Public Sector Benefits

A common justification for the exorbitant pension and benefit plans public workers get is that these employees are relatively underpaid during their working careers (and thus they have to make up for it during retirement). This article disputes this notion:

In defending the pensions, supporters say public workers, especially professionals in high-paying fields such as lawyers, doctors and engineers, earn less than private employees in exchange for better job security and benefits. Most also will not get Social Security, having not paid into the federal plan.

"City employees give up a lot to work for the city," said former Cincinnati Safety Director William Gustavson, an attorney who represents retirees watching City Council as it considers possible changes to pension and health benefits. "Being able to count on a good pension and benefits is part of the trade off."

U.S. Bureau of Labor Statistics data contradict that argument, showing that local and state workers earn an average of $25.30 an hour, 33 percent more than the private sector's $19. Among professionals such as lawyers and teachers, public-sector hourly salaries averaged $31.51, almost identical to the private sector's $31.75, according to BLS figures for 2007. Blue-collar public employees easily out-earn private workers, averaging $16.72 per hour compared to $9.87.

A 2008 study by the Employee Benefit Research Institute, a nonpartisan Washington study group, found that including wages and benefits, total compensation costs for local and state workers were 51 percent higher than those of private employees.

If we added studies of government worker productivity to this, I bet that public workers get paid more than double what private workers do on an output basis.

Economically, it stands to reason that government can only over-pay for its workers: if they offer less than market rates, they’ll have no employees, since candidates will go elsewhere. And because there’s no market mechanism to make governments care about their costs (i.e. governments don’t work for a profit) there’s no constraint on how much they’ll spend. So the easy way to get employees is to offer (way) above-market rates to its employees, with the taxpayer footing the bill. And according to this article, that’s exactly what governments do. (Guess how this plays out with all the “stimulus” spending government is doing in your name?)

But although the outcome was predictable by economic arguments, the real question is, why is government engaged in most of its activities anyways? (I.e. why is it doing anything beyond maintaining the peace via the police, courts and armed services?) That question is fundamentally a moral one, because to answer it, one first has to answer the question “what is good for man?”. Objectivism answers that the good is that which permits each individual man to survive, viz. the free use of his rational mind. The political organization of society follows from there, including the very limited role of government. Were we to adopt these ideas, there would be no issue of determining the pay of most current public workers — they'd be part of the private sector and thus would have to prove their worth on a market just as do most of us.

Sarc. Sweetheart 'Martha' x Sarc. Fitzhart 'Red'

Setting the Agenda

Citizens today, particularly the young, are told that their greatest civic responsibility is to vote. I think this is ridiculous — the most important responsibility is to educate oneself and then add one’s voice to the debate. One way to do this is to pick a topic of particular personal interest, learn about it, and then participate in the early legislative policy debates (which are normally open to public commentary). In this way, instead of simply casting a vote for the limited choices others have saddled you with, you get to shape the choices that millions or even hundreds of millions will vote on.

This article supports this approach:

A new study in the Journal of Policy Analysis and Management demonstrates that public commenters who participate during the early phases of regulatory policymaking play an important agenda setting role. Results suggest that these “public” participants—who are often interest groups—can help shape the content of regulatory proposals as they move through the regulatory process and may thwart unwanted regulations.

HT OActivists

Cymbidium Mauve-Burgundy

Tea Party Roundup

Diana has a roundup of various OActivist's tea party activities and reports. It's very encouraging to see how many people are out there on the ramparts (so to speak) and how welcome their message seemed to be.

Forbes on Beal and his Bank

For those interested in the absurdity and injustice of our regulatory landscape, particularly in banking, this article is a must read. (I tried to think of possible excerpts to post, but none could do the whole article justice.)

Legal Precedent?

I was encouraged by this VfR blog post announcing the first time that Ayn Rand's stance was used explicitly in a published appellate opinion. We're chipping away on all fronts...

How would you run the economy?

I thought a comment I left on Noah Stahl's Undercurrent blog post might be of general interest, so here it is:

In response to Rebecca who comments: “Its easy to criticize and point out the errors in what someone is doing. More difficult, however, is coming up with a different, better option. Do you have a proposal?”

While I can’t speak for Noah, I’d suggest that the crucial principle to uphold is freedom — as enshrined and protected by individual rights.

Under such a principle, the answer to the question: “How would you run the economy?” becomes: “I wouldn’t.” And neither would anyone else. Instead the “economy” would simply be the sum of all the voluntary production and trade between individuals and groups of individuals (a.k.a. corporations). Given such freedom, the market would allow the most efficient and rational processes and products to emerge, without any “commander” or “czar” (to use today’s jargon) to “guide” it.

While the role of the government in such a system is limited, it is also essential, viz. to preserve individual rights via the courts and the police.

And by the way, this system is not just a “proposal”, it was very nearly implemented in early nineteenth century America — in fact it even has a name: laissez faire capitalism.

Tea Party Activism

Congrats and thanks to all the OActivists who will be participating in Tea Parties tomorrow. A few examples: the Ohio Objectivist Society and Rational Jenn in Atlanta.

Maxillaria Rufescens

Very fragrant with a vanilla-ish scent

Editorial: Ayn Rand as "Prophet"

I'm happy to report that my editorial Ayn Rand as "Prophet" has been published by Pajamas Media (with some edits). Check it out, and please feel free to leave a comment.

Special thanks to OEditors Lucy Hugel and Paul Hsieh for many valuable comments, suggestions and criticisms. Thanks also to WM for several improved formulations. (Of course, any errors or flaws are my own.)

Simplifying Taxes

Although our ultimate goal must be to abolish the income tax and other forms of taxation, there would be significant benefit in just simplifying the tax code. Consider a few stats from a recent WSJ editorial:

- According to my office's analysis of IRS data, U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code.

- If tax compliance were an industry, it would be one of the largest in the United States. To consume 7.6 billion hours, such a "tax compliance industry" would require the equivalent of 3.8 million full-time workers.

- Compliance costs are huge both in absolute terms and relative to the amount of tax revenue collected. Based on Bureau of Labor Statistics data on the hourly cost of an employee, my office estimates that the costs of complying with individual and corporate income tax requirements in 2006 amounted to $193 billion -- or a staggering 14% of aggregate income tax receipts.

- More than 80% of individual taxpayers find the process of filing tax returns so overwhelming that they pay for help. About 60% of taxpayers pay preparers to do the job, and another 22% purchase tax software to help them perform the calculations themselves.

Imagine if we had an extra 3.8 million workers doing productive activities like searching for cures for cancer, or advocating for a better philosophy, instead of complying with byzantine tax rules?

ARC on the Tea Party Protests

ARI/ARC has put up a page with videos, articles, interviews and other relevant material. Check it out.

Time to "Go Galt"?

I liked Don Watkins' post on the topic, particularly this part of Ayn Rand's answer:

One does not yet have to break relationships with society. But what one must do is break relationships with the culture: Withdraw your sanction from those people, groups, schools, or theories that preach the ideas that are destroying you. In Atlas Shrugged I describe the sanction of the victim–when the good people help their own destroyers–and show in how many ways men are guilty of it, through generosity or ignorance. Anyone serious about saving the world today must first discard the dominant philosophy of the culture. Stand on your own as much as if you moved to a separate valley, like in Atlas Shrugged. Check your premises; define your convictions rationally. Do not take anything on faith; do not believe that your elders know what they’re doing, because they don’t. That’s the sense in which Atlas Shrugged is applicable to our period.

And incidentally, I'm with Don in not liking how the phrase is being used today. (Indeed I'm sad that our intellectual independence is so slight that we have to resurrect phrases like "Going Galt" and "Tea Parties" completely out of context, rather than identifying today's problems and issues -- and then addressing them squarely and head on.)

Lifeboat Scenarios

I enjoyed Diana's post on the subject. And I agree with her conclusion:

Rather, as can be seen from Dr. Peikoff's remarks, the problem with "lifeboat ethics" is that the proposed scenarios are concocted so as to produce irresolvable conflicts between people. By various artificial constraints, they make life in society impossible. They preclude any rational solutions to the problem at hand. Is it then any wonder that the results are unseemly? Of course not.

The simple fact is that lifeboat scenarios do not reflect the most basic facts about human nature, namely our distinctively human methods of producing and trading the values required to sustain life. Consequently, moral principles cannot be applied to such scenarios, nor induced from them.

Attacks on LGF are Revealing

Though I don't have time to follow it as closely as I'd like to, I think Charles Johnson's Little Green Footballs is one of the best (non-objectivist) blogs out there. He's for free speech and strongly against Islamic totalitarianism -- and wants the Republicans to rally around those issues. But in order to be on the side of the rational, he adamantly thinks the Republicans must drop creationism (and its modern variant, intelligent design) and any other fundamentalist religious views, as well as to denounce the irrational "fringe" views that so many in the party hold (like being against vaccines, engaging in conspiracy theories, etc.). He's also very honest, and thus won't let Republicans criticize the Democrats for things they too have done (for example Bush bowed to the Saudi King just as Obama recently did). Lately he's suggested that Glenn Beck's apocalyptic and over-the-top sensationalism is a disservice to serious Republicans. What have his reasonable views brought him? Vilification from the religious Right, including from nuts like Pam Geller (who really should give up her blog name "Atlas Shrugs" forthwith), and even from Robert Spencer. It's really quite a sad spectacle.

P.S. here's a funny spoof of Beck that Charles put up earlier this week.

Update: I've turned off comments as I think everyone has had their say about the original post, and I don't really want to host a thread devoted to minute by minute updates of someone else's blog.

Editorials in Canada's FP Comment

Canada's Financial Post / National Post has two great editorials out today: Alex Epstein's Obama Doesn't Get Roots of Crisis and Peter Foster's Atlas Shrugs, Leftists Rage.

Update: I just realized that there's a slightly longer version of Alex's editorial on ARI's site. I prefer it to the one published in the Financial Post.

America's Second Declaration of Independence

About a month ago I re-listened to Onkar's lecture on Atlas Shrugged as America's Second Declaration of Independence. Because I really enjoyed it and appreciated its relevance to today's world, I sent the link to a list of personal friends. So I'm glad to see that ARI is now recommending it to the world at large.

Obama's Tactics

Although I don't agree with all its conclusions or causal explanations, this article does draw some interesting parallels between Obama's tactics and those of the mafia and of the Soviets. E.g.:

Once a community organizer gains control of the media and the government, the next logical step is to turn the entire nation into a mob and set them against businesses, while offering the latter government “protection.” The subsequent takeover of the economy leaves the future society reduced to the two basic elements: an authoritarian government and a compliant mob. This may be an ideal arrangement for a community organizer, but it’s a direct opposite of what the Founding Fathers had intended.

Most Americans will probably associate this trend with the protection racket that was rampant in Chicago in the 1930s. It follows the same pattern: the mob, in conjunction with the unions, would organize strikes and protests, do physical damage, and intimidate business owners. Then a mob representative would meet with the owner and offer “protection” by saying “I’m the only thing between you and the pitchforks.”

Dendrobium 'Rain Dance'

I wish I could say that I'd grown this, but I can't, it was bought at the SB orchid show.

Welcome to Mob Rule

Or as Peter Schwartz puts it in this editorial: Mob Rule Comes to Washington.

Picture of a Ponzi Scheme

The Financial Times has a nice graphical look at the demographics for various country's social benefit obligations. I hope the older generations have enjoyed their kids' wealth. (Or perhaps less snarkily, this is what happens when people don't save for themselves -- the burden is shifted to others who had no say or responsibility in the matter.)

LTE cited

As a small confirmation that people do pay attention to Letters to the Editor, a few days after it was published, one of my LTE's was cited in a second LTE:

Generational logic

I think letter-writer Amit Ghate ["Contract complexities," March 3] is on to something when he says that you can't make a contract without informed consent of the "contractees," when he points out that state pensions/health care have effectively created a contract with generations not yet born.

We should apply the same logic to Social Security.

Donna Furon

March 2009 OActivist Compilation

Last month's OActivity has been summarized here. I hope it serves as some inspiration to take up a pen, microphone or keyboard and become involved.

Onkar in Businessweek

Onk has a short piece up in BusinessWeek's "Debate Room": The Economy Needs Ayn Rand. Feel free to stop by and leave comments.

Thanks

In these pretty depressing times, where we’re seemingly under assault from all sides (from attacks on freedom of speech, to government-mandated servitude, to the socialization of many of our financial institutions and perhaps of medicine, to the abandonment of the rule of law, to the further encroachment of environmentalism and the man-haters, to the continued rise of religion, etc.), I wanted to take a moment to thank all those who have really stepped up to oppose these attacks. Foremost I’d like to publicly thank Paul Hsieh whose tireless work is an inspiration. I’d also like to thank the staff, scholars and financial supporters of ARI and Anthem; the volunteers at the Undercurrent; bloggers such as Gus Van Horn, Doug Reich, and Diana Hsieh; active members of the OActivist list; and anyone who speaks up for the right ideas in any form.

Given the number of people who are working hard to right the wrongs we see all around us, and given that they’re growing in every aspect (number, quality and organization), I’m cautiously optimistic that better days lie ahead.

For my own part, I’ll say that the commitment I made to myself after 9/11—to learning and then trying to present a systematic defense of proper principles and values—has been much more interesting and rewarding than I ever would have expected (special thanks here to Onk and the OAC). More and more I find myself focusing my time on interacting with, and supporting, those who are also learning and fighting—not out of any sense of duty, but out of common values and the intellectual challenge and stimulus it provides. Looked at that way, even though the “macro” climate is much worse than it was 5 or 10 years ago, my personal “micro” climate is substantially better. So for that too, I’d like to thank all those who have not resigned themselves to their fates, but who are actively working towards something much better.