photo by EfrankE

Sunday, June 6, 2010

I Think I Found Your Problem Here

The U.S. labor department released May employment figures last Friday. The government hired 431,000, mostly temporary, census workers. Private sector employment increased by just 41,000 jobs, a decrease in number from 218,000 in April.

Here’s the problem from my point of view as a professional and businessman:

Government jobs are characteristically regulatory. They don’t produce tangible consumer products, like food, housing, cars or appliances. These jobs generally do not contribute to an increase in the nation’s commerce; they actually subtract from it’s production potential, as regulatory jobs add to the cost of production, which must be paid for by the end-user, or consumer, as part of the product price.

That’s not to say that all government jobs are a waste of money. I believe there is a benefit, for example, in safe food and drug laws and their enforcement, assuming that this is taking place free from corrupting influences. Logically, people employed to oversee the safety of consumable products do add value to the products if they keep the products from poisoning us, yet these still are costs to be paid for and not products in and of themselves.

I do not believe that the more government we have, the better our lives become. Many government jobs are little more than political patronage positions useful to politicians for wielding greater political influence. We’ve had a U.S. Department of Education for over thirty years and educational achievement is worse than before it existed. I don’t see why we wouldn’t benefit from eliminating that multi-tens of billions of dollars department cost.

Government jobs are cost factors, not potential profit centers in terms of business. In business, when costs cause a desirable product to exceed the market value of the product, the product generally does not sell, business activity declines for that product item and people cannot be employed for it’s production. When too many products are priced beyond the market’s ability to purchase them, the economy declines. The bigger the government, the greater the regulation cost, and the higher the product end-user cost.

The U.S. government is already running an unimaginably huge deficit. Is it really in the best interests of the country to hire another 431,000 government employees when their costs (wages, benefits, offices and other operating expenses) must be paid for by taxes from another mere 41,000 producers (more than 10 to 1, “costers” to producers?)

There is a tipping point, the question is, are we there yet? I’ve said this before but, when the regulators overwhelm the producers, a country cannot be sustained economically any more than a healthy body can be sustained when the number of parasites overwhelm the host. Eventually, the death of both must result.

If I were in charge of things, at the very least, I would try to start eliminating Federal Departments of Round Pegs Into Square Holes instead of increasing their number. Increasing the cost and difficulty of producing consumer goods in this country is not a useful policy direction. Especially not if the goal is to increase the employment of producers.

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