for gov employees.
Today the construction trades pay about the same, if there is any work. One reason the trades paid more back then was because it was hard work AND seasonal work.
During college I worked for UPS during Christmas of 1984 and 1985, as a “runner”, I went out with a river, he gave me a package and i ran a fast as I could tot he door and dropped it off. I was paid $9.56 and hour in 1984. In 1985 I was paid $8.50 an hour. Thos SAME jobs today pay $7.50 an hour. Wrap that around your head. The job I did for $9.56 an hour in 1984 is paying 21% LESS 29 years later. If the 1984 job wage kept place with inflation it would pay over $25 an hour……instead it is paying 75% LESS than the inflation adjusted wage of 1984.
The disparity between what is happening in the real world and gov employment is so perverse I wonder if this state-and the country too, can survive.
These Occupy and Tea Party (both want the same goals IMO) movements are a clear sign that social unrest is here, and it is going to get worse before it gets better.
I think it is inevitable that we will see some violent outbreaks, Rodney King style-if things don’t improve.
If the public sector does not change then the people will change it for them. I have been reading the comments on various websites on Jerry Browns Pension/Sales tax proposal, and the comments are almost universally against the taxes, by a large margin. I predict if Brown gets his pension/sales tax on the ballot it will bomb by a 2-1 or possibly a 3-1 margin, a landslide. If that happens then Brown will have no choice but to go after the gov employment disparity.
Brown says we have two choices-raises taxes or cut services. His a lair-we can cut employee pay and benefits to a fair level and cap it there for 5-10 years or until these pensions are properly funded-and lowered. By lowering and then capping all gov employees salary we will have stopped digging the hole we are in as it relates to current budgets and future pension obligations.
So to recap-lower all gov employee pay, and cap it at the lower rate for several years or unitl the pension and healthcare obligations are covered and fully funded. That way the gov employee will be covering a fair portion of the pension and healthcare they will receive, and that cost will not be placed on the backs of the poor and middle class. And the gov employee SHOULD be covering most of the gold plated beneftis they get, because their salary is in nearly every case well above what they would receive in the real world. The civil service job protections add 30% or more to the gov employees job value.
I would also cap gov spending at no more than 5% of the previous years budget. If CA had a $100B budget in 2011, then it would be no more than $105B in 2012, $110.5B in 2013, etc.Tthat would prevent these politicians from spending money in good years on nonsense spending, giving CA a true rainy day fund, then when a 2007/08 depression comes along we have soemthing to fall back on and keep us solvent.
This is the solution, and if we want out of the hole we are PERPETUALLY in then we must do it. Elect rex gov and I will implement and lead this state back to prosperity.
Please explain how gov’t employees are not working in the “real” world”.