Saturday, June 29, 2013

Weekend Musings/Ramblings ... "Taxflation" vs. "Austerity" ... Government Payrolls and Productivity ... Here's What I say ... Let's Start Asking the Right Question

Sadly, the America which used to be the "individual land of opportunity" has become the land of "government redistribution." We take from one and give to another, and we do it through the government. As a result, we need mountains government workers to redistribute mountains of money that is either (1) taken away from some, (2) borrowed or (3) printed and then redistributed to others.

That's quite a combination resulting in growing levels of government spending, high deficits and an increasing debt burden. Let's call that the genesis of "taxflation."

As a result, we have also become by necessity the land of "taxflation." Government spending means more immediate taxes, and/or more borrowings which will lead to higher taxes and/or a weaker currency, which are legacies we don't want to leave to our kids, grandkids and as yet unborn Americans.

Thus, whether it's more taxes and slower economic growth, more borrowings and slower economic growth or a weaker currency and slower economic growth, "taxflation" resulting from government redistribution programs leads to the same sorry destination. It's a road we don't want to travel, but it's the one we're on.

Our government debts and unfunded entitlement obligations have reached the point where we really are a welfare state with a dysfunctional government and mountains of debt with no political will to solve the problems. It's up to We the People, and it's going to be a tough slog indeed. Taking away "free" money from, or raising taxes on, "middle class" Americans, aka ourselves, (recipients of government pay, Social Security, Medicare, Medicaid, ObamaCare, K-12 subsidies, college student loans, government home mortgage guarantees and so forth) won't be easy. We may have to go bust first. Let's hope not.

Government bleeding heart do-good progressives say we need more government spending to stimulate the economy. What they fail to mention are the taxflation effects of such a wrongheaded approach.

We are in debt up to our eyeballs, and the situation isn't getting any better. Our political system is bankrupt. Our "social contract" between the generations is in a shambles. It's time for straight talk.

If some Remocrat or Depublican U.S. politician would propose cutting government spending, in a serious way, aka reducing redistribution payments, he would run into the well organized opposition of one or both of two groups: (1) recipients of public sector pay and (2) recipients of government benefits. And that's a whole lot of people, including the entire public sector workforce and the aforementioned "middle class" beneficiaries.


But since I'm not running for elected office, let's discuss how much government we want, need and are willing to pay for as a nation.

The bloated size of government payrolls has been getting a great deal of attention lately, both at the federal and state levels. And much of the attention has centered on how many of the government workers are paid in excess of $100,000 annually or some similar number.

Thus, how much the high paid government employee receives compared to a similarly skilled private sector employee, what the comparative benefits are for public vs. private workers, whether there's a 401(k) or pension plan in effect for public and private sector employees, how much of a retirement underfunding issue exists and so forth, are all "hot topics" these days. But we're not discussing the biggest issue of all.

(1) Does the government work being done need doing and if so, (2) is there a better and more productive, aka less costly, way of doing that work? Unless the answer to the first part of the question is yes, we need not concern ourselves with part two. But if the answer is yes to part one, then the correct answer to part two is always yes. Despite this simple truth, these two parts of the relevant question aren't even being addressed.

So even though all of the questions being asked about payroll and so forth are legitimate taxpayer and employee concerns, of course, they cause us to miss the essential point. And that essential point is contained in parts one and two of the foregoing essential question about the need for the work being done by government and, if so, improving in a continuous and rapid manner the way in which that necessary work is done. That's the missing factor ---- the overall and ongoing productivity factor of the necessary government work.

So the essential point is simply this: How many government employees are necessary to do what We the People want done by government? In other words, how productive are they at doing what we want them to be doing? And for that we need to pay government workers fairly. Period.

Here's the deal: government monopoly = no market pricing = no required productivity improvements = no focus on improved customer service = higher and uncontrollable costs over time.

Of course, the essential question is almost never asked and here's why. It's the public sector unions and the politicians acting in concert and taking advantage of We the People being asleep at the switch.

The simple truth is that the more public employees there are on the government payrolls and the higher those employees are paid, the higher the public sector union dues that go to the union leadership. And the more highly paid and underworked public employees that are on the payroll paying union dues, the more likely those 'grateful' employees will be to support the 'allied' politicians currently in office.

The biggest problem, other than unaffordability, with all this excessive government payroll is the "taxflation" effect. The more we pay to the government, the less that is left for us to save and invest in the private sector.

And the more the government spends, the more taxes that are required from We the People to offset that spending. Thus, raise the taxes, and especially on the "rich," becomes the cry from the politicians. And when that's done, government grows and the economy slows.

But just try to cut the overall payrolls of the public sector or try to make them justify their existence in relation to the costs taxpayers are incurring (think post office and school administrators and congressional staffs) and see what happens. Nothing.

The unions protect the status quo, the politicians protect the unions, the government payroll grows relentlessly, the taxpayer takes it on the chin and the economy slows. Things get worse. It's the system, Stupid!

And as a result, the young and the poor among us poor suffer most.

But are we likely to address this essential two part question anytime soon? Of course not.

That's not the way government works. Not yet anyway.

Thanks. Bob.

No comments:

Post a Comment