Greedy Goblin

Wednesday, November 2, 2011

"Government workers are inactives"

I think one of the reasons why pro-business ideas are not spreading as we wish is the belief of "government workers are inactives". Most pro-business parties are cutting back on government spending and fire as many "useless bureaucrats" as possible, but instead of GDP increase and deficit decrease they get the opposite, allowing socialists to come back to power.

The above statement is completely wrong and it's pretty easy to prove it. If the government would buy or nationalize a company, would the workers (who produce the same product as yesterday) become useless inactives overnight? If the government would privatize one of its facilities (like a prison or hospital), would the formerly "useless bureaucrats" become free-market certified useful workers?

A worker is useless if he doesn't work. It doesn't matter if he works for the government or a private company. The ownership of the company he works for is completely irrelevant. Of course I don't question that it's more likely to find ineffective or completely useless workers in the public sector but there is only a (limited) correlation, not causality. The causes of the less effectivity are problems with the government itself and not with the workers. I mean if they produce low quality services and you are forced to consume them, the problem is with the government forcing you to consume it and not that someone had to make them.

The largest proof of the usefulness of government workers is that we keep demanding better services. More police, better education, better health care. So those who are providing it are indeed useful, even if not optimally effective.

On the top of that, the government worker has proven to have work ethic and certain skills, therefore could be surely used in some more productive work if his current one is found to be ineffective. He is also in competition with other wannabe-workers so by getting the job he proved to be better than some other people. It's like the employees working on failed products like HD-DVD. Maybe their boss was useless, but not them, they did their jobs and they should go find another job with no shame or fear of bad resumee.

For a successful pro-market idea you must see the huge difference between the government worker (who gets your tax money for a work provided to the society, including you), and the inactive (who gets your tax money for nothing). We can and should find ideas to outsource government services to the more efficient private sector, transforming the people working on them into private company workers. We can also demand to terminate some of these services if we find them useless. But considering people useless who create useful things is wrong.


spinksville said...

Partly this shows that you can't calculate a worker's value in the same way all the time. Sure, someone working for a private company can look at the bottom line, but state workers such as teachers, medical staff, police, social workers etc. are improving the ability of the rest of the people to become productive. (eg. a social worker removes a child from an abusive family, hopefully that child gets a better start in life and is less likely to go off the rails later.)

But you have to look at long term results and try to value people in terms of how much money they save rather than how much they make.

This does leave the question open as to what you'd like to happen with people who can't work and will never be able to work. eg. disabled, sick, old (particularly if they did save for pensions but got screwed by the various financial institutions promising things they couldn't deliver).

Jumina said...

Is there (in Europe) some party which could be called pro-business party? I see only parties raising taxes or creating new fees. They never fire "useless bureaucrats". They close some hospitals or some schools sometimes but no real cuts are ever made. This is how so called "right wing" parties lose their voters.

Maro said...

I don't know what's your point there in your whole note. "pro-business" parties indeed try to force the government to cut down useless bureaucrats but it's pretty clear that (if they're not sam band of mad anarchists) they do not consider all the bureaucrats useless (the police, the military and so on). They just think some are and they want them to be fired, because why would they want to pay for uselessness.

Goodmongo said...

I think you miss the point. there are revenue producers and revenue consumers. Take any business. The sales staff goes out and produces revenue. The accounting department, while necessary, is a revenue consumer or cost center. The business could never continue with just cost centers, but might continue with just revenue centers.

Now the problem with most government jobs is they are providing services but are strictly cost centers. The argument is not that we don't need the prison but that as a cost center it has to hold down the costs if the revenue centers are not producing.

Couple this with the fact that government never produces anything (excluding nationalized companies) and they get their revenue from taking it via taxes.

In the US they tried to make some former government agencies into companies that rely on reveune obtained through product or services. Amtrack and the post office are two examples. But we know they have issues due to government regulations on what thye can and can't do to become profitable.

So the argument is since the government are mostly cost centers they need to take a big hit when revenues are down. Same thing that would happen in a business. Accounting would get hit with layoffs before sales did as the business knows they can't reduce sales for if they did they just killed their future.

And this represents governments response with raising taxes. They want to keep the accounting cost center and cut back on the dollars the sales or revenue side has.

Joshua said...

A perfect execution of Gevlon's idea has been realized in New Mexico with the "MVD express"(first hit on google). This company was started and hires many former Motor vehicle Dept employees and provides the EXACT same services as the government run MVD only faster and for a slight increase of cost. The longest I've ever spent there is 10 min. I've spent over 2.5 hours at the government run MVD.

Jon said...

I don't think many consider gov't workers to be inactives as they provide valuable services as you point out. Rather, the problem is the distribution of benefits. Having to pay a government worker's health care and pension into retirement is essentially a ponzi scheme. With more and more government workers entering retirement age, this ponzi scheme is starting to collapse. The reason most private companies do not provide retirement benefits is because they cannot make a profit; whereas the government can simply raise taxes if costs get out of hand. (Not always a good idea, but possible.)

Anonymous said...

@spinksville Thats ofc what makes it easy in a production industry. A worker is worth what he produces, and his wage will (to a degree) reflect that.

Government services have "0" value, since they are not sold, and thus it is impossible to measure it on the same scale.

@ Joshua.
Its a similar phenomenon that explains your situation. When a government institution (or a monopoly upheld by law) wants to decrease costs, they might increase waiting time. This reduces their own cost slightly, while greatly increasing yours.

However from their point of view its pure savings, since they are not competing against anyone else.

If a private firm in competition were to do the same, a competitor could easily sell the same service without waiting time at a slightly higher costs.

Sheldon said...

"When a government institution (or a monopoly upheld by law) wants to decrease costs, they might increase waiting time. This reduces their own cost slightly, while greatly increasing yours.

If a private firm in competition were to do the same, a competitor could easily sell the same service without waiting time at a slightly higher costs."

Obviously, you haven't tried to talk to a live person at an airline or credit card company or computer manufacturer in the last ten years.

stubborn said...

As a teacher, and thus a government worker (up until a year ago, when I moved), I'm glad to see you come down on this side. I'm not surprised you did, but let's be honest, you're a little erratic some times.

I think one of the huge problems with the education system in America is the logical extension of your point. Business people are indebted to the bottom line, but in most government services, there is no bottom line. Therefore, in a misguided attempt to "get out of the red," business people in charge of government agencies cut, cut, cut until the agency is so poorly run that it becomes privatized, "proving" that the government can't do anything right. This both works as a self-fulfilling prophecy AND as a way to enrich corporations, who then donate millions of dollars to said politician's re-election campaign. It's a nasty, vicious cycle. I'm interested to hear what you think about this, should you find time to reply.

Azuriel said...

So the argument is since the government are mostly cost centers they need to take a big hit when revenues are down. Same thing that would happen in a business.

And that argument is dumb.

While there are certainly areas in which the private sector could come in and do a better job, the actual majority of public positions are jobs which A) could not be replicated in the private sector due to legitimacy (police, etc), or B) would create conflicts of interest, or C) become MORE important in downturns.

For example, can you imagine a private Children Services department? There would be no real way of structuring a private company that does that without encouraging more children to be removed from homes. Should the safety of children be cut back on in a downturn? That would simply create more of socioeconomic drain years later as all these abused children become abusive adults. And so on.

The real problem, speaking as someone working in the public sector, is the prevalence of unions. My health care benefits and such are pretty amazing, no doubt, but my pay has nothing to do with my performance; our recent contract is 2%, 1.5%, 1% for the next three years. So as I become more efficient, more knowledgeable, and an otherwise more valuable employee in every way... I get paid less and less over time.

Public, unionized employees have zero incentive to work harder and every incentive to not. Fix that, and you will get a lot more value out of your tax dollar.

Anonymous said...

BS. A worker is worth what it costs to hire him. The only limitation is that that cost can not be greater than the cost of hiring an alternative worker and that the total cost of production needs to be less than the price of the product.

Arguments based on 'value' of work fail because most work doesn't have a fixed intrinsic value.

Eg., I own a factory. I hire Joe to make buttons that cost 3 dollars to make and sell for 5 dollars. Joe makes 100 buttons a day.
I can't pay him more than 200 dollars a day...but if John will work for 2 dollars a day...John it is. OTOH, if Joe designed the equipment, and I can't reproduce it, Joe is worth about 200 dollars a day.

This is an example perfectly applicable to much of the custom software industry.