Monday, August 9, 2010

The Unpaving of America

Paul Krugman writes:

"The lights are going out all over America — literally. Colorado Springs has made headlines with its desperate attempt to save money by turning off a third of its streetlights, but similar things are either happening or being contemplated across the nation, from Philadelphia to Fresno.

Meanwhile, a country that once amazed the world with its visionary investments in transportation, from the Erie Canal to the Interstate Highway System, is now in the process of unpaving itself: in a number of states, local governments are breaking up roads they can no longer afford to maintain, and returning them to gravel.

And a nation that once prized education — that was among the first to provide basic schooling to all its children — is now cutting back. Teachers are being laid off; programs are being canceled; in Hawaii, the school year itself is being drastically shortened. And all signs point to even more cuts ahead."


I have a question to my right and to my left.

To the right: how can "crowding out" even come into your lexicon at a time like this? You clearly understand the concept of simultaneously determined investment decisions. Have you even given a thought to the prospect of "crowding in"?

To the left: why are you always so quick (as Krugman does further down in the column) to suggest that the federal government oughta fund these state level decisions? Why is local, decentralized governance not even in your toolbox? Is it a practical issue for you? I suppose that might make some sense. But why is federal provision always the option you jump on?


*****

"The most immediate threat to the welfare of the citizens of Maryland in the present age arises not from excessive power in their state government, but from a lack of power which prevents their state government from acting effectively... it must be recognized that... oppression can result as much from governmental inaction, as it can from governmental action."

- H. Vernon Eney, 1967

32 comments:

  1. Maybe they need to be returned to gravel. I grew up driving on gravel roads - they have their benefits in rural areas. Oh, and gravel roads also need to be maintained.

    Anyway, I suspect that Krugman does not mention what is never or rarely mentioned by the left (I'll never read another one of his posts after the whole "traitor to the Earth" column) - the public pension system.

    More here: http://reason.com/blog/2010/08/08/can-we-at-least-have-some-elem

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  2. The problem with local governments is that local people have too much input. We really need elitist technocrats in Washington running the show, because only they, free of such influences, can do any real good. Moreover, decentralising such decision-making may lead to competition between political jursidictions. How will people be forced to do what's good for them if they can just up and leave? We need the Feds to make sure the same rules are applicable to everyone.

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  3. All of these comments concern the financing problems that the states have gotten themselves into by their overgenerous compensation plans for state employees. That's the 800 lbs. gorilla that liberals do not want to address.

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  4. Xenophon -

    First, that's a uselessly broad sentiment. It burdens some states more than others. Citing NYC is especially useless. Everyone knows public employment in NYC is problematic in this way. That's something New Yorkers have to take seriously, but you have to be careful generalizing it.

    Second, I've heard mixed reviews of this. I've heard suggestions that the discrepancy is only in the raw data. When you adjust for job type and education of the worker, public employees are at a slight disadvantage. I honestly don't know what's right - I don't know the literature - but most of the evidence you see in the popular press making the case you do (it's hardly an 800 lb. gorilla in the room - this gets talked about all the time) uses those raw figures.

    The fire-fighter/police/soldier comparison is always tough too when people talk about public employees. There's not a great comparison in the private sector, except perhaps for mercenaries, and they seem to take more of their compensation in salary than in pension and benefits (relative to soldiers at least).

    Again, we're also talking about labor that the private sector has a real tough time putting an efficient price on because we're talking about externalities. As I said before, I simply don't know the literature on how the compensation compares but I understand that there is some difference of opinion. But regardless of what the literature finds, it's not clear to me at all that there should be parity with what the job could get in the private sector. If we're talking about important externalities there's no reason to believe parity necessarily makes sense.

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  5. dkuehn,

    I did cite NYC ... then you deleted it. Go figure.

    "When you adjust for job type and education of the worker, public employees are at a slight disadvantage."

    The figures on this clear - public employees receive more in compensation for both their wages and their retirement benefits than do private sector employees. That can only go on so for long before the former becomes an object of resentment for the latter.

    "The fire-fighter/police/soldier comparison is always tough too when people talk about public employees. "

    No it isn't actually. There are plenty of private cops and private firefighters in the U.S. after all (indeed, as city services have started to collapse over the past two decades their use has increased dramatically). Indeed, I dare say there are more private security personnel in the U.S. than there are public security personnel - and what they do is very complimentary.

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  6. But let's get back to the second point above ... liberals are unwilling to talk about this issue for the simple fact that public sector unions have so much political power or because of their ideological blinders. You cannot talk about this issue without talking about pension reform. It is a bit like talking about HCR without talking about Medicare.

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  7. Paranoid much?

    We didn't delete anything, Xenophon. At least I didn't and Evan hasn't been online today. You probably posted wrong or perhaps (actually probably more likely) blospot.com is being quirky.

    "The figures on this clear - public employees receive more in compensation for both their wages and their retirement benefits than do private sector employees. That can only go on so for long before the former becomes an object of resentment for the latter."

    And actors get paid more than lawnmowers. So? There's only so much the comparison of the raw data can tell us. This is the argument that crude Marxists (is that redundant?) make against income inequality in general. You can't seriously tell me you find that convicing in this case.

    "Indeed, I dare say there are more private security personnel in the U.S. than there are public security personnel."

    The vast majority of these private security personnel do nothing like what cops do - certainly in major cities where police work is more substantial and dangerous. The best comparison you've got on the security front is the comparison of mercenaries to soldiers. Unless of course you have a very specialized kind of private security firm - but those sorts of firms get drowned out by the mall cops when you look at the data.

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  8. "It is a bit like talking about HCR without talking about Medicare."

    It is like that! And everybody in this town talks about and worries about Medicare.

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  9. They were there ... then they were gone. Two articles. The first I added twice. So no, I'm not paranoid. They were there, then they were gone. Since it is no longer up, how did you know one of the articles described the situation in NYC?

    "The vast majority of these private security personnel do nothing like what cops do - certainly in major cities where police work is more substantial and dangerous."

    The vast majority of police work even in large cities is not dangerous at all - and almost everything they do could be done by private security pesonnel. Let's not valorize cops please.

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  10. Xenophon if you have a meta-analysis or survey of the literature I can look at that would be great, but you can't just compare raw data, cite newspaper articles, or talk anecdotally about this stuff. I honestly think either outcome is plausible (that they're overpaid or underpaid), and I'm sure some specific groups of public employees are blatantly underpaid and some specific groups are blatantly overpaid. But you simply can't approach this discussion the way you're approaching it.

    Think of it this way - if I pointed out that people in New York City are paid more than people in Newport News, Virginia would that mean anything to you? Or what if I told you that nuclear technicians get paid more than maids. Would that mean anything? Of course not. These raw data comparisons don't amount to much.

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  11. dkuehn,

    You can't tell that from ObamaCare (which dumps most of the added insured population into MediCare, robs Medicare of a bunch of its money, and then spends that money elsewhere).

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  12. "They were there ... then they were gone. Two articles. The first I added twice. So no, I'm not paranoid."

    I got the email notification that you had posted both - I'm not saying you made it up. I'm saying you're paranoid if you think we're deleting it. Something must be up with the website.

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  13. Not paranoid. A very reasonable conclusion. The deleting of comments is common on the internets after all.

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  14. Seriously, though... here? I'm disappointed. We let all kinds of crazy crap stay up here. I think we're about the lightest of editors on blogspot. I've even conversed with spammers writing in (what I assume is) Mandarin!

    I got the email notification too. About to go get it and paste it up.

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  15. Apparently your blog is eating hyperlinks ... so I can't provide you with a metanalysis.

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  16. Don't worry about it Evan - we've got it up.

    Ya - I've only ever deleted comments from that one post where I was looking for some actually feedback and it got off on a real acrimonious tangent.

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  17. Actually... yours is down again. We'll see how long my re-post lasts. Maybe there is a serious hyperlink problem.

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  18. Yeah, it ate it.

    "Seriously, though... here? I'm disappointed."

    Sorry, but that is a decent assumption. Which your perfectly free to do of course.

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  19. How odd. I think I better stop posting here before whatever plague this is affects my other blog! :)

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  20. "Sorry, but that is a decent assumption. Which your perfectly free to do of course."

    And we're also perfectly free to consider you paranoid for expecting that sort of thing.

    If your critiques were harder to shoot down we might resort to deleting comments and blaming the website...

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  21. I checked some other posts - not a problem on anything else that I saw. We still have comments with hyperlinks.

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  22. ...while we're on the topic of hyperlinks, I've never told you Xenophon, but you have the best link on your moniker.

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  23. Alright, it seems to delete anything with an http:// at the beginning, but not if you start with the www.

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  24. Anyway, most public employees are not cops or firefighters ... so even if I grant you that in other areas - clerical work, teachers, etc. - it is easy to compare.

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  25. www.cato-at-liberty.org/2009/08/24/federal-pay-continues-rapid-ascent/

    The author responds to your criticisms BTW.

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  26. More here:

    reason.org/news/show/public-sector-private-sector-salary

    Which sites some material friendly to your position.

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  27. "If your critiques were harder to shoot down we might resort to deleting comments and blaming the website..."

    That would hurt if it were actually true.

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  28. I don't think that Xenophon is being paranoid by suggesting that it's possible that you're deleting the comments--it happens in the blogosphere, as your recent discussion with Sandre about Brad DeLong attests. If he's being paranoid, then thou dost protest too much, methinks. That being said, I give you the benefit of the doubt that you're not deleting it, and you don't strike me as the type of person who would probably do that. However, repeatedly calling him paranoid, versus simply explaining that he is incorrect, strikes me as childish and mean-spirited.

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  29. I don't understand this whole "apples to apples" thing. I think it's kind of a red herring. What does the fact that an actor is paid more than a lawnmower have to do with the (possible) fact that government workers get paid more than private-sector equivalents? Absolutely nothing, unless you're trying to be misleading. The whole point is that we're comparing similar jobs in the private and public sectors, not DISSIMILAR jobs in the private sector as per your example. Yes, yes, government jobs MAY (big emphasis on MAY) to SOME DEGREE differ from their private-sector counterparts, but, then so do similar private-sector jobs differ from each other! The point is that no two jobs are exactly alike, but that doesn't prevent us from making general comparisons. And then, it's never demonstrated that government jobs ACTUALLY DO differ from private-sector ones; it's only ASSERTED that they MAY differ, so the burden of proof is on the people who make this claim. Even if we could demonstrate that government jobs do differ significantly, we would still have to prove the degree to which this affects the comparison. And though I don't know of any literature or statistics on this, I would highly doubt that most government jobs would be very much different from their private counterparts except that they are probably much more INEFFICIENT, which is something that should be considered in this comparison. If, say, a private and a public employee each receive the exact same wage for the exact same job, then really still the public employee's wage is higher in the sense that he is overpaid relative to his productivity and qualification. Not to mention that a lot of government jobs wouldn't exist in the private sector simply because they would be useless, unproductive, and resource-wasting, then I would argue that there's an even stronger case that government employees are overpaid. And I read the article that Xenophon posted that was friendly to your position. It claims that government employees on average have greater work experience and better education than in the private sector, and thus it follows that, of course, government employees will be better compensated. Taking for the sake of argument that this is true (and not, as I see it, somewhat suspect) and that their study was not methodologically flawed, the conclusion they draw is backwards. I would say that they reason government employees are better-qualified is BECAUSE the government offers better pay, and not the other way around, since it only makes sense that if you offer higher wages, you're going to attract the better-qualified. I would also wager that at least some of those in government with "better" education have largely worthless liberal arts degrees, and thus were not able to find good jobs in the private sector, whereas they were qualified for government jobs. It's kind of ironic really. They aren't qualified for private-sector jobs, but they can get government jobs that require less qualification, and then statist economists like the ones mentioned in the article can conveniently turn around and say that, viola, government employees are "better qualified" because they have a college education, one which didn't qualify them in the public sector! I have friends who are at least anecdotal evidence for this being true.

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  30. Something I'd like to add, that should be (in my opinion) considered as part of compensation, is the relative ease of the job compared to the private sector and the amount of "goofing off" downtime involved, since leisure and free time can be counted as compensation but probably aren't included in these statistics. For example, my mother works for the local city government, and I swear she can basically set her in- and out-times and seems to take two to three hour lunches. That must be nice.

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  31. 1. Xenophon and I have a special banter style here. I hope I wasn't mean-spirited to him. Anyway, he of all people should know that I was not deleting his comments.

    2. Actually, my whole point is that people usually compare public and private wages without comparing similar jobs and similar workers. That was the whole point of the apples to apples statement. And because of the nature of state intervention, which is often addressing something that the market does not do particularly well, it makes finding a comparison case that much harder.

    3. "so the burden of proof is on the people who make this claim"

    The burden of proof is on the people flinging the data around trying to make statements that the two are comparable. When you present an analysis you don't just say "I'm right if you thing I'm wrong you have to prove it". No. Besides, market failures in education, public goods like national security, etc. are all very well understood. It's not just an assertion on my part.

    4. As for your point about the direction of causality in pay and qualification... of course. That's how supply and demand works. Market equilibrium is simultaneously determined. So? Is this news?

    5. Why do you think the government is more likely to take a liberal arts degree than the private sector?

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