Public Servants, Public Masters

The current issue of reason magazine  publishes an article by Steven Greenhut, a former columnist for the Orange County Register, entitled “Class War: How public servants became our masters.” You don’t have to be a survivalist living in the mountains of northern Idaho to be shocked and dismayed by the data and conclusions the article presents.

Focusing mainly on California, which has experienced runaway growth of the public sector, the article also addresses the national picture. Many of us think that government salaries are lower than those in the private sector, but by way of recompense government workers enjoy higher job security and somewhat better benefits. That used to be true, but according to data from the U.S. Bureau of Labor Statistics, “the average federal worker made $59,864 in 2005, compared with the average salary of $40,505 in the private sector.” In 1946, after WWII and the New Deal had swollen government payrolls substantially, the U.S. counted 3.3 million state and local government workers. Today the number stands at nearly 20 million, an increase of almost 500 percent over a period in which the population has grown by only 115 percent. We now have 6.5 state and local government employees per 100 citizens, compared to 2.3 in 1946.

Greenhut outlines the notorious “three percent at 50” retirement plan passed by the California legislature in 1999, which allows many public employees to retire at age 50 and to receive a pension benefit – payable for the lifetime of the retiree and his or her spouse – equivalent to three percent of their final year’s salary multiplied by the number of years of service. So someone who joined, say, the Department of Motor Vehicles at age 20 could retire at age 50 with an annual pension of 90% of their last year’s pay.

Defined-benefit pension plans, which pay retirees some percentage of their annual pre-retirement earnings, have all but disappeared in the private sector, replaced by defined-contribution plans like 401(k)s. Unionization of public sector employees has contributed to this explosion in numbers of staff and to the expansion of gold-plated salaries and health and pension benefits, which are paid mainly by struggling (and increasingly non-unionized) private sector workers who get nothing near as generous. Even more important is the expansion of government regulation of ever more spheres of what used to be considered private life. I remember many years ago reading a letter to the editor of Playboy (I read it for the articles, of course) asking why, if liberals so adamantly supported freedom for any kind of sexual act between consenting adults, did they not support equivalent freedom for economic acts between consenting adults.

We should engage in vigorous debate over how large government’s role should be,  though, as Greenhut’s article points out, now that only 54 percent of the U.S. economy is private versus the 28 percent that goes to the feds and 18 percent to state and local governments (down from a 78 percent to 32 percent private/public split in 1947), we may already have reached a tipping point at which public sector employees make up a majority of the voting population, which will consistently support continued increases in public spending and employment. This is a huge danger to our public finances and to the long-term competitiveness of the American economy.

But even if most people support a more activist role for government and think it is worth increasing government’s share of the economy, why do government payrolls swell as if the past 20 years of IT-related productivity gains had never occurred? Does it really take five times more people to run the government now than it did 60 years ago? Are public services and public infrastructure five times better than they were in 1950? Even if you think they are – and please send me your evidence if you do -  what in the world justifies paying public employees more than their private sector counterparts and giving them health and retirement benefits most people can only dream of? It’s not as if they perform to a standard of competence and probity the private sector can’t match. Gerald McEntee, President of the 1.6 million-strong American Federation of State, County, and Municipal Employees, has said he hopes the public sector will serve as an example, inspiring private employers to offer similar pay and benefits. But as even General Motors found out, business is not government. Companies cannot tax the public or print and borrow money without limit as governments can. They have owners and shareholders to answer to.

In all the commentary published since the financial crisis began, detailing all the flaws of America’s systems of corporate and economic governance, politicians, bankers, and corporate executives have come in for especial criticism. Apart from the past 20 years or so when the Wall Street Masters of the Universe were considered, well, masters of the Universe, none of these groups has enjoyed much public approval since the founding of our republic. In any case, politicians can be thrown out of office and Titans of the business and financial sectors can be toppled, if not without a struggle. But civil servants are forever.

With each day that passes, public employees migrate further and further from their initial designation as public or civil “servants” and  instead become our public “masters.” In ancient China the mandarins who administered the empire were a privileged class, just as in Europe today the class of what the French call fonctionnaires enjoys similar power and privilege. By all means, let the bureaucrats in Brussels enjoy their perks. As Americans, though, we should never let public employees forget that they are there to serve us, not the other way around.