Public Sector vs. Private Sector

I would like to take a couple of posts and explain further the purpose and implication behind one of the main tenants of conservatism, limited government. President Reagan once said it best, “in this present crisis, government is not the solution to our problem; government IS the problem.” An unspoken message from President Obama is, government is the solution to this problem, and every problem.

The government is the solution mantra has led to an explosion in the scope and size of government. We’ve created whole new government positions for advisors, regulators, and administrators that haven’t been needed for the last 233 years, but now are crucial to the survival of our system and our country.

The jump start to the government solution was the $787 BILLION stimulus package which dumped huge amounts of resources into areas that didn’t have the personnel and infrastructure to handle this influx. The choice then becomes to deny the funds, which thankfully some have done, or expand and create an organization that can handle this waterfall of funding.

The theory behind this is that any spending is stimulus and any job created is beneficial to the system. This is true to a very small degree and for a very limited time. The problem with public sector, or government jobs, is that they don’t make money. Think about it. What are public sector jobs? Teachers, fire fighters, police officers, the Motor Vehicle Division, social workers, politicians and their expanding staffs, and the increasingly popular regulators of everything from environmental conditions to bank health and welfare. These of course are just the tip of the iceberg; quite frankly the list is growing every day. All of these are fine and good and yes we need and are thankful for all, well okay, most of these positions, when they are in the correct proportions. But take a look at the list for a minute. Do any of these positions generate money? I don’t mean, do they bring home a paycheck; of course these positions are paid, but do they generate money?

The answer of course is no. These are not profit generating positions. I know that seems to be a bad word these days, “profit”, but it is not a bad thing. Profit is a good thing; a necessary thing.

While none of these positions actually generates a profit, they all COST money and to have them we have to get the money from somewhere. Money doesn’t just fall from the sky and the government just can’t print all of the money that it needs. I have been shocked at the people that I have talked to that seem to think that this is exactly what happens. That’s not the case. The government brings in money in the way of taxes and then spends that money on the critical things including all of the necessary public sector jobs. The problem is that money has to first come out of the private sector. This means that people have to hold private, profit generating positions in order to fund the public sector positions.

Now do you understand my concern, and the concern of many others, when we see the size of the private sector shrinking and the public sector growing? Where does the money come from when you are pulling more and more money from an ever shrinking pool?

You are seeing the answer to that question as well in the form of deficits and debt, which carries its own implications and burdens that I won’t discuss right now.

The problem is magnified when hard times hit and suddenly the private sector is not producing the profits that it use to. A recession in the private sector means layoffs, cutbacks, even companies folding and going out of business. The public sector doesn’t quite work like that because they don’t get funding based on their output, sales, or profit. Their funding is provided through taxes and administered by politicians and other public sector workers or appointees. Instead of decisions made on economic realities, they become leverage for political campaigns.

Ever hear slogans like this:

“We need to fund education!”
“My opponent voted to slash welfare benefits”
“I care about the children, so I will push for increased after school programs.”
“My opponent will slash you Medicare benefits!”
“My opponent wants to get rid of your Social Security!”
“I will push for a universal healthcare”

Understand now? Instead of finding a way to fund a new program but cutting an old one, they just get stacked on top of each other until it becomes a burden that the private sector can’t support.

That is why is hard to cut funding in these areas. That is why public sector jobs are harder to reduce than private sector positions. That is why they need to be created slowly, with great thought and long term consideration, not under the guise of stimulus and unsustainable budgets.

The fact is that we need to reduce the number of public positions to the point where they are sustainable under the worst economic conditions and funding should come, as much as possible, from local and state sources.

This public sector explosion can’t last and more importantly it shouldn’t have started.

Just one reason and one example of why conservatives believe in limited government.