Friday, January 27, 2017

Such Dreamers

Some people "shoot high" when they plan or dream, and hope a miraculous intervention will occur to make it so.

Others don't like the disappointment that invariably follows.

One example in the first group is relatively surprising though; it's the Business Examiner.
Actually it was a story in the BE from The Fraser Institute by Charles Lammam, entitled "Debt-Laden Governments Need to Tackle Gilded Public Sector Wages".  (couldn't find it in the online version).

Come on, folks, this isn't new news!

So what is the Fraser Institute--and presumably BE because they published it--dreaming about when they know there's beggar all that any politician will do about it?
Or has done about it, as older studies have shown.

Well, their dreams are shooting high.

Some excerpts from the Lamman story:

"...governments in Canada are projecting
 they will rack up $43.8 billion in deficits
 this year alone."
C.Lamman, the Fraser Institute

"With the pay and benefits for government employees consuming a significant share of government spending -- often about half of a provincial budget -- controlling these costs is key to any government's effort to repair public finances."

The article does recognize what we taxpayers hear ad nauseam:  that "governments must provide competitive compensation to attract qualified employees."

Yeah, yeah.

But it goes on to say "Using StatsCan data from 2015, the study finds that government employees receive, on average, 10.6 per cent higher wages than comparable workers in the private sector.

The article provides more yabba yabba:  "(This wage premium accounts for differences between individual workers in the two sectors such as age, gender, education, tenure, experience and type of work)."

"But wages are just one component of total compensation, which includes pensions (blog note:  government employee pensions are unfunded in British Columbia!), early retirement and job's the total cost of compensation that matters rather than the individual components."

Rather than copying more of the article (because we all already know this stuff), we'll jump to the penultimate paragraph:

"Better information, available more regularly, will hold governments to account for managing compensation costs.  (blog note:  Really?  more data?)  The longer-term solution, however, is to enact measures that link the wages and benefits of government employees to similar positions in the private sector.  Doing so would allow governments to better control spending, rein in debt, and maintain fairness for taxpayers who ultimately foot the bill."

Better information?

Surveys are available, and various Fraser Institute and KPMG studies show the disparity isn't waning.

This 1998 KPMG study uses words that private sector employees haven't heard:  "life insurance", "pay for time not worked", for example.

And one from 2008:


Why hasn't the disparity ended, with government job compensation holding off on increases until private industry can catch up?

10.6 per cent?


"The reason is twofold," says Lamman.  "In the government sector, political factors largely determine the wage-setting process, while the private sector is largely guided by market forces and profit constraints.  The differences are amplified by the monopoly environment in which the government sector operates..."

And it has ever been thus.

Shooting high?

"Mr. Lamman needs a nap," Kia would've said, "so he can keep dreaming."

and this look into the future from an anonymous poster:

"The real question is the cost of running government. Costs only go up here, their wages never sink, their spending retreats little, and for short periods of time. Hard to automate a politician.
Here is where there will be strife. Revenues will be pounded into the ground due to incomes falling off a cliff, taxation of automated plants will have to be handled with care as they could relocate to a deserted island if they wanted to.
Governments have traditionally resisted cuts to services and their wages. What will they do? History says they will try to carve it out of the beleaguered citizenry, I say that’ll drive revenues down even more just like it did in Greece.
Even today, we see government borrowing and taxing more every year, yet it is always coming up short.
Lost manufacturing has impacted them as much as the rest of us.
IMHO, the cost of running government will be the major problem for the 1st world in the future."

A compelling thought, don't you think? 

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