The Fundamental Fiscal Weakness in Democracy - the fiction of Public Service

California is in a fiscal mess.  The roots of the problem are a problem fundamental to all governments.  How to fairly compensate public employee's.  Private sector compensation is controlled by consumer's voting with their dollars.  If your product is inferior, or too expensive, people stop buying it, so you have no income stream to overpay yourself and your associates.  No business can claim a right to force people to buy what they are selling.

But Government can force people to buy what they are selling.  In any government where voters have no real power Government employees can go on for decades living a good life at the expense of everyone else, as happened in the Soviet Union.  But even in a true democratic government, government has an inherent power that is hard for voters to control.  In addition to California's current problems with employee compensation, the whole problem in the Euro zone rests on public employee compensation levels that exceed taxpayer willingness to fund.

The problem is built into the ways voters interact.  California is a good example.  In the late 1970's Republicans in the state started trying to restrain the growth of Government spending by limiting governments ability to tax.  The problem with this approach is it aimed at the wrong target.  Instead of aiming at limiting employee compensation, it just cut revenue to the state.  In essence it treated a symptom, not the underlying disease.  What that accomplished was to cut lots of lower end employee's and public services without touching the way public employee compensation was determined.  In fact it set up a situation where programs began competing for public money, so the whole process became less about what served the public, and more about who could generate political clout.

At a point years ago California's legislature started creating "compensation" committee's to determine fair compensation for government officials.  The committee's have three problems.  1.  They are composed mostly of politically connected people who generally anticipate spending part of their working life as government employee's, so it is hard to be completely objective.
2.  They tried to compete with the private sector on salary.  What they end up doing is competing with the most successful private sector enterprises who pay the most money for any particular skill, even though that enterprise may pay much lower for other skills not as important.  In short the public sectors salaries tend to reflect cherry picking the highest salaries paid for a particular skill across all industries.  
3.  But most crucially, 80 years ago or so public employers bought into the notion they should set an example for the private sector with a guarantee to all employees of a comfortable retirement.  The system has evolved to a point where public sector retirement is vastly more expensive than taxpayers are willing to fund.

The result in California is a state where the obligations greatly exceed it's income, and taxpayers are unwilling to approve higher taxes.  Why should they?  When the average California probably makes $45,000 to $50,000 a year, what are they to think when 50 employees of the State Department of Corrections make 10 times as much, and will continue to make as much when the retire?  When literally millions of State employees will draw more in retirement than the average taxpayer makes?  When tuition at the State's Universities is so expensive the average Californian can no longer afford to attend.

Republican's on the National level have taken the same tack - seeking to limit government by limiting income, while not doing much to limit government salary and benefits.   They have managed to cover up the fundamental weakness of their strategy for 30 years by pumping up the US economy for 30 years with deficit spending on defense, at the expense of programs that actually impact peoples daily lives.  Defense spending does produce a boost to the economy, as it puts people to work, but in the end it doesn't produce wealth, it produces a big military that is probably going to cost us a lot more money as we try to put all that military might to some useful purpose (although it unequivocally makes a lot of defense contractors very rich) and then as we care for physically and emotionally crippled veterans for the rest of their lives.

Our Democracy needs provisions built into the Constitution to create a direct link between the level of public sector compensation and the average private sector compensation.