Thursday, July 16, 2009

Pension Envy.

Pension Envy: Bashing Public Employees
Envy is a celebrity deadly sin, many philosophers think it’s the worst. Joseph Epstein writes in Envy, “Envy clouds thought, clobbers generosity, precludes any hope of serenity, and ends in shriveling the heart.”

Jealous is intensely felt, you are jealous of what someone has. Envy is cold and sneaky, you are envious for who someone is, not just for what they have. Jealousy about the pensions of government workers spurs you to fight for your own pensions. Envy would spur you to spitefully lobby to cut their pensions. A dose of jealousy helps you; envy hurts all.

The envy machine is cranked up.

Illinois State Senator Chris Lauzen says government benefits are unsustainable and unfair to taxpayers who earn less than civil servants. “People will become angrier and angrier when they learn the difference between their pay and benefits and what we give to public employees.”

Historian Kevin Phillips’ argues in The Arrogant Capitol that the path of a great civilization’s downfall is paved with a growing gap between citizens and the public employees. And, it is true, the raw data show that civil servants have better pensions and health care than the private sector workers: total compensation for state and local workers was $39.25 an hour — $11.90 more than in private business.

The comparisons are confusing because government workers have more education than the average private-sector worker and public workers have better benefits and lower salaries — not better in both.

The salaries of state-employed professionals lag behind private sector peers when comparisons are made correctly.

According to a study by the teacher’s union: Private-sector salaries exceed state employee salaries in 20 of the 24 job classifications in which comparisons were made. Geologists — they work for oil companies in the private sector — are paid almost twice what government geologists are paid (they challenge oil companies) and chemists who work for the private sector earn 52 percent more. Across all 24 classifications, private-sector salaries are, on average, 26 percent higher than those of state employees.

But the perception is out there, public employees are better off than the taxpayers.

Public employees have a couple of choices: Accept pressures for cutbacks in their medical and pensions or help taxpayers get better pensions and medical beenfits. So now is the time for a little jealousy, a lot of solidarity, but no envy.
(T. Ghilarducci)


  1. In the original movie of “The Manchurian Candidate,” the character played by Frank Sinatra starts to come out of his brainwashing by the Chinese who captured his unit in the Korean War, when he realizes his “memories” of the combat in which his unit won all their medals aren’t quite right. And what’s not quite right about them is that they contain no visceral memories of actual, bloody combat, but instead only Xs and Os and arrows on a chart. The bloodless abstractions are what the brainwashers have implanted as a description of how the “battle” unfolded. Similarly, D. Lawerence’s and James’s bloodless abstractions of the labor market bear the same relation to real, human workers “negotiating” their wages and pensions as do the brainwashers’ abstractions bear to real combat.

    Half a century ago, it was the communists who attempted brainwashing. Nowadays, it’s the capitalists.

  2. D Lawrence said: Prices in a free market — and that includes wages — are set by supply and demand. Employers try to hire workers at the lowest cost, and workers seek out jobs with the highest pay. If everyone is free to maximize his own interest, the system moves toward an optimal equilibrium.

    Strong believers in the power of unions seem to believe that wages can magically be elevated above their natural equilibrium if workers will simply organize themselves and demand higher pay. But in fact, the only things that unions accomplish is to price themselves out of the market. Chrysler and GM are only the latest examples.

    Now we see that government has also priced itself out of the market. Simply put, the economy cannot support all the demands placed upon it by government, and the high cost of government employees is only the tip of the iceberg. Ergo, the size of government will shrink, and government employees will find their remuneration reduced.

    This process can take place through negotiations between the various parties, or it can take place through bankruptcies and financial failures. But the process will take place, and there is nothing unions can do to stop it.

  3. Humane said: “If everyone is free to maximize his own interest, the system moves toward an optimal equilibrium.”

    This is the kind of freemarket Pollyannaism about the price of labor that should be confined to the conservative think tanks where fellows who’ve usually done nothing but study and write such claptrap sit in isolated little offices and make chessboard generalities about human beings trying to feed their families.

    The equilibrium D Lawrence describes is only “optimal” for management. Exhibit A: Working conditions and wages in the age of the Robber Barons, when the government stayed out of workplace rules and unions were either nonexistent or virtually powerless, i.e., when everyone was “free to maximize his own interest.” Exhibit B: The difference between a human laborer and a company’s product for sale: the human being can’t sit on the shelf until the price for his* labor can be negotiated high enough; he and his family will starve or freeze in short order.

    When an individual laborer sits down across a table from a company rep, all the advantages at the table are held by the company rep, who can usually find somebody else to do the work cheaper. (Please don’t try to invoke in rebuttal sports figures individually negotiating lucrative contracts; those contracts are on top of CBAs negotiated by powerful players’ unions. And please don’t try to invoke in rebuttal individual “supply and demand” contracts negotiated by CEOs, law school faculty, endowed professorships, etc. These are a tiny and anomalous fraction of the totality of labor. Most people hold jobs that could be done equally well by other similarly qualified people who would work for less rather than have no job at all.) And even if everyone were “free to maximize his own interest” that freedom—in the real, wider world—involves the freedom to leverage through unions, strikes, closed shops, boycotts, etc.

    “If Illinois state workers have such bad pensions why don’t they just move to the private sector and get better benefits. “

    Because they can’t “just move to the private sector” en masse, just as workers in the private sector couldn’t “just move” to the public sector if private-sector pensions weren’t adequate. Why this is the case should be obvious.