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Public Employee Bashing on the Dark Side

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Saturday, 16 October 2010 16:04

With private sector unionization down to 7 percent, the right-wing is turning its guns on public sector unions. Since workers generally can opt to join a union in the public sector without the risk of being fired, there has been no notable decline in public sector unionization rates over the last three decades. The unionization rate in the public sector is still above 35 percent, which means that public sector unions continue to be an important force on the political scene.

The Washington Examiner accommodated this attack with a piece from Diana Furchtgott-Roth, the chief economist at the Labor Department in the Bush Administration. The centerpiece of Ms. Furchtgott-Roth's piece is a complaint "insourcing," which means having work done by private contractors done instead by public employees.

Her first sentence has the bizarre complaint that:

"Even though Americans face a 9.6 percent unemployment rate, with almost 15 million out of work, President Obama and Congress are trying to take more jobs from private businesses through 'insourcing,' which means taking contracts from private firms and giving the work to government employees."
The 9.6 percent unemployment rate is obviously awful, but what does that have to do with whether jobs should be done by workers in the public or private sector? For most people a job is a job. If some of the unemployed get re-employed in the public sector, what is the problem?
But the more fundamental point is that the policy that Furchtgott-Roth complains about does not in fact exist. She is upset about an insourcing policy that gives preference to the public sector over private contractors.
However, that is not the policy in place. The policy only gives preference to the public sector in cases where the work in question has an inherently governmental character (think of interrogating prisoners) or there had been a past history of abuse by private contractors (think of Halliburton).
The simple fact is that the role of private contractors in the federal government has exploded in the past decade. The real value of private contracts increased by more than 50 percent between 2000 and 2009. Many of these contracts have been associated with serious abuses. It is understandable that the recipients of these contracts would be concerned if some of this business ended up back in the public sector, but it is hard to see why the rest of us would be.
We might not expect the Washington Examiner to be "fair and balanced," but it would be nice if it stuck a little closer to the truth.
Comments (8)Add Comment
...
written by izzatzo, October 16, 2010 7:33
The 9.6 percent unemployment rate is obviously awful, but what does that have to do with whether jobs should be done by workers in the public or private sector?


Unlike Baker, real economists like Furchgott-Roth understand that public goods and employees crowd out private ones with inferior performance due to forced insourcing, the same way deficit spending crowds out private investment and makes the recession worse.

For example, a famous example of forced insourcing is public traffic lights, a government imposed monopoly at selected intersections that operates under the guise of managing traffic, but is well known among economists to be less efficient than smoke signals.

Imagine how many jobs would be created in the private sector if traffic lights were replaced by the market freedom of individual drivers to negotiate with each other for the use of intersections. Just the increase in attorneys alone would justify the elimination of socialist insourcing and reduce the current unemployment rate by at least half.

And if the entire military had been replaced by private contractors instead of only part of it, the other half of unemployment would have been eliminated as well, not to mention that more wars would have been won as well, so more could be started.
...
written by diesel, October 17, 2010 11:07
Izzatzo is, I know (at least I think I know), stretching a point to make a point, but, amazingly enough, Miltdownman Friedman actually proposed privatizing all streets and roads in his blockbuster epic Capitalism and Freedom. My guess is that he imagined a toll gate at every boundary between private owners where a user fee would be collected, as between fiefdoms in the Middle ages.

The South, in fighting the Civil War, had five different gauge (width between rails) railroads. Freight had to be unloaded at each terminus and reloaded onto the next gauge train. Naturally, each owner jealously protected his rail's unique configuration, because that guaranteed his regional monopoly. Now there's private sector efficiency for you.

Insourcing
written by Diana Furchtgott-Roth, October 17, 2010 11:36
Dear Dean,

The Washington Examiner article that I wrote on October 15 is correct. Until 2009 federal and private employees bid on certain government projects, and the low bidder got the job. A new policy to declare certain functions "inherently governmental" and to give preference to federal workers was laid out in a White House memorandum in March 2009, and proposed in an official policy change by OMB in March 2010. This insourcing policy that gives preference to public sector employees does exist, and Secretary Gates said on August 9 that "we weren't seeming the savings we hoped from insourcing." If the policy didn't exist, why would Secretary Gates say that we weren't seeing expected savings?

Congress is attempting to move the new insourcing guidelines from Administration policy to law. The policy language is in the Sarbanes Amendment to the House-passed defense authorization bill, which might be passed by the Senate in the lame duck session.

It is true that private contracts have increased over the past decade, but so has federal government spending. It makes sense for private and public workers to bid on a wide range of tasks so they can be provided at the lowest cost to the taxpayer.

Further, your heroic assumption about labor mobility--that the private sector employees who lose their jobs by "insourcing" will find work in the public sector--is unlikely, especially in the short term. The labor market is simply not that fluid, in part because government moves slowly, in hiring and other matters.

Sincerely,

Diana Furchtgott-Roth
Senior Fellow
Hudson Institute
...
written by Peter T, October 18, 2010 12:37
I despise the current Republican party and their lies, but they have a point with the public sector unions - the public unions's program is anti-productivity to keep the current workplaces and the work speed down. At the same time, they have an influence in the Democratic party that is out of proportion of their membership.
Even more so!
written by John H. McCloskey, October 18, 2010 7:47
Dear Dr. Bones,

Golly, look at this wouldja, sir: the Freedame and Kiddiemistress of Furchtgott-Roth has actually condescended to reply! How often have you seen that happen in this neck of the WWWonderland Woods?

I just flattered your colleague Dr. Baker in a different thread as a producer of "upmarket _blogghiatura_" even before this signal triumph.

Congratulate him for me, please, sir.

Happy days.
...
written by BOXER, October 18, 2010 8:02
Gov needs to make 15m public sector jobs, that's what good gov is supposed to do, look out for the people. Anyone who worked a backbreaking job at top speed for crap wages knows the value of a union. We already work harder and longer than any country and for less money, in a rotten rat race existence to boot. So let's get rid of the unions that allow a man to pace himself like a human, not a damn machine. Let's get rid of unions so the wage race to the bottom won't be a hindrance to the billion dollar boys. EVERYBODY.. join a union!
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Diana Furchtgott-Roth Makes No Sense
written by Shaun Snapp, October 19, 2010 12:56
In Diana's response she conveniently ignored all of Dean's points. The most important point is whether the main idea of her article is true. That is, does moving employment from the private sector to the public sector decrease employment. It doesn't. Diana's inability to write or think clearly makes her a perfect candidate to be a "senior fellow" at whatever fake conservative think tank she works at.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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