Why Government is disfunctional

Prop 22 on the upcoming California ballot is a scrap between local governments and the state over limited funds. Prop 22 is sponsored by Cities who argue about protecting local services I was listening to arguments pro and con on NPR and kept coming back to the fact I have been seeing a lot of data recently documenting the fact public employees make a lot more in salary and benefits than the average private sector employees. Why should we in the private sector care about helping protect money for local services when it seems like with "public servants" protecting their relatively cushy jobs is more important than providing services? In the private sector when funds are not available people make less money. In the public sector when funds are scarce salaries are protected at the expense of the services that are the function of the organization.

It seems to me the fiscal train wreck that is government in California stems in large part from that simple issue. People in the private sector see a lack of accountability in the pubic sector. "Public Service" is a dead concept, public sector jobs are usually pretty cushy compared to their private sector counterparts. Its easy to lose any enthusiasm for supporting government when you are scrambling to pay taxes to support people who are living off your labors quite comfortably.

Marketers run the US

Politics, business, even universities are run by the marketers. They are utterly amoral.

Big business is the worst of course. They will do everything in their power to pry money out of your pocket. If you try to call their customer service and talk to them they say "yes, I understand" while they ignore what you called them for to give their various sales pitches. They will use all the powers of psychology and persuasion to sell things people don't need to people who can't afford it.

But politicians are not to far behind. Not the politicians personally, but the consultants they hire and slavishly follow. Emotion is the enemy of good problem solving, but political consultants realize stirring up emotions can lead to votes, so they stir away shamelessly. Every little issue becomes an apocalyptic threat to our nations survival. Issues that have no impact on most people are milked to stir up outrage.

And finally there are the Universities who have become all about marketing and image and bend the whole nature of education to accommodate the marketers. Required textbooks cost more than rent on a students apartment because they make professors lots of money and provide grist for the marketing mill. Tuition consistently rises far faster than the cost of virtually everything else in our world as marketing education takes a bigger and bigger chunk of the education budget.

Unfortunately the marketers are dominant because the are good at what they do. They know how to push our buttons, how to manipulate us, how to fool us.

If anyone ever developed an inoculation that protects against the wiles of marketers they would be doing everyone a big favor.

Our limping economy

President Obama is proposing various tax proposals to try to pull the economy out of its funk.

Democrats in Congress are trying to shape any changes to protect their primary contributing constituency, unions and public employees. Republicans are trying to shape any changes to protect their primary contributing constituency, wealthy folks and big business.

None of the ideas anyone is floating seem to me to make much sense. The Republican notions that we should be cutting government spending is ludicrous - the modern day version of the old medical practice of draining blood from sick people. The democrats ideas seem misdirected - because they can't seem to find good ideas they are capable of defending in the chaos of modern political media.

It all seems pretty simple to me. The people that have money, wealthy individuals and businesses, are sitting on it because they don't want to risk losing it. The ordinary folks aren't spending because there houses are not worth as much as they thought, or they are in debt or they are worried about their jobs.

The logical response it would seem would be to lighten the burden on ordinary folks, and make it more costly for the wealthy folks to sit on their money. A significant temporary increase on taxes on corporate retained earnings and corporate dividends would make it more sensible for corporations to invest in creating jobs than sitting on their money. A tax cut for working consumers would help them feel better about their economic situation and be more willing to spend money.

I suspect what we will actually get will be the normal mish-mash of misdirected policies to hand some benefit to the politically connected. It is not ultimately Washington's fault. As voters, we get the government we deserve. If as voters we are lazy thinkers, going with what sounds good emotionally instead of taking the time to learn facts and evaluate the policy.....

Why are Corporate profits at record levels?

The housing market is a disaster, unemployment is stuck in double digits, the economy is weaker than we thought it was. How is it that Corporate profits are at record levels?

Perhaps because big corporations are no longer linked to the economy in the US. Globalization means they can send work to where labor is cheapest and sell wherever in the world there is a buyer. Much of the world is now working hard to drag themselves up to the standard of living we enjoy in the west, so global corporations have replaced the market share they lost due to the weak US economy with market share in other parts of the world. They are the winners from the globalization movement of the last 20 years.

The people in the US that are not management in a big corporation appear to the the losers. Maybe someday globalization will bring benefits to us all beyond cheap stuff at Wal Mart, but in the shorter term small business and government will limp along while we pay for the debt fueled excesses of the last decade. Unemployment will probably be stubbornly high, the housing market will limp along. We can expect angry voters and some political instability and people fighting over who is going to pay for big deficits and the loss of services people rely on for years to come.

Sure big corporations will pay some taxes, but only on what they sell in this country. They are bigger than this country these days, and the Supreme Court has given them the right to use their size to insure their responsibilities to the US are as limited as possible.

We made some bad mistakes in the last two decades and now we will be paying for them.

Is our Medical Care System discouraging entrepreneurs?

I have had a number of recent contacts with young highly educated professionals who have expressed resignation that, as much as they would like to start their own business, they remain tethered to their jobs with big government or big corporations because of the medical plans. Despite all the complex efforts to make Insurance portable it isn't really because of the expense, particularly for younger folks with families.

Makes you wonder if the folks that killed a government sponsored health insurance system this last year gave any thought to its impact on entrepreneurial spirit?

Also makes you wonder if that is why, despite our efforts to get small businesses to hire people to start bringing down unemployment, it just isn't happening. Maybe there aren't enough new small businesses being formed because people see the expense or possible loss of Health Insurance as a bigger risk than they want to take on?

Are we undermining our future to protect our Edsel health insurance system? (Don't know what an Edsel is? Goggle it)

Government Benefits

One unfortunate characteristic of government benefits such as unemployment or various types of social welfare payments is that people who work the system may stretch the truth and receive the benefits while similarly situated people who are more honest don't qualify for the benefits.

It is difficult and expensive to discover fraud, so to the extent possible benefits should be designed to limit misuse. For example, benefits could be structured so everyone is entitled to a certain amount of benefits over their lifetime, with an absolute ceiling regardless of circumstances, and a cash payment for unused benefits upon retirement. That way those who behave honestly aren't subsidizing the dishonest.

Government Salaries

July 2010. Voters often have little knowledge or control over Government salaries.According to the U.S. Bureau of Labor Statistics, the average weekly salary of the American Worker as of January 2010 is $629.04, or $32,708.10 per year.

News reports have revealed the City Manager of the City of Bell, California, makes nearly $800,000 a year. Bell is a relatively small city in greater Los Angeles. The city population is 36,000 people. Other city employees have salaries of hundreds of thousands of dollars a year, and many have six figure pensions when they chose to retire.

Famously the City of Vallejo, California, with a population of about 124,000, went into bankruptcy a couple years ago and it was revealed somewhere around 150 city employees received over $100,000 a year in salaries, plus very generous pensions and benefits, with a number of city employees, and some nurses and public safety personnel making over $200,000 a year not counting pensions and benefits.

The controls over public sector salaries often don't work. The employees who want to make more money have knowledge, access and influence over the local legislative bodies. The local legislators want to get reelected so they work to please the most vocal and aware voters. It is almost impossible for voters to control public sector salaries as they have little time, little or no information, and it is inherently difficult to measure productivity in many government jobs since there is no bottom line to measure against.

Government is important, but the private sector is what creates wealth.

Government should function as a service where the employees are motivated primarily by the desire to help people, not by the desire to make money. But the notion of "public service" has become an argument for higher salaries, rather than a measure of something forgone to serve the public. Government jobs already tend to provide more stability than private sector jobs because of the ongoing nature of government responsibilities. People who are motivated primarily by making a lot of money should not be working for the government.

The lack of working controls over Government salaries has resulted in many people who are primarily motivated by making money moving into, or staying in public employment. Even people who started out in Government motivated by a desire to do "public service" may stay in Government later in life after their focus becomes more on making money. They use their knowledge of government to find a way to squeeze more money out of government. The system should be set up so people who are primarily motivated by money move into the private sector.

Conclusion? Perhaps Government salaries and benefits should be limited by law to schedules measured by the average private sector salary/benefits in that region. The schedules should be set so Government workers who reach a point in their life where they want to make more money will move into the private sector. No government employee should make more that 3 or 4 times the average private sector salary.