We've Become a Nation of Takers, Not Makers

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If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government.

It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills?

Steve Moore has the details on Rep. Paul Ryan's plan to cut spending.

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida's ratio is more than 3 to 1. So is New York's.

Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things. The leaders in government hiring are Wyoming and New Mexico, which have hired more than six government workers for every manufacturing worker.

Now it is certainly true that many states have not typically been home to traditional manufacturing operations. Iowa and Nebraska are farm states, for example. But in those states, there are at least five times more government workers than farmers. West Virginia is the mining capital of the world, yet it has at least three times more government workers than miners. New York is the financial capital of the world—at least for now. That sector employs roughly 670,000 New Yorkers. That's less than half of the state's 1.48 million government employees.

Don't expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. When 23-year-olds aren't willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles.

The employment trends described here are explained in part by hugely beneficial productivity improvements in such traditional industries as farming, manufacturing, financial services and telecommunications. These produce far more output per worker than in the past. The typical farmer, for example, is today at least three times more productive than in 1950.


Where are the productivity gains in government? Consider a core function of state and local governments: schools. Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.

But education is an industry where we measure performance backwards: We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn't pay teachers enough or we need smaller class sizes or newer schools. If education had undergone the same productivity revolution that manufacturing has, we would have half as many educators, smaller school budgets, and higher graduation rates and test scores.

The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. One way that private companies spur productivity is by firing underperforming employees and rewarding excellence. In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which is what we've gotten.

Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services.

President Obama says we have to retool our economy to "win the future." The only way to do that is to grow the economy that makes things, not the sector that takes things.
Think about what this means: The average American worker in the private sector is productive enough to pay an income for himself and an income for at least one other person.

Maybe if we shrank government, women wouldn't need to work to help raise a family?
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Good point. With 100 million at retirement age by 2012, millions of millions of illegals pouring over the boarder, stupid SWPLs with degrees in 19th century french literature expect to see the US government rely more and more on massive soviet style government works programs propped up by the seemly endless stream cash of the federal reserve.

Someone once pointed out how government jobs has become nothing more than sophisticated welfare because

1. Government workers create little wealth. Shuqeena at the DMV who does 2 hours of real work out of her 8 work schedule is a huge deadweight loss, not a net positive to the economy.

2. Public sector unions as made it impossible to fire incompetent workers so who have Shuqeena at the DMV getting life long tenures with unreasonable raises during severe recessions and retiring with big fat pensions.

3. It's mostly service based. What real tangible wealth has Shuqeena created compared to a farmer in idaho or a petroleum engineer in texas? Service based economies are a sham and not sustainable in the long run. It might work in small economically efficient country like switzerland but not in the US with a population of 300 million.
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Team Zissou

LOL. It's ridiculous. The productive sector is carrying unionized bureaucrats, old people, cat ladies with fibromyalgia, homos with AIDS, negros, Aztecs with no health insurance, and on and on, and there's STILL enough excess wealth to support things like theater, symphonies, Cornel West, etc.

Beefy Rep

This piece seems to be sent from a bizzaro world where government workers are all useless bureaucrats and private sector workers are all manly primary producers. This is far from the case: the private sector in the United States is mostly dominated by types far more useless than a teacher, road worker, or judge. Restaurant employees and various retail employees, HR diversicrats, and ten thousand other jobs like "life coach" or "doggie daycare worker" abound. Then, of course, there's all those MBAs who, despite being compensated handsomely for being heroic Randian individuals, don't seem to ever have much do do with actually doing things or making things. And don't forget all the rich class of owners, who are undoubtedly worth every penny for the common good.

Both the public and private sectors are ridiculously bloated with niches and layers of complexity that are only sustained by a massive supply of fossil fuel energy, hundreds of millions of third world workers, and a military that can enforce an arrangement of global power where most of the good of this energy and labor goes to--us.

Gov't employees get paid by tax income which comes from the productive sector (i.e. private sector) of the economy. If they weren't productive, they wouldn't get paid because they'd be out of business. When you have no tax revenue, you get a completely insolvent government. Follow the money and you'll find out that those waitresses and MBAs are actually providing much more for us than people realize. The capitalists manage capital. they do this effectively, producing many things and making lots of money in the process. They make enough stuff and produce enough value in order to make a living for themselves and have half their earnings extracted from them and paid out to gov't employees and beneficiaries.

It's almost by definition that the private sector is productive, and that an insolvent, overbearing government is unproductive. Of course, those with a leftist "anti-personal responsibility" agenda would prefer that we extend the scope of government and destroy all profitable business. This is what we are seeing today with the insolvencies of governments.

So let's ask for more services, more taxation and more regulation, and embrace the collapse of personal responsibility which is being replaced with "social responsibility"... that thing where it's everyone else's fault that things aren't perfect.

I'll agree to this.
Team Zissou
That is a confused post. The HR diversicrats and numerous other corporate drones are employed to comply with government mandates. These mandates in turn raise barriers to entry, which ensures that only large corporate entities can enter the playing field.

The whole idea that military is the reason for global trade is ridiculous. Saudis have sand and a bunch of oil; we have things like food and paper. The Saudis trade their oil for those things or go back to wandering the desert and burning camel dung. Repeat this pattern all over the globe. High IQ Germans make cars; low IQ east Asians make shirts. Everybody trades, everybody wins.
Beefy Rep
This is voodoo magic thinking. Capital is not productive. Labor is productive; energy is productive. But its not as if our modern version of voodoo priests--the bankers, economists, technocrats--aren't trying to make capital productive over and against a horizon of resource depletion, decreasing energy supplies, and the cascading series of ecological crises we're just getting into in this century of ours. I wish them the best of luck in uttering incantations, warding off the evil spirits, and making their pigs fly.

Well, that is how you've defined it; however, the actual business of doing things and making things involves complex arrangements that involve both the public and private sectors. A county auto grader operator, for instance, is producing something of great public use--a passable road. He is also paid by tax dollars, some of which comes from people who do no tangible good to anybody.

One could likewise say that an insolvent, overbearing banking sector is unproductive.
You're insane.