John Edwards was right
Posted by aogFriday, 11 December 2009 at 10:18 TrackBack Ping URL

The creation of Two Americas — public vs. private.

Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months — and that’s before overtime pay and bonuses are counted. […]

The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.

This while the federal government is on a hiring spree

In the first six months of the year, the federal government was adding 10,000 jobs per month, and over the recession had grown the ranks of bureaucrats by 9.8%. The private sector, during that same period, shed 7.3 million jobs to contract 6.3%.

But our Dear Leader is going to get on that deficit, Real Soon Now.

Comments — Formatting by Textile
Harry Eagar Friday, 11 December 2009 at 20:24

Reminds me of the dear old days of Reagan, when federal contractors got progress bonus payments on contracts for which no work had yet been done.

Annoying Old Guy Saturday, 12 December 2009 at 09:27

It’s fascinating that even you don’t see any difference between corruption and the normal workings of government. If only you used that knowledge for good, not evil.

Harry Eagar Saturday, 12 December 2009 at 12:30

I couldn’t make out the purpose of the post. $170K wouldn’t keep a banker in Bijan ties, and although I don’t recall you’ve said anything about banker bonuses, my guess is that you would deplore such interference.

What was your point?

Annoying Old Guy Saturday, 12 December 2009 at 13:11

That during tough economic times, the response of our government has been to hire a lot more people and pay them a lot more money. Not only is this immoral for a government of the people, but creates strong incentives in the government to prolong economic turmoil and enervates the private sector by making government work more attractive (better pay, better pensions, more job security).

That leads to the creation of two classes, the “landed class” who have government jobs, and the serfs, those who work in the private sector for the benefit of the public sector. That’s the kind of thing that grinds down a civilization.

I find it interesting that despite your professed concern for “the little guy” you are blithely indifferent to his fate when it’s the government that’s crushing the middle class. Massively overpaid bankers don’t prevent the poor from rising to middle class, but this kind of government expansion does.

Harry Eagar Sunday, 13 December 2009 at 12:26

I am not following you at all.

For one thing, for vast sections of the citizenry, government work has been almost the only entry to the middle class, because private business discriminated against them.

Second, it seems to me that work should be compensated for appropriately. It is unclear to me a) why bankers should be paid so much; or b) why public sector workers with similar responsibilities should be compensated badly.

Perhaps you don’t think there should be a Transportation Department. However, there is one, and it has vast responsibilities. $170K is moderate pay indeed for managers of big private businesses.

You appear to be making a ‘crowding out’ argument similar to the one I brought up earlier about public demand for capital crowding out private seekers. That didn’t happen, either.

Many years ago, when I was president of a union trapped in a labor dispute, I called in the NLRB for an arbitrator. He did a terrific job, solved an impasse tnat had gone on for a year in less than 2 hours. I asked him why he worked for the government when with his ability he could have made a lot more in the private sector.

Turned out, he had been the chief labor manager for a Fortune 100 company. He preferred to work for the government. I cannot quote him word for word after 40 years, but he said something like, “I make a lot less money but I sleep at night.”

Annoying Old Guy Sunday, 13 December 2009 at 13:08

for vast sections of the citizenry, government work has been almost the only entry to the middle class, because private business discriminated against them

I find that highly implausible at best. I think “small, limited sections” would be much more accurate. Private sector employment, even today, still dwarfs public employment. That alone demonstrates how unrealistic your claim is.

For bankers vs. bureaucrats, I don’t see why bankers are paid so much either but I find the cure for that much worse than the disease. For bureaucrats, it is a good thing to restrict their pay because they are given privileges against private citizens that are vastly greater than any banker, because those privileges are backed with force.

Besides, you think that sort of greed is bad. Why would you want more of it among bureaucrats?

You appear to be making a ‘crowding out’ argument similar to the one I brought up earlier about public demand for capital crowding out private seekers. That didn’t happen, either.

I think it did. You think it didn’t because you consistently rewrite the argument to be “government debt would soak up all the world’s capital [emphasis added]”.

But my crowding out argument is about the costs of all those employees. That largest financial burden on middle class families today is taxes. As that burden increases, it becomes harder to be middle class. Once you break through to “rich” then it’s painful but debilitating. It does create a bottle neck through which few pass leading to a real bifurcation.

Annoying Old Guy Sunday, 13 December 2009 at 14:37

It also occurs to me that we have here yet another example of Mr. Eagar forgiving government anything, and forgiving private actors nothing. The idea that it was private interests who engaged in discrimination and not the government is so contrary to the facts on the ground that I am tempted to ask “does no one remember history anymore?”. We could consider the career of that noted Progressive President, Woodrow Wilson, clearly a private actor. Or those Jim Crow laws, clearly created by the private sector. Or how then President Eisenhower sent in the troops to Little Rock to break the discrimination by private schools.

I will attempt to save some time and state, “no, I am not claiming there was no discrimination by private actors”.

Harry Eagar Monday, 14 December 2009 at 12:55

Why does the fact that private sector employment dominates matter? Remember, I grew up in the South.

For a black person there, the chance of private middle class employment was nil. The military, once it started dropping its color bar, was and still is an opening to middle class work for black Americans,

In Hawaii, to take an example that still burns in some hearts, no Japanese was permitted to hold a supervisor’s (luna, in pidgen) job.

I never said government did not discriminate. I like to think I am hard to shock, but I was shocked just a couple days ago to learn (in a book called ‘Americans in Paris’) that the US government did not offer consular protection to black American citizens in France in 1940, although it did to whites.

I would argue that Jim Crow laws were purely a creation of the private sector. State governments pretty much did what business interests told them in those days, including shooting workers.

erp Monday, 14 December 2009 at 13:48


- You mean union workers were shot at the behest of business men? There are two sides to that story.

- You put too much trust in things you read in books. I’d need a lot more convincing to believe that Americans in France or anyplace else didn’t have consular protection unless they were white. If I wasn’t so lazy, I’d write a book making all kinds of wild statements, so I could use it to corroborate my own long held wild opinions.

- I think the Japanese living in Hawaii after Pearl Harbor were darn lucky they weren’t put into detention camps nevermind complaining about unfair labor practices. We Yanks are actually a pretty decent kind of people. Wonder how Americans living in Japan at the time of a sneak attack by the U.S. would have fared??? Hmmmmmmm?

Bret Monday, 14 December 2009 at 15:45

Harry Eagar wrote: “$170K is moderate pay indeed for managers of big private businesses.

I don’t think so. For example, I went to entered manager->accounting->Master’s degree->15,000+ employees, the median salary is around $90K. Similar results follow for most versions of “manager”.

There’s not a single person in my company (granted, it’s less than 20 people) who makes anywhere near $170K, even though they have degrees, including Ph.D.’s, from top universities and years or even decades of experience.

My wife is COO of a $100M company with nearly 1,000 employees and she doesn’t make anywhere near $170K.

I guess managers of newspapers must get paid exceedingly well, skewing Harry’s perspective about what people in the rest of the private sector make.

At this point, working for the government is the sweet job, especially since you don’t actually have to do anything other than show up occasionally, so I’m trying to figure out how to get rid of my company without hosing the investors so I can live the good life by working for the government.

Bret Monday, 14 December 2009 at 15:50

I think Jim Crow laws were a partnership of the public sector, public opinion, and probably business interests.

But the comment by Harry that “state governments pretty much did what business interests told them” exactly illustrates the difference between free market and corporatism. Corporatism involves business and the government teaming up to extract rents from everybody else. Free markets, by definition, exclude such collusion.

Annoying Old Guy Monday, 14 December 2009 at 16:09

Why does the fact that private sector employment dominates matter?

Because if public employment is, say, 1% of employment then it only helps roughly 1% of the working age populace, as opposed to “vast sections”. I also exclude the military by using the term “bureaucrats” (although frankly “appartchik” might be better). One notes that none of this new flood of money is going to military personnel making the point moot.

This is an excellent combination of straw men and moving the goal posts on your part though. I think it may be a culture clash — with us engineering types, words have meanings and one is expected to use them with precision and accuracy. A specific claim should be either supported or retracted, not redefined or memholed.

I never said government did not discriminate.

You didn’t literally write that. However it is a precondition of what you did write, in that you can’t escape discrimination on the part of A by going to B who also discriminates. It only makes sense if B does not. So the concept that blacks escaped private discrimination by getting public sector jobs is either nonsense or implies lack of discrimination against blacks in the public sector. I am willing to switch to the former interpretation if you wish.

I would argue that Jim Crow laws were purely a creation of the private sector.

I am sure you would. I, on the other hand, would not believe that for a moment.

Harry Eagar Tuesday, 15 December 2009 at 12:54

Everybody discriminated against blacks in the South up till the ‘60s, then those darn outside agitators started making trouble. Next thing you knew, the black high school in Norfolk, Virginia, had to have indoor plumbing, just like the white high schools.

Terrible times, terrible times.

erp, I will be reviewing the book shortly at RtO. It contains personal statements by the black citizens involved. If you knew anything about the racism in the State Department in those days, you wouldn’t be so skeptical.

‘I guess managers of newspapers must get paid exceedingly well.’ The worse they do, the better they get paid. It’s a common sport among reporters at big-city papers to take pictures of the Maseratis and Lamborghinis that the circulation department managers drive to work and publish them on the Intertubes.

erp Tuesday, 15 December 2009 at 14:06

Harry, I’ll look the review.

Annoying Old Guy Tuesday, 15 December 2009 at 14:18

Mr. Eagar;

So the claim about government employment being a way around discrimination was just made up. Thanks for clearing that up.

Harry Eagar Wednesday, 16 December 2009 at 12:41

Times change, Guy. It was a big deal when Truman told the military to stop discriminating on the basis of skin.

The South, by the way, presents a difficult problem to your view of the world: low taxes, no unions and a large part of the public school system replaced by private schools accountable to parents. Yet it did and still does lag the rest of the country in wealth.

Annoying Old Guy Wednesday, 16 December 2009 at 13:10

Ah a HENSROTO. I agree.

Yes, the South is a bit of a sticky wicket but it may just be a time scale issue. In terms of growth over the last couple of decades it is much less of a problem.

erp Wednesday, 16 December 2009 at 13:57

HENSROTO? Stumped Google, Bing and me.

Harry, do you think the oppressive hot sticky weather in the deep south had something to do with it lagging behind the rest of the country in the days before A/C?

Try hovering your mouse cursor over the acronym — that should make it confess.

erp Wednesday, 16 December 2009 at 15:17

You did tell me about that, but I forgot (something I do a lot).

Harry Eagar Wednesday, 16 December 2009 at 22:29

The hot, sticky weather didn’t have anything to do with it. But pellagra and hookworm and malaria did. And, in the coastal south, yellow fever.

The Rockefeller Foundation made the South a place humans could thrive in, although that was merely a necessary, not a sufficient condition.

I doubt very much that tech firms will be hiring graduates of the South’s private academies.

erp Thursday, 17 December 2009 at 07:36

Semantics again Harry. Hot sticky weather encompasses the conditions you describe and if tech firms, mostly orbiting universities in the bosom of Kool-Aid country, don’t hire graduates of southern “academies,” that’s discrimination. Don’t these folks need some affirmative action?

Harry Eagar Friday, 18 December 2009 at 12:56

No it doesn’t. I repeat myself, so you may have heard this one before, but the leading cause of death in Illinois during the time Lincoln was building up his corporate law practice was malaria.

The notion that the South is too hot for productive work is a myth. I grew up in the South without air conditioning. We worked.

I am not aware that tech firms are mostly in Kool-Aid country. RTP, by the way, was the conception of Kennedy’s Secretary of Commerce, the dirty liberal. They won’t be hiring the graduates of seg academies because those kids won’t hack it. Some of them will qualify as rote technicians. If an employer wants thinkers (I know, not all do), it’s hard to think of a more stultifying environment than a Southern private school.

erp Friday, 18 December 2009 at 14:14

Sorry Harry,

I naturally thought by academies you meant colleges and universities. I have no knowledge of southern private elementary and high schools which I presume are mostly religious.

RTP most certainly is Kool-Aid country as is Silicon Valley and other similar areas.

Things probably have changed a bit since computers and the internet are so widespread, but the basic reason for locating high tech firms near colleges and universities remains. That’s where highly skilled employees can be found.

Of course people worked in the heat and humidity of the south, it’s just that they weren’t as productive as those who worked in a more forgiving climate.

cjm Saturday, 19 December 2009 at 00:52

there should be a bounty paid for shooting union scum. they are to a company what fleas are to a dog. disgusting troglodytes to a man; flip side of organized crime.

Harry Eagar Saturday, 19 December 2009 at 12:08

I meant the seg academies, erp. These are nominally secular, actually holy roller. With their medievalist approach, they are not likely to produce workers desirable in a tech society.

Also, they are not going to produce workers who fit in well in ethnically diverse tech firms.

Annoying Old Guy Monday, 28 December 2009 at 12:48

Cite: Public sector sees recovery, private sector not so much — check out the graphs for how that works.

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