Political Labels

By Mike Koetting May 16, 2019

Political labels are shortcuts designating a more complex set of thoughts. But when there is no agreement on what the terms mean, discourse is difficult.

Exhibit One:  Socialism

Socialism has a specific definition:  where the means of production are owned by the people as a whole, which is to say, the state. Today there are a number of people who proudly accept the label, ranging from Bernie Sanders through Alexandria Ocasio-Cortez to the six Chicago City Council members who call themselves “democratic socialists”. However, it doesn’t take a fine reading of the policies they are actually advocating to realize their policies differ fundamentally from this formal definition of socialism. They are not advocating literal ownership of the means of production; rather they are arguing that the economy should be regulated with a much greater eye to the common good. Their policy proposals, while clearly “liberal”, are in fact well within the mainstream context of American political thought.

While it may be reasonable to redefine a term to reflect evolving views, the question of its impact on discourse remains. There are reasons they may seek to distinguish themselves from other elements in the Democratic Party who they believe are too beholden to the current ownership of the means of production. But whether this label is politically effective or causes more confusion is an empirical question that will get settled in elections over the next 18 months.

But it is relatively certain that in the short run, embrace of that term by material elements within the Democratic party creates major opportunities for those on the right to use the term as shorthand for yet a different meaning of the term, namely socialism as fundamentally opposed to an American concept of human rights and democracy. The basis of this use of the term is the conflation of socialism with Stalin’s Communism. Russian Communism was in fact a nightmare, but, as Kurt Vonnegut puts it, Stalin is to socialism as the Inquisition is to Christianity.

Exhibit Two: Capitalism

Prior to the Cold War, the term “capitalism” was used almost entirely as a pejorative political term, shorthand  for “Bosses exploiting workers.” Then language changed, particularly when looking for the antonym for “socialism”. And thus capitalism came to be seen as the only “correct” form of organizing society. The collapse of the Communist states in the 80’s cemented that notion.

Until, of course, rising income inequality caused the old, pejorative nature of the term to creep back into use. Pankrai Mishra in a Bloomburg Opinion post reviews two new books on capitalism under the headline:

Ideas once dismissed as the ravings of the loony left are breaking into the mainstream of economic and intellectual debate. 

If this weren’t confusing enough, Joseph Stiglitz’ new book promotes itself as “Progressive Capitalism” with a set of policy ideas that are virtually identical to what the so-called Democratic Socialists are proposing.

Now we have a situation where a meaningful percent of the country say they prefer socialism to capitalism, but it’s hard to know what the heck they actually mean because the important ideas in each of these terms has become total mud. (Indeed, a recent Gallup poll shows that most Americans don’t know what either socialism or capitalism means.)

Exhibit Three:  Inalienable Rights

This term is interesting because, while there tends to be some agreement on the basic words that define “inalienable rights”, the conclusions people draw from those are so different as to make one wonder how people understand these words.

For instance, a post in The Library of Economics and Liberty argues that socialism is a contradiction of the idea of inalienable rights because it vests ultimate decision rights in the state rather than individuals. But others argue that inalienable rights mean that everyone has the right to a fair shake in society and that an economy that puts the most important economic decisions in the hands of individual capitalists without concern for the broader social welfare is inherently undemocratic.

And so….

What does one make of this sematic marsh?

First, the terms “socialism” and “capitalism” cause more trouble than they shed light. Sure, it’s true that all societies feel tension between individual freedom and collective goals. And differences among societies are frequently reflected in the way they construct their economic markets. But given the porousness of the terms “capitalism” and “socialism”, it seems to me that these terms get used as much as a matter of political expediency as a useful description of what’s going on

The qualitative differences in societies are not around the label they give their economies but how they arrange themselves around other values—respect for the fundamental equality of humans, individual freedoms, and a democratic rule of law. It is not easy to agree on policies around each of these, individually and collectively. But discussions framed around these issues have a better chance of being useful than using the mush-labels of “capitalism” and “socialism”.

If one must have some label to dichotomize, looking at these three values suggests something like “democratic” versus “authoritarian”. That is the distinction that Robert Kagan makes in his extremely important article “The Strongmen Strike Back”. (He actually uses the term “liberal democratic”—liberal in its historical meaning—to distinguish from countries that have the form of democracy but are underneath authoritarian.)

Kaplan also raises the question of why there should be so many non-liberal regimes now. Some argue this is largely a reaction to growing world inequality. While there is a well-documented connection between liberal orientations and good economic times, I don’t find growing economic inequality a fully persuasive explanation. If the problem is perceived as simply economic inequality, why don’t people use the democratic alternatives available to change the economic order? In fact, they often seem willing to vote against their own economic interests. Kaplan suggests it is because there are values that that the individualism of liberal democracy not only does not address, but actually attenuates. He describes these as family, tribe, race and culture. In my words, fear of the outsider, a trait that one easily imagines is buried deep in the communal psyche of mankind as it has evolved over the millennia.

This is one of the conundrums of democracy. While all humans might be endowed with certain rights, they also carry a recessive political gene that is intrinsically anti-democratic. It potentially elevates fear of the outsider over other impulses and lead people to believe the outsider is less human, their rights less justified and the rule of law less applicable because the outsider threatens something intrinsic to their own identify. In well-functioning democracies, this gene fades into the background. But when things start to go south, this gene gains potency, particularly when there is an individual with some talent at stoking that fear.

We should not get too focused on the individual authoritarian figure and fail to recognize the challenge is fundamental to democracy. Democracy requires us to give “the outsider” the same rights as our family, our tribe, our culture–to treat the outsider as we ourselves want to be treated. Some members of the democracy are not up to that challenge, particularly people who find life otherwise challenging.

We would like to think that democracy is universally desired by people and if autocrats are removed, democracy will replace them. But we also recognize that the people of Russia seem to prefer Putin, that the population of the Philippines actually supports Duarte, and that even in countries with strong democratic traditions, there is a substantial portion of the population who are anti-democratic and for whom the values of liberal democracy are threatening. Jefferson notwithstanding, democracy is not the natural state of things. It is something achieved relatively recently and tenuously protected over time.

All of this suggests the right label to get behind  is “democracy.” It is at the heart of the crisis facing America today. But, at least in regard to this country, I fear it so overused, it would simply become another confusing label with fuzzy antecedents.

Maybe the moral is that political labels just aren’t that helpful.

High Expertise Government Jobs

By Mike Koetting May 1, 2019

This is the final post in my series on government workers. The last two posts have addressed government jobs, particularly federal jobs, in general. This post will focus more on government jobs at the higher end of the education spectrum. Generally speaking, these jobs require some specific expertise, are leadership/management positions, or both. As a society, we focus a lot of attention on political jobs, but we don’t pay much attention to jobs at the top range of the bureaucracy. Failing to get the appropriate people in these positions is as potentially dangerous as electing the wrong politicians. (See Michael Lewis’ new book, The Fifth Risk.)

My views on this matter are heavily influenced by two stints in Illinois state government. It appears to me that the issues in Illinois, and probably other state governments, are a bit more extreme than the issues facing the federal government. But the same general problems are facing all government organizations.

Salary Differentials Drive Out Experienced Managers

As noted in previous posts, federal jobs for people with advanced education pay less than the private sector. The differences are even starker at state and local levels. Government salaries have always been lower but relied on people’s interest in working for government. However, at some point, the differences become so large they surely impact. I noticed the change in Illinois. At the end of my first time in state government in the late-seventies and early eighties, I was a deputy director of an agency. When I did move to the private sector my salary went up, but as I recollect by less than 10%. Twenty-eight years later, when I returned to government from the private sector at approximately the same bureaucratic level, my compensation declined by more than half.  People who moved to the private sector at senior levels often received salaries that were multiples of their state salary.

A recent paper published by the Milbank Memorial Fund suggests that this problem isn’t limited to Illinois. In most states the Medicaid agencies offer insufficient salaries to attract and retain people with the right skills and expertise to run Medicaid, which is typically a multi-billion dollar enterprise. Among other things, this leads to agencies controlled by the healthcare industry and beholden to private firms with whom it contracts, which don’t have the same agenda as the agency itself.

My knowledge base mostly involves state level healthcare functions; however, I have every reason to assume that the issues are much the same in the other difficult subject areas addressed by government at various levels.

This gets reflected in salary increases as well as base salaries. In Illinois, salaries of senior agency officials and other non-union positions (e.g. legal staff) were frozen for 10 years. During the five years of my second stint in state government, neither I nor any of the other senior administrators received any salary increase. One can only guess this reflects a sense in the broader society that investment in government is not a good investment. Attitudes range from skepticism that government is an effective tool to downright hostility to government as an evil “deep state.” Nevertheless, pretending government jobs are immune to the laws of the market is a bad strategy. Government work is an honor, but honor only goes so far.

It is no surprise, therefore, that people at senior levels or with special expertise are leaving government in the face of the shutdown and other difficulties. A Washington Post article from January says:

An upcoming job fair for workers with security clearances has seen a 20 percent jump in registrations over last year’s, said Rob Riggins of Cleared Jobs, which is organizing the Jan. 31 event in Tysons, Va. He attributed the increase to the shutdown.

Even before the shutdown, there was a drift away from government service. In the first six months of the Trump administration, 71,000 career employees quite or retired, compared with 50,000 in the first six months of the Obama administration. In Cook County, in the face of stagnant salaries, 40% of the civil litigators have left the State’s Attorney’s Office over the last year This slows down all the County’s business and increases the risks to many basic functions.

Salaries are by no means the only issue. Research shows people in government jobs, particularly senior positions, are motivated by a desire to provide public service. They care deeply about the mission of their agency and their role in serving the public. When these missions are attacked or denigrated, when the hierarchy of their agencies are filled with people who disagree with the fundamental purpose of the agency, some people who are doing good and important work are more likely to take advantage of non-government options than when their work is being celebrated.

Not Getting Young People

There is also a problem at the other end. As noted earlier, there are disproportionately many older employees in government and disproportionately fewer young people in the federal civil service, a pattern seen in many states as well.

Part of this is distrust of the current administration and part is the accumulated damage of 40 years attacking government. But a big part is the fact that government sclerosis makes hiring and retaining young people difficult. At the federal level the inefficiency of the hiring process is noted in virtually every report on the status of the federal workforce. The current process makes it hard to find out about relevant jobs, takes roughly forever to crank out an actual job offer, and then often puts people into a rigid bureaucracy which is particularly unattractive for young people.

The same problems impact state and local governments. In fact, their structural problems may be even more acute. The number of state and local government jobs has decreased by 3% (11% per-capita) in the last 10 years. This widespread downward pressure on the number of jobs means fewer job openings. Further, in many places well-intentioned provisions designed to root out political influence from hiring, have made it almost impossible to bring talented young people into government service, or, indeed, bring in anyone who is not already working in state government. During my first stint in state government, there was a flow of talented young people into state government who provided yeoman’s services and, in many cases, rose to form the backbone of Illinois government for the following decade. During my second stint, the entire department was only able to hire a handful of young people in five years. At the bureaucratic leadership level, we were aghast at the consequences. We were not getting new blood into the agency and many of our systems were being held together by retirement-eligible workers who were the only ones who knew how the systems really worked.

This need not be the case. Despite skepticism about government, many young people are strongly altruistic and could be attracted to government with approaches and opportunities that speak to them. For instance, the UK has nearly double the US’ share of people under 30 in its civil service, thanks in large part to its Civil Service Fast Stream, a development program for new graduates who want to work in government. The program is highly competitive (fewer than 1 in 25 applicants is accepted) and attracts some of the best talent in the UK. The federal government has tried a number of programs that adopt some of these elements but, according to the Volker Alliance, a non-profit group founded by Paul Volker to strengthen government service, none of them has been consistent or comprehensive enough to really have the desired outcome.

All of this leads the Volker Alliance to conclude:

Simply put, too many of the best of the nation’s senior executives are ready to leave government, and not enough of its most talented young people are willing to join. This erosion in the attractiveness of public service at all levels—most specifically in the federal civil service—undermines the ability of government to respond effectively to the needs and aspirations of the American people, and ultimately damages the democratic process itself.

We are inflicting serious damage on ourselves.

Private Sector Versus Government Workers

By Mike Koetting April 19, 2019

You don’t have to work very hard to find someone willing to criticize government workers, for instance this investors’ newsletter dismissing the hardship of government workers during the shutdown:

Let’s remember who we are talking about here. While there are certainly plenty of hardworking, dedicated federal workers, they are, for the most part, incredibly pampered. They get better pay and more generous benefits than private sector workers doing the same things.

Complaints about government worker pensions are ubiquitous, particularly here in Illinois where the pension system has been horribly mismanaged.

But I think there is a shortage of clear thinking on the topic. I would make two fundamental points:

  • Maybe the problem is not in the government sector, but in the private sector.
  • The net impact of moving good jobs to the contracting sector contributes to other problematic trends.

Whose Problem Anyway?

The issue of how government salaries relate to private sector jobs has been hotly debated. But I suspect the below chart, prepared by the Congressional Budget Office (CBO) a few years ago, is as good an indicator as anything.

It shows that with less than a college degree, government salaries are higher, that with a college degree it’s basically a wash, and with an advanced degree, government salaries are lower. Government workers are typically better educated, with 60% of federal employees having a bachelors or more advanced degree, compared to 35% in the private sector. For federal workers, 29% have advanced degrees compared to 11% in the private sector, which is in itself an important consideration for thinking about the work done by government workers.

This is interesting in that traditionally government salaries, across the board, were lower than private sector salaries. But private sector salaries at the lower end of the salary range have stopped growing while government salaries kept growing at a reasonable, but continuous rate, yielding the above graph.

Consistent with historic trends, government benefits are materially greater at all but the highest levels, where they are roughly equal. The CBO notes that most of the differences in benefits have to do with differences in retirement benefits. As the private sector has replaced pensions with 401(K)s—if lucky—the difference between the two have increased. The retreat of private sector from providing robust healthcare benefits has also contributed.

Focusing on the differences between government and private sector compensation misses the more important question: What kind of employers make the country stronger? Providing wages that track inflation, good health insurance, holidays and sick days and provisions for retirement with dignity are things we should expect from all employers. To be sure, there are tweaks needed to some of the wage-benefit structures in government. In Illinois, for instance, there are numerous anomalies that desperately need fixing. But marginal issues notwithstanding, we should not be seduced by the private sector’s race to the bottom. Other workers should not resent government workers for getting paid fairly, but should be demanding the same thing for themselves. And government should do more to insure they get them.

I have a friend who mentioned to me how relieved she was that her nephew got a job with the Postal Service. She said he definitely wasn’t suited for college, but this would provide a stable job with a reasonable salary and benefits that didn’t keep disappearing. Letting these jobs slip away is not really in the national interest.

I note that in the short term, a political problem has been created because many workers, whose salaries have not kept track with inflation and whose benefits have shrunk, feel doubly aggrieved by also having to pay for government workers getting better benefits. But we still need to be clear that reducing everyone is a losing strategy in the long run.

One of the reasons government salaries and benefits have stayed healthy is, of course, that public employees have unions. Unions protect workers. It is as simple as that. Note, for instance, that when the shutdown was finally over, civil service workers received back pay. Contracted employees did not. Many of the lowest paid “government” jobs are the cooks, guards, and janitors and others whose jobs have been contracted out. Their salaries are between $450 and $650 a week, which makes it very hard to absorb the loss of a full month’s pay. Losses were greater for contracted employees who had higher salaries, but they also had more resources to fall back upon.  (On the other hand, that may undermine their long-run enthusiasm for governmental contract work.) The loss of union jobs in the private sector is part of the race to the bottom that has been allowed, even encouraged, over the last 40 years.

Another observation here: government benefits increase with salary but the benefits discrepancy between the highest and lowest paid government employees is enormously lower than in the private sector. The same is true of wages, but the difference is not quite as great. Government employment is fundamentally more equitable.

Net Impact

The net impact of moving more workers from civil service positions to contracting is another, substantial, contribution to the growing inequality of American society. As noted in my previous post, salaries of contracted workers are substantially lower than of regular federal employees. But the overall cost of contracted workers is, typically, greater. The difference goes to corporate overhead and profit returned to investors. In short, it moves taxpayer money from the people actually doing the work to corporate overhead and profits. This is a specific policy that widens the gap among workers and investors. Is this the best use of tax dollars?

This is particularly problematic for minority groups. As the New York Times reports:

For millions of black families, working for the government has long provided a dependable pathway to the middle class and a measure of security harder to find in the private sector, particularly for those without college degrees.

Blacks are about 30 percent more likely to have a public sector job (including state and local government) than non-Hispanic whites, and twice as likely as Hispanics. The 2007 recession was particularly hard on public sector jobs and they have not rebounded as quickly as the private sector—in part because formerly public sector jobs are being moved into the private sector at lower wages. So this trend not only adds to overall inequality, it disproportionately impacts minorities.

In short, we need to pay more attention to what happens when public sector jobs get reduced, especially when they result in contracting jobs out to private agencies.

Errata

My brother called to my attention that in my last post I referred to Post Office employees. He noted that the Post Office has not existed since 1971, at which time it became the Postal Service. When I suggested he was being bureaucratic, he retorted that you couldn’t always go by the old adage: “Good enough for private sector work—like Boeing, Wells Fargo, Experian or Deepwater Horizon.”

The State of Government Workers

By Mike Koetting April 4, 2019

The recent shutdown of the federal government got me thinking again about something that has been on and off my mind for about 20 years, the state of government workers.

I started thinking about this one day in a class I was teaching and it dawned on me that the students sitting in front of me had never been alive when attacking government wasn’t the predominate mode. They were raised in an era, as Ronald Reagan put it, not only was government not the answer, but it was the problem. While it is possible that they grew up in houses that offered a broader view, it is impossible to escape the society-wide attitude that, even at its best, there is something suspect about government. (My niece recounts a classmate at the Kennedy School saying in class: “Private industry is always more efficient than government. Everybody knows that.”)

The government shutdown got me thinking again about the longer-term problems of this attitude. This is the first of three posts on the topic of government workers and the broader society.

I was struck that, particularly for the first weeks of the shutdown, coverage of the shutdown focused almost exclusively on the hardships that it placed on federal workers, and, belatedly, the contractors who depend on the federal government. I understand the focus on the human suffering of the workers and their families. But, by the same token, I wanted the coverage to give equal focus to the fact that this was not simply the loss of income for federal workers, but it was also a loss to the American people because important jobs weren’t getting done.

As the shutdown dragged on, the media did start to get clearer about things that weren’t getting done. A partial list included Federal Aviation Inspectors, IRS services and reporting, processing of requests for agricultural subsidies, wildlife refuges, FDA inspections, EPA inspections,, immigration hearings, Homeland Security e-verify for employers, requests for HUD housing vouchers, data kept by US agencies—including reports used by businesses and investors, Federal Trade Commission services–including its consumer identify theft reporting system, certain services relevant to weather reports, the FEMA office that sells flood insurance, virtually all civil cases in federal courts delayed, National Transportation Safety Board review of fatal accidents, preparation and training for the coming wildfire season. In short, life as we know it would be difficult to proceed without the services of the federal government. And, remember, the above list is only what wasn’t happening because of furloughed federal employees….and does not include all kinds of government workers at state and local levels.  

So, maybe people will admit that the government work force serves important roles. At the same time, I am willing to guess that the preconceptions many people have about the government work force are inaccurate.

Take for instance size. Between 1970 and 2018, the federal non-military workforce has declined by about 2%, virtually all in the Post Office. The number of other, non-military, federal employees has been level. During that time, the US population has increased by 70%, Congressionally mandated rules and regulations almost doubled, and Federal spending increased exponentially. So, in one sense, the size of government isn’t growing, in fact is shrinking relative to what needs doing.

On the other hand, the size of the federal service has been kept stable by shifting a large amount of government work to contractors. The magnitude of this escaped my attention until the shut-down got me curious. Turns out, the contracted federal work force is about 80% larger than the civil service workforce.

Moreover, while it may come as a surprise to many, this contracting apparently makes government more expensive. It is true that average salaries among contractual workers are typically lower than federal salaries, sometimes much lower. [I will address the issue of government salaries in subsequent posts.] But, on balance, once overhead and other expenses, including returns to shareholders, are added in to contractors costs, best guesses are that contracted work is materially more expensive. One investigator recounts a series of head-to-head competitions run by the Bush administration:

These competitions were used…to test its theory that any job listed in the “Yellow Pages” phone directory can be done at lower cost by contract employees. Federal employees won 83 percent of the tests, suggesting that they could do the jobs for less when given the opportunity to build a most-efficient organization.

This large amount of outsourcing combines with other trends to raise some concerns about the future of the government workforce, particularly at the federal level.

To start with, it has changed the shape of the distribution of work done by career civil servants. More and more lower and mid-level jobs have been outsourced. This has resulted in the creation of a “top heavy” civil service—that is to say, a disproportionate share of its positions are upper mid-level and higher. That in itself is not necessarily problematic, but it is corresponding to another problem—the aging of the civil service.

A report by the Volker Alliance, a non-profit group established by Paul Volker and others to advance the effective management of government, suggests the federal government is edging toward what experts have described as a “retirement tsunami”–54% of all federal employees are aged greater than 45, as opposed 38% in the private sector. At the other end of the age spectrum, only 16% of all federal employees are under 35, as opposed to 40% in the private sector. At some point in the relatively near future, there will be a severe shortage of civil servants who have the experience to successfully manage the much larger number of contractors.

What will happen then? There will be pressure to use contractors to fill gaps because we don’t have enough people coming through the ranks to effectively manage. At some point having so much of the federal workforce working not as civil servants, but for companies that have at least somewhat different agendas becomes a problem. This, again according to the Volker Alliance:

…weakens the chain of command and produces government failures, such as the failure to connect the dots that led to the 9/11 attacks and the sluggish response to Hurricane Katrina. It also encourages the use of contract and grant employees to backfill vacated posts.

In short, the use of contracting has become so pervasive, the difficulty of getting an actual civil service job so great and the disincentives from the relentless pounding on government have gotten us to a point where more reliance on contracting can become self-fulfilling.

It is also the case that the privatization of large portions of the federal workforce has adverse consequences for the workers themselves. This is also true at state and local levels, although the diversity of approaches in these locales makes generalizations more risky. More in the next post.

Centrists: Chill Out

By Mike Koetting March 20, 2019

Inevitably, people are starting to talk about 2020.

Prickly City by Scott Stantis

Many people I know—which is to say older people who will under absolutely no circumstances vote for Trump—are worrying that the Democrats are tending too far left. My advice: “Chill out!’ And It’s not just that this is all ridiculously far-way—although it is. Unless the Democrats lose their collective mind, I am not worried by this.

I consider myself progressive, but more of a gradualist. I supported Clinton over Sanders. I have many concerns about the policies proposed by those further to the left. But so what? As economist Brad DeLong points out (in a fabulous Vox interview by Zack Beauchamp, strongly recommended): “The baton rightly passes to our colleagues on our left. We are still here, but it is not our time to lead.”

Continue reading “Centrists: Chill Out”

Gun Violence: No Single Answer

By Mike Koetting March 1, 2019

I recently attended a summit of groups working on reducing gun violence in Illinois. Much of what was said underlined that we know ways to reduce gun violence without unduly limiting civil liberties. The problem is that, as a society, we are not willing to do what it takes. The majority of society, and certainly most readers of this blog, disagree that the loss of thousands of extra lives a year is an acceptable price to pay for relatively uncontrolled access to guns. But they haven’t yet expressed this belief so strongly that politicians feel no choice but to change their calculations. That may be coming, but it is not here yet.

In any event, that is old news and this blog will focus on a few other things from this meeting.

Continue reading “Gun Violence: No Single Answer”

Environertia

By Mike Koetting February 14, 2019

Five weeks ago there was another scientific study that said the condition of the ocean was even worse than imagined and that, really, we better start thinking about what we are going to do—really.

One of my recent posts was about more speculative societal risk. Environmental risks are relatively immediate and are potentially existential. But, while a large percentage of Americans recognize it’s a problem, the political momentum to address the issue is not remotely commensurate with the degree of societal risk. How can this be?

Continue reading “Environertia”