Good and Bad Addendum
One of that union guy’s talking points on the recent episode of Newsmakers that I addressed the other day didn’t spark an immediate rebuttal from Bill Felkner or from me.
If you listen to the language that Bill uses — “lucrative contracts” — I think the reality is that that money that goes into a public sector contract does in fact go right into the economy. Firefighters, teachers, public servants — they live in and around the communities they serve. They’re not taking their money and dumping it in the stock market. They’re going to the Dunkin’ Donuts at the corner; they’re going to the local mom-and-pop restaurant. So that money’s going into the local economy.
It’s true that public sector workers are no different from private sector workers as residents — as economic units in the state’s economy. It’s a dramatic distortion, though, to lift that up as a response to Bill’s one-to-one statement about money taken out of the economy and shifted to labor.
Trace the pot of money that goes to public-sector labor: There’s some cost for the government to collect it. Some of it enables policies of inefficiency, such as requiring multiple traffic controllers to stare into space at construction sites in order to meet a genitalia quota. Some of it is siphoned off to pay people like Pat Crowley and the entire organizational structure that supports him — which I suspect includes a flow to the national organizations and which I know includes a flow to politicians and political activism. When it comes to the individual worker, some of it is exported (trips, out of state shopping, etc.). Some of it is saved. And yes, a percentage goes into the active local economy. Only that very last percentage — and I’d love to have the time to do the research and figure out a rough per-dollar amount — has the potential to advance anything new. The pay that goes to government bureaucrats, union executives, and so on supports an activity that is already established; we’re not talking innovations that might result in economic growth.
By contrast, the dollar that the government takes out of the economy to feed this machine comes out of what might be seen as an “excess” end, in that the first column from which taxpayers are likely to draw funds in order to pay their tax bills will be the least necessary to survival. I long ago decided that I couldn’t justify a daily stop at the Dunkin’ Donuts for a $1.50 coffee when a can of Chock Full o’ Nuts supplies the same caffeine fix for pennies. A weekly dinner at the mom-and-pop restaurant might be the first thing to go when the property tax bill jumps up by double-digit percentages.
In order to grant the public sector unionist sufficient funds to add a dinner out to the weekly schedule or a flat-screen TV to the living room wall, multiple families have to give theirs up.
Extrapolate that example to the “extra” spending of the wealthier residents from whom a greater percentage of the money is taken. Tax money for labor doesn’t come from basic house-upkeep money. It’s not diversified, global, long-term investment money. It’s not pick-up-an-extra-shift-at-work money. Rather it’s money that would be risked on local high-growth investment opportunities, or that would simply be given away with no expectation of return. Now apply this imaginative exercise to corporations.
This isn’t an argument that we ought to give the rich as much as we possibly can. I’m merely pointing to a dynamic that we ought to take into consideration as we assess potential economic policies, and the right answer is likely to vary from era to era. Suffice to say, though, that an economic downturn that has sent the state into a landslide to bankruptcy is not the time to be pulling money out of a portion of the economy that can tolerate risk and loss and from which expenditures may be lightly made in order to maintain and increase payments to a portion that is notoriously inefficient at recycling dollars.