Friday, April 1, 2011

A nation of takers, not makers

If you want to know why America is messed up, just read this essay from Stephen Moore, We've Become a Nation of Takers, Not Makers. Moore points out that in the last few decades we have become a nation where people are taking from the economy in government jobs instead of making things that drive the economy.

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?

Staggering numbers. We have too many people who rely on tax dollars to pay for their jobs and benefits and not enough private sector workers to pay those tax dollars. He also points out that while we need fewer farmers because they have become so much more efficient, there are no corresponding efficiency improvements in the public sector.

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.

Schools are full of extra people. Teacher's aides, staffers, various and sundry other people. We keep adding staff and cost and delivering a mediocre product. But woe to the politician who tries to rein in the runaway public school spending train! Any private sector industry that ran that way would either be dependent on government subsidies or out of business.

As we turn into a nation of people who work for the government, we lose our risk-taking, entrepreunerial spirit, drive to succeed and replace it with mindless bureaucracy, job preservation and security. You can't compete in a global economy against nations with billions of people hungry and willing to work hard and take risks with a nation full of bureaucratic paper pushers who don't make anything and don't seem to mind.
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