The Nation's Bryce Covert argues that "public sector job loss is at the heart of our stagnant economy and is a big reason why the recovery can't get real lift-off."
Underlying Covert's argument is the false assumption that all jobs are made equal. Any economist with even a modicum of sophistication understands that certain types of labor contribute far more to Gross Domestic Product, money circulation, goods output and other productivity metrics than do others. Traditionally, economists have looked upon government as non-productive labor. Government workers do not "add value" in the same way that, say, workers in the primary sector (mining, agriculture) or secondary sector (manufacturing, industry) of the economy do. This is not an alien concept to social democrats or leftists -- most Western European nations utilize a Value Added Tax that is fundamentally tied in to this concept.
Think of the national economy as a factory floor. You have a manufacturing workforce on the assembly line that produces the actual product and you have white-collar administrators who ensure that production is managed efficiently. The administrators are usually a small minority. They represent the so-called "overhead." The Nation would like us to believe that productive and administrative jobs are interchangeable and equally beneficial to the economy. They are not. The Nation would like us to believe that a nation of administrators is no different from a nation that actually produces goods and services. They are wrong on this point as well.
As long as Covert refuses to acknowledge these truths, her economic analysis will remain at the elementary level.
Furthermore, Covert argues that public sector job cuts are the result of an ideological agenda led by the right-wing in the United States. How does she account for the austerity being undertaken across Europe, where leftist governments enjoy far more support? What advice does she have for a nation like Greece, which has very limited access to the bond markets and no budgetary surplus thereby making deficit spending or public sector employment growth a near impossibility? What assurances does she have that the debt crisis afflicting Southern Europe won't soon engulf the U.S., the U.K. and Japan? Why is it that the social democratic premiers of Spain and Greece and former the Mayor of London, the self-declared socialist "Red" Ken Livingstone, all admit that the debt crisis is real and that spending, especially deficit spending, must be limited?
Covert pretends as if Europe does not exist. She pretends as if Scott Walker's victories over public sector unions in Wisconsin are an isolated product of American "ultraconservative Republicans".
The reality is that the events in Wisconsin are intimately tied to the events in Greece, Portugal, Spain, Ireland, and Iceland (and soon Italy). The Keynesian model of endlessly borrowing from the future in order to create make-work jobs (jobs for the sake of jobs, that don't create real physical value) and spur ever-greater consumption is fundamentally unsustainable and has reached a tipping point.
Governments across the so-called 'developed world' are waking up to this and taking action. Governments that act prudently and enforce budgetary discipline will be rewarded. In fact, they already have been to some degree. Germany and Netherlands have both severely limited their government spending. Germany is committed to a balanced budget. Germany's health care system is far more "free-market" than that of most of its Western European neighbors. As a result, they enjoy low unemployment, high income and purchasing power, and governments often run surpluses that allow for generous social benefits. In contrast, countries that are reckless and imprudent with their spending will see themselves slip into vicious cycles of wealth destruction. This has already happened in Greece. The public sector plays a far greater role in the economy in Greece than it does in Northern Europe. Structurally, social welfare schemes are far more generous in Greece than in Northern Europe. Yet Greece has one of the highest unemployment rates in the 'developed world', a declining quality of life (including health-wise), and low purchasing power.
This is the inconvenient truth that The Nation refuses to confront.
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