As William Robson notes in the Financial Post, "productivity in the public sector tends to be lower than in business." This may seem self-evident to anyone who's watched a government employee on the job but, notwithstanding the welcome and vital work performed in some areas of the economy — like health care — in which the government has effectively legislated private competition out of existence, the most significant cost to productivity from the public sector lies in the fact that most government business is contracted by political demand instead of real demand. Services for which either a large enough politically-significant constituency desires but is unwilling to pay for out-of-pocket in purposeful transactions or, worse yet, that politicians and top bureaucrats commission solely to placate their public sector clients are intrinsically unproductive to some degree or greater. More so, they are economically counter-productive because they squeeze out the private sector's ability to supply real demand, raising compensation pressures on businesses that exceed labour productivity as well as artificial inflationary pressures on interest rates. As always, there's no free ride… unless of course you're a government employee.
And of interest to observers of municipal politics is this little gem: local government payrolls jumped 11% year-over-year to August 2007.
Tuesday, November 13, 2007
Posted by MapMaster on Tuesday, November 13, 2007