At a time when workers’ pay and benefits have stagnated, federal employees’ average compensation has grown to more than double what private sector workers earn, a USA TODAY analysis finds.

Federal workers have been awarded bigger average pay and benefit increases than private employees for nine years in a row. The compensation gap between federal and private workers has doubled in the past decade.

Federal civil servants earned average pay and benefits of $123,049 in 2009 while private workers made $61,051 in total compensation, according to the Bureau of Economic Analysis. The data are the latest available.

The federal compensation advantage has grown from $30,415 in 2000 to $61,998 last year.

…

What the data show:

• Benefits. Federal workers received average benefits worth $41,791 in 2009. Most of this was the government’s contribution to pensions. Employees contributed an additional $10,569.

• Pay. The average federal salary has grown 33% faster than inflation since 2000. USA TODAY reported in March that the federal government pays an average of 20% more than private firms for comparable occupations. The analysis did not consider differences in experience and education.

• Total compensation. Federal compensation has grown 36.9% since 2000 after adjusting for inflation, compared with 8.8% for private workers.

–Dennis Cauchon, USA Today

While it’s understandable that stats like this will make your blood boil, it’s more important to understand what’s going on with these numbers. Specifically, why is this “wrong.” It’s not enough to just get mad that somebody is making more money than you are. And, while legitimate, it’s also not enough to get mad that so many public workers appear to be such lazy freeloaders. You have to give reasoned arguments as to why it isn’t right for government employees compensation to be that high. And, that argument happens to be an economic one.

Why is it not ok for a mid-level beauracrat to make $100k, but it’s ok for a mid-level V.P. at Microsoft to make $100k? The principle reason is that Microsoft is actually giving you something that you have determined is valuable to you in exchange for your money. Remember rule number one in market economics: value is subjective. When you make a transaction with a private institution, it’s because you think that the good or service you’re getting in exchange benefits you more than the potential goods and services you are foregoing by giving them your money. Another way of saying it is that, at a particular moment in time, you’d decided that the particular good or service you are purchasing is more valuable than the exchange potential of the money in your pocket.

Because of this, a privately employed individual’s salary is based on how well he satisfies the consumers of his goods and services. That means that, all things being equal (i.e. in a truly free market), private employment wages are linked directly to consumer satisfaction. Obviously, this isn’t the case with public employees. Government wages aren’t reliant upon satisfying the consumer. Instead, government entities increase their budgets, and thus their salaries, through lobbying and political entrepreneurship – drawing their funds from taxation and inflation(i.e. theft). There is no connection to consumer satisfaction whatsoever. Indeed, many times when a government office or department does a horrible job, the call goes out to increase that department’s budget. They will say it’s the lack of funds that’s causing them to do a poor job.

I think all of this is probably pretty obvious, but it helps to keep a proper perspective. The problem with government salaries in general is not how much they are(obviously the lower the better), but the fundamental lack of connection to how they produce anything of value.

A perfect example of all of this is my wife’s recent license plate payment. We bought a van a couple of weeks ago for about $6000. It’s an older van with a lot of miles, but it meets our needs. Essentially, we decided that, at this time, having a van was more valuable to us than any other potential purchases we could make with $6000 dollars. Now, fast forward to two weeks later. My wife takes the van down to the DMV. They inform her that she must pay them $400. That’s $58 for the license plate, $240 for sales tax, and some other fee crap. Could she have told them, “You know, $400 seems a bit steep when there are potholes all over the road on the way over here. I think I’ll just go down the street to your competitor and see if they can give me a better deal?” Of course she couldn’t say that, because the DMV is a monopoly. There is no competition by fiat. If we didn’t pay them the $400 I would eventually wind up in jail.

In this way, government wages are completely devoid of any job performance evaluation, because there’s nothing to evaluate. You’re job consists of showing up, demanding people give you their money and then going home. Government wages aren’t just bad because they are high. They’re bad because they exist at all.

SEC. 3. PURPOSES AND PRINCIPLES.

(a) STATEMENT OF PURPOSES.—The purposes of this Act include the following:

• (1) To preserve and create jobs and promote economic recovery.
• (2) To assist those most impacted by the recession.
• (3) To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
• (4) To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
• (5) To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.

(b) GENERAL PRINCIPLES CONCERNING USE OF FUNDS.—The President and the heads of Federal departments and agencies shall manage and expend the funds made available in this Act so as to achieve the purposes specified in subsection (a), including commencing expenditures and activities as quickly as possible consistent with prudent management.

–Readthestimulus.org

I started thinking about it the other day when it sort of dawned on me that I hadn’t even heard anyone mention the stimulus bill in a while. This is strange, because everyone on the right predicted that most of the stimulus money would be held back and spent during the months leading up to the November 2010 elections. That isn’t really panning out though. According to the recovery.gov website, only $201 billion (about 25% of the total) has been spent so far. And with only three and a half months to go until the November elections, I don’t think they’re gonna make it.

So, why didn’t the predictions come true? After all, it makes perfect sense that Congressmen would vote themselves a huge slush fund right after an election and then spend most of it right before the next election. Well, the answer is that you have to remember the inherent limitations of government. Government is a gargantuan, lumbering behemoth. It is incapable of doing anything on a set time table. While I am sure that those who passed the stimulus bill probably fully intended it to be spent in their own districts to help their reelection bids, the fact remains that spending $850 billion dollars isn’t exactly easy. And it’s anything but quick or efficient.

And, there is another problem. Where are all of the “shovel ready jobs” that the stimulus was supposed to create? I have seen exactly none in my travels around the state of Alabama. Evidently I’m not alone:

It would appear that most of the stimulus money spent so far has gone to the states to retain existing government jobs — teachers, police, firefighters — thereby moving state payrolls onto the national debt and allowing them to defer the hard decisions they will have to make eventually. My own observation of the narrowly limited landscape between the Sandhills and Kansas City did not reveal much in the way of highly touted “shovel-ready” construction projects, or even routine maintenance.

–Fred Wolferman, The Pilot

So, that’s where the money is going. It was a way for the states (i.e. public employees unions) to fund themselves using federal debt. Basically, the stimulus is a huge ATM card for the public sectors of each state. That makes perfect sense when you think about it. After all, that’s why money flows from Washington down through the states anyway. Money trickles down from D.C. to the states. And then from the states to local programs. Then, influence and vote buying flow back up to D.C. via organizations and individuals that benefited from the influx of money. It’s not just the stimulus bill that works this way. It’s the entire political machine that is structured like this. Just take this story as an example:

Moore’s farm — her husband died in 1999 — was among the last eight farms in Alabama to grow tobacco, mainly due to the end of a government quota-and-price-support system nearly five years ago. The eight farms shut down between 2002 and 2007, according to the latest U.S. Farm Census released earlier this year.

The biggest reason for tobacco farms’ final demise in Alabama was a decision by Congress five years ago to end a quota and price support system.

That system had been around since 1938 to help Depression-era tobacco farmers. Tobacco farmers signed up for government quotas — allotments that limited the number of acres they could grow. That helped keep tobacco prices high for farmers.

But with lessening demand for tobacco in the 1980s and 1990s, combined with a price support and quota system that kept prices high, the amount of imported tobacco grew.

As a result, Congress voted in the fall of 2004 to do away with quotas and price supports and offer a buyout to farmers who had a quota. Congress set aside $10.1 billion to pay out to farmers with quotas through 2014. The buyouts are based on a formula involving pounds of production in previous years. Farmers who had leased quotas get a portion of the buyout.

Many farmers took the buyout and decided not to try growing tobacco without the quota system, Sanford said. Nationwide, the number of farms growing tobacco fell from 56,977 in 2002 to 16,234 by the 2007 farm census. That’s a nearly 72 percent drop. But production fell only about 11 percent as some growers expanded their farms.

Besides the few Alabama farms that were growing tobacco after the 2002 census, many other Alabamians are getting annual buyout payments because they owned or leased quotas for growing in other states.

Jo Moore’s husband, Lila, died in 1999. By that time the couple had been leasing their land, barn and quota to another farmer.

Moore said she decided to take the buyout because the farmer leasing from them wasn’t making much off the tobacco. Her share of the buyout amounts to about $3,500 a year, she said.

Moore still leases her 400 tillable acres to a cotton farmer.

–John A. MacDonald, B’ham News

Here you have an entire system set up to artificially inflate the price of a product for 60 years by paying farmers not to grow more than a certain number of acres. And when it finally became untenable, instead of just ending the payments, Congress started giving those farmers cash payments in the form of a buyout. So, now they are being paid not to grow anything at all. The lady in the story, Jo Moore, now leases her land to another farmer, and in the mean time collects a check from the government for not doing anything at all. It’s farm welfare, and it’s a way to ensure that Mrs. Moore keeps on voting for the guy that promises to extend her buyout check for a few more years.

It will take a few years, but eventually all of that stimulus money will flow into these types of long-term projects to prop up the rent-seeking and vote-buying. Politics is about producing long-term stability to the super rich elites. It has very little to do with the “next election.”

Let’s go through his main points:

1. State power is drawn from social power.

It is unfortunately none too well understood that, just as the State has no money of its own, so it
has no power of its own. All the power it has is what society gives it, plus what it confiscates from
time to time on one pretext or another; there is no other source from which State power can be
drawn. Therefore every assumption of State power, whether by gift or seizure, leaves society with
so much less power; there is never, nor can there be, any strengthening of State power without a
corresponding and roughly equivalent depletion of social power.

–Nock, Our Enemy, The State

This is an interesting comment. We all know that all state money comes from only two sources: confiscation(taxes) and inflation(printing money). But, he is saying that state power is derived the same way, through a sort of confiscation of societal power. And, just as taxes result in it’s victim being financially poorer, so does the confiscation of a citizen’s “power.” And, by power he means the citizens ability to exercise his/her efforts toward solving a personal or societal ill. Take, for instance, the beauracracy involved in starting a business. There are all sorts of papers to fill out, licenses to apply for and fees/taxes to pay. In the carrying out of these exigencies, the state has placed barriers in front of you in regards to exercising your power(in this instance, your labour) to provide for your own welfare. He expounds on that next.

2. This consumption of social power by the state robs society of the will to exercise that power.

It is largely in this way that the progressive conversion of social power into State power becomes
acceptable and gets itself accepted. When the Johnstown flood occurred, social power was
immediately mobilized and applied with intelligence and vigour. Its abundance, measured by
money alone, was so great that when everything was finally put in order, something like a million
dollars remained. If such a catastrophe happened now, not only is social power perhaps too
depleted for the like exercise, but the general instinct would be to let the State see to it. Not only
has social power atrophied to that extent, but the disposition to exercise it in that particular
direction has atrophied with it. If the State has made such matters its business, and has
confiscated the social power necessary to deal with them, why, let it deal with them. We can get
some kind of rough measure of this general atrophy by our own disposition when approached by a
beggar. Two years ago we might have been moved to give him something; today we are moved to
refer him to the State’s relief-agency. The State has said to society, You are either not exercising
enough power to meet the emergency, or are exercising it in what I think is an incompetent way,
so I shall confiscate your power, and exercise it to suit myself. Hence when a beggar asks us for a
quarter, our instinct is to say that the State has already confiscated our quarter for his benefit, and
he should go to the State about it.

–Nock, Our Enemy, The State

Here, he is fleshing out his previous idea about the depletion of social power by the state as it takes on more and more activities that are considered social issues. He gives an example that is contemporary to his own time, so I’ll do the same. This phenomenon is perhaps no more clearly illustrated than what happened in Kauai, Hawaii last year. After waiting on the Department of Land and Natural Resources to fix a park road for months, the residents of the area repaired the road themselves. The DOLNR had estimated that it would cost $4 million dollars and take two years to repair the road. Instead, the area business owners and residents did it in 8 days and with only donations.

What should have never been the business of the state to begin with had paralyzed this community for months. But, why? Why would they wait for someone else to do something for them. Because of the atrophy of will that occurs when the state absconds with power that it never should have had. The more power that is accumulates to itself, the less society desires to exercise that particular power on it’s own. Even if it legally can.