28 September 2009

When Jobs = Waste

If adding 100 jobs in Department A will generate 1,000 units of income, but cost 7,000 units of expense, is this a good deal?

And if the described deal got worse over time, where your 1,000 units of income now cost more than 14,000 units of expense, would you keep it going? For 40 years?

Welcome to the empirical experiment in "Jobs = Waste" known as the Puerto Rican Political Economic System. Grab a seat: this is a bumpy ride.

Replace the phrase "units of income" for "tax dollars" and you will have a framework for the disaster I'll discuss here. The basic premise is that government jobs do not really help build an economy and that Puerto Rico's moronic fixation on increasing the number of government jobs--masquerading as an "economic plan"--has led Us to the brink of disaster.

Also known as the Luis "The Larva" Fortuño (non)government.

The late 1960s' estimate of the cost of a government job, when measured in tax dollars, was 1-to-7, in other words, every dollar a government worker received in salary and benefits equaled 7 tax dollars in direct and indirect expenses. This was at a time when the local salary package was about $8,100 a year, so the cost of having that goverment worker was about $57,000.

Obviously, We don't each pay enough in taxes to directly cover that much expense per worker, but that's what tax revenues and other government fees are for: to cover public project and public process costs. 

Now spend the next 40 years adding government workers--who are an expense--while simultaneously reducing the overall tax base and limiting potential private sector business growth. What will that lead to? A bloated government and not enough money to pay for it.

Welcome to the empirical yadda yadda yadda.

Government jobs, that sinecure of mediocre, senescent and feeble minds (sometimes known as "the teacher's union"), are an economic boost on paper only and only with the "lies, damn lies an statistics" factor thrown in. It boils down to three factors:

1) As noted, a government job is a government expense. There is no such thing as a "profitable" government job for the government is not a profit-centric entity. (When it is, there's usually a dictator involved.) There's only "efficient " government jobs and efficiency is never achieved by endlessly increasing the number of workers.

2) Government workers are not production, they are either maintenance or administration. To simplify, the government doesn't "sell" (costs + profit), it serves (cost.) (I'm speaking in ideal, abstract terms. In reality, governments serve themselves and the devil take the hindmost.) For a government to operate well and serve its higher purpose, it must balance costs with revenues, with costs being determined by a limited--limited, people--set of services based on common defense (military, police, courts), common infrastructure (roads, public buildings, airports, ports), common administration (laws, offices, elections) and common revenue collection (taxes and fees). The government only supervises or supports what the private sector builds or operates within the legal framework of the state. That is how an economy is built, not by making the government the job-creator to replace the private sector.

3) The government can become bloated by failing to understand (often willfully) Point #2 and because Point #1 is rendered irrelevant by recourse to "public deficit," "extraconstitutional debt" or "pettifoggery." Hence, welcome to Puerto Rico, the empirical yadda yadda yadda.

Note I did not include "education" in the four services of Point #2. It doesn't belong there. Having the government control education is an excessive and unneeded intrusion, not to mention a demonstrably colossal waste of tax monies. But under the "common defense" factor, the government can (and should thus limit itself) to developing general standards for what will constitute a "well-prepared citizen for national progress" and let citizens--individuals and groups--decide on how best to develop said future citizens. 

The increase in ratio from 1-to-7 all the way up to 1-to-14 is based on the increasingly heavy expenses needed to sustain the overly-complex government bureaucracy, higher wages and benefit packages (especially consultants and legislative greed-bags), a reduced corporate tax base giving incentives away willy-nilly and--here it comes--corruption. A former Ethics Office director estimated the cost of corruption in Our government to be about 10% of the total budget, or about a billion tax dollars a year. Uh-huh. And McDonald's has sold millions of greasy burgers...

Any way you slice it, by shuffling tax dollars around like pieces of confetti, We have proven over four decades that goverment jobs = waste. Human waste. (heeheehee...I couldn't help Myself...) But don't take My word for it:

"Economic growth results from producing more goods and services (not from redistributing existing [government] income), and that requires productivity growth and growth in the labor supply. A government's impact on economic growth is, therefore, determined by its policies' effect on labor productivity and labor supply."

Or take these:

"Before you go away thinking I’m opposed to all government jobs, I understand there are a great many public works jobs that are useful, even essential. Government monies (read: taxes we’ve paid) which get channelled into public projects like highways, bridges, parks, water and sewer services, etc. represent reasonable and proper ways to spend our money. You can even include the paper-pushers who are needed to keep public projects organized, documented and running efficiently. (I speak idealistically, of course, as there certainly is nothing efficient about the current bureaucratic behemoth…)

The point is simple: it’s only jobs in the private sector, in the areas of manufacturing, sales, service, construction and repair, that are the generators of economic growth, health and wealth. The vast majority of the jobs Obama is proposing and trying to create (whether actual agency jobs within the government, or hirings by private companies using government funds offered as incentive to hire) will invariably cost taxpayer money just to create them, and then more taxpayer money to sustain them. The process becomes a black hole – collect taxpayer money, spend it to ‘create’ jobs for which there is no consumer demand, sustain them with more taxpayer money, tax that new job along with the rest of us, ‘create’ some more jobs, raise taxes to sustain all those ‘new jobs’ — I think you see how the very concept requires a constant raising of taxes and draining of resources to maintain the ludicrous cycle of bogus job creation and sustainance."

Oh, yes, there's an Obama reference in that second quote. Maybe it will serve as a wake-up call before the U.S. of part of A. also joins Puerto Rico as an empirical yadda yadda yadda.

The Jenius Has Spoken.

1 comment:

Antigonum Cajan said...

The native islanders
continue to believe
the state is a philanthropic
Let the CHURCHES, the thousands
of them help their sheep
in this moment of misfortune.
I will never forget that
30 years ago, Miguel Hernandez
Agosto, declared that they
knew there were 70,000 hired
unnecessary employees in the
government but they could
not be fired because they are" padres
the familia".

Let the church do what they
should and the state be the state.