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Originally Posted by sebastian_dangerfield
Are we better off trading govt workers for private sector workers? I think we all agree the answer there is yes. One is a cost. The other grows the economy (and you get 1.5 - 2 private sector workers for the cost of one govt worker).
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Now you're being inane. First, government workers don't make twice as much as their counterparts in the private sector, as we all know. If the average comp figures look like that, it's because government jobs tend to be white collar and in more highly paid lines of work.
Second, in ordinary times there's a fear that government spending will supplant private spending. In these times, people aren't spending their money, they're hoarding it. Hence the problem with aggregate demand. You need the government to pick up the slack, because there is slack. You have a host of unemployed workers out there who can't find jobs because there isn't demand. They were working not too long ago, so the problem (or most of it) isn't structural. It's that no one is hiring. This is a huge loss for the country, and if we don't do something about it it's going to be a bigger loss because no one will want to employ those people in a few years.
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The question is, If we let govt workers go, would the decrease in spending there flood into creation of private sector jobs? I'm unsure of that, and see your criticism about making such a bet. But I'd nevertheless make the bet, for reasons explained in the last paragraph of this post.
That big increase in municipal and state taxes may seem insignificant to you and me. But I assure you, there are tons of lower middle class people going into Sheriff's sale of their homes right now over tax bills of $3-4k. I'm not shitting you. I used to collect taxes for a county in PA and still have online access to the tax rolls. There's a whole underclass of people who really live their lives to the penny. If the state jacks their taxes 1%, and the municipality and schools take them up another 5%, these people are fucked. And the more we hurt them to pay for the benefits and outrageous salaries of the average govt worker, the more we push ourselves toward a day of reckoning where those govt workers have to be laid off en masse, rather than slowly, methodically downsized in a process that avoids creating acute economic damage.
On your last point, the GOP, I think, is looking a couple steps ahead. Unless we get a transformative technology, we're looking at a decade plus of stagnancy. Giving the states stimulus to pay for a govt they can't afford for a couple more years allows them to put off until tomorrow a debate we needed to have years ago - "What do we want? A bigger private sector, or a bigger govt?" We can't have both in a long term economic environment teetering between anemic and negative growth.
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We don't want a bigger government per se. We need the government to pick up the slack now, in extraordinary times. Doing so helps the economy recover.
