Tuesday, November 13, 2007

The naked boom

Growth of Paid Employment, August 2006 to August 2007

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.

3 comments:

Elaine said...

You know what I would like to see is an audit of city hall. I just know there is a whack of people working down there that are not working. Pretend jobs, made up for people who do diddly.

Be nice to have someone like Shelia Frasier go in there and point out the waste.

How do you get average Joe citizen to stop bending over to be reamed by city hall?

Geoff said...

Q: How many people work at city hall?

A: About half.

Elaine said...

Thank you geoff, and how much do we owe you for that insightful feasibility report?