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Posts Tagged ‘Bureaucrats’

As a taxpayer, I don’t like the fact that government employees get paid more than folks in the private sector.

But the big difference between bureaucrats and regular workers isn’t so much the pay, it’s the fringe benefits.

And perhaps the  biggest difference of all is that government bureaucrats get far more  lavish retiree benefits.

Sounds like a sweet deal, at least if you get a coveted job (or even six jobs!) with a state or local government.

It’s not a good deal for taxpayers, though, and the entire system is rather unstable because politicians and union bosses have conspired to create huge unfunded liabilities that threaten to create a death spiral for state and local governments.

Simply stated, why should productive taxpayers continue to live, work, and pay taxes in places where a huge chunk of money is diverted to pay off past promises rather than to deliver goods and services (education, parks, trash pickup, police, etc) that have some value?

Indeed, this is a big reason why places such as Detroit already have collapsed. And I fear it is just a matter of time before other local government (as well as some states such as California and Illinois) reach the tipping point.

But perhaps you think I’m being too dour? Yes, I’m prone to pessimism because of my low level of faith in the political elite. In this case, however, any sensible person should be very worried.

Let’s look at what some experts have to say about these issues.

Here are some passages from Steve Malanga’s Wall Street Journal column from earlier this month.

He starts by explaining that Jerry Brown’s big tax hike for education actually has very little to do with helping kids to learn (not that more money is the recipe for better education, as shown by this jaw-dropping chart, but that’s a separate issue).

Instead, the money is being diverted to finance the lavish pension system.

California Gov. Jerry Brown sold a $6 billion tax increase to voters in 2012 by promising that nearly half of the money would go to bolster public schools. …Last June Mr. Brown signed legislation that will require school districts to increase funding for teachers’ pensions from less than $1 billion this year in school year 2014-15, which started in September, to $3.7 billion by 2021, gobbling up much of the new tax money. With the state’s general government pension fund, Calpers, also demanding more money, California taxpayer advocate Joel Fox recently observed that no matter what local politicians tell voters, when you see tax increases, “think pensions.” …When California passed its 2012 tax increases, Gov. Brown and legislators promised voters the new rates would expire in 2018. But school pension costs will keep increasing… Public union leaders and sympathetic legislators are already trying to figure out how to convince voters to extend the 2012 tax increases and approve “who knows what else” in new levies

Sounds grim, but Mr. Malanga warns that “Californians are not alone.”

Decades of rising retirement benefits for workers—some of which politicians awarded to employees without setting aside adequate funding—and the 2008 financial meltdown have left American cities and states with somewhere between $1.5 trillion and $4 trillion in retirement debt. …the tab keeps growing, and now it is forcing taxes higher in many places.

Such as Pennsylvania.

A report last June by the Pennsylvania Association of School Administrators found that nearly every school district in that state anticipated higher pension costs for the new fiscal year, with three-quarters calculating their pension bills would rise by 25% or more. Subsequently, 164 school districts received state permission to raise property taxes above the 2.1% state tax cap. Every one of the districts cited rising pension costs.

And West Virginia.

In West Virginia, where local governments also face big pension debts, the legislature recently expanded the state’s home rule law—which governs how municipalities can raise revenues—to allow cities to impose their own sales taxes. The state’s biggest city, Charleston, with $287 million in unfunded pension liabilities, has already instituted a $6 million-a-year local sales tax devoted solely to pensions, on top of the $10 million the city already contributes annually to its retirement system. At least five more cities applying to raise local sales taxes, including Wheeling, also cited pension costs.

The column also has lots of material on the mess in Illinois.

Here’s just a sampling.

The city of Peoria’s budget illustrates the squeeze. In the early 1990s it spent 18% of the property-tax money it collected on pensions. This year it will devote 57% of its property tax to pension costs. Reluctant to raise the property levy any more, last year the city increased fees and charges to residents by 8%, or $1.2 million, for such items as garbage collection and sewer services. Taxpayers in Chicago saw the first of what promises to be a blizzard of new taxes. The city’s public-safety retirement plans are only about 35% funded, though pension costs already consume nearly half of Chicago’s property-tax collections.

All this sounds depressing, but it’s actually worse than you think.

We also have to look at the promises that have been made to provide health benefits for retired government employees.

Robert Pozen of Brookings has some very sobering data.

Public-pension funds have garnered attention in recent years for being underfunded, but a more precarious situation has received much less notice: health-care obligations for public retirees. …only 11 states have funded more than 10% of retiree health-care liabilities, according to a November 2013 report from the credit-rating agency Standard & Poor’s. For example, New Jersey has almost no assets backing one of the largest retiree health-care liabilities of any state—$63.8 billion. Only eight out of the 30 largest U.S. cities have funded more than 5% of their retiree health-care obligations, according to a study released last March by the Pew Charitable Trust. New York City tops the list with $22,857 of unfunded liabilities per household. …Total U.S. unfunded health-care liabilities exceeded $530 billion in 2009, the Government Accountability Office estimated, but the current number may be closer to $1 trillion, according to a 2014 comprehensive study released by the National Bureau of Economic Research.

By the way, these retired government workers are covered by Medicare, but Pozen explains that the unfunded liabilities exist because so many of them retire before age 65.

And their health plans sometimes cover Medicare premiums once they turn 65.

State and local governments typically pay most of the insurance premiums for employees who retire before they are eligible for Medicare at age 65. That can be a long commitment, as many workers retire as early as 50. Many governments also pay a percentage of Medicare premiums once retired workers turn 65.

But there is some good news.

States are trying to deal with this healthcare-driven fiscal Sword of Damocles.

Since 2010 more than 15 states have passed laws to reduce health-care cost-of-living adjustments—automatic benefit increases linked to the consumer-price index. Courts in eight states upheld these reductions on grounds that cost-of-living adjustments should not be considered a contractual right. Only Washington’s law was struck down in 2011, and the case is now on appeal. Some state and local governments—Nevada and West Virginia, for example—have increased deductibles and scaled back premium subsidies. Others like Ohio and Maine have reduced the health-care benefits provided to retirees. Several years ago Pennsylvania changed early retirement eligibility to 20 years of service from 15.

In many cases, though, I fear these reforms are a case of too little, too late.

So long as the fiscal burden of providing pensions and healthcare expands at a faster rate than the private economy, states and localities will push for more and more taxes to prop up the system.

But people won’t want to live in places where a big chunk of their tax payments are diverted to fringe benefits. So they’ll move out of cities like Detroit and Chicago, and they’ll move out of states like New Jersey and Illinois.

So the bottom line is that politicians and government employee unions engineered a great scam, but one that ultimately in many cases will self destruct.

And the lesson for the rest of us is that government bureaucrats should not get special goodies, particularly when they are financed by nothing other than promises to screw future taxpayers.

Pensions for government workers should be based on the defined-contribution model, and healthcare promises should be more limited and in the form of health savings accounts.

But how do you get these much-needed reforms when the government unions finance the politicians who are on the opposite side of the negotiating table?!?

P.S. Here’s a good joke about government bureaucracy. Here’s a similar joke in picture form. And we find the same humor in this joke, but with a bit more build up. And now that I’ve given it some thought, there’s more bureaucrat humor here, here (image near bottom), and here.

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I’m impressed, in a dark and gloomy way.

I thought the Italian healthcare official who showed up for work only 15 days in a nine-year period set the record for bureaucratic loafing.

Based on longevity of laxity, he definitely out-did the San Francisco paper pusher who didn’t work at all in 2012 yet still got paid $333,000.

And while it’s remarkable that a New Jersey bureaucrat simultaneously got paid for six different jobs, he presumably actually went to work every day.

But all these bureaucrats will probably be ashamed to learn that one of their counterparts in India makes the rest of them seem like workaholics.

Here are some excerpts from a report in England’s Daily Telegraph.

Even in India, where government jobs are considered to be for life, A.K. Verma was pushing it. Verma, an executive engineer at the Central Public Works Department, was fired after last appearing for work in December 1990. …Even after an inquiry found him guilty of “wilful absence from duty” in 1992, it took another 22 years and the intervention of a cabinet minister to remove him, the government said. India’s labour laws, which the World Bank says are the most restrictive anywhere, make it hard to sack staff for any reason other than criminal misconduct.

Needless to say, Mr. Verma deserves election to our Bureaucrat Hall of Fame.

And I suppose there are two broader public policy lessons to this story.

1. If you’ve ever wondered why Indians in America are so successful in America while Indians in India are relatively impoverished, bad policy is to blame, with restrictive labor laws being just one example. Yes, India has implemented some reforms, but if you check the data from Economic Freedom of the World, you can see there’s still a long way to go.

2. There’s nothing wrong with unions if they’re operating in a non-coercive setting. But when the governments tilt the playing field with pro-union legislation, bad results are almost inevitable. And the greatest problem isn’t necessarily above-market wages, but rather inefficient work practices such as an inability to fire bad performers.

P.S. If you like bureaucracy humor, here’s a message from the California public works department.

This Michael Ramirez cartoon shows how taxpayers get squeezed when politicians and bureaucrats negotiate.

We also have this flowchart on bureaucratic operations which was probably developed at DHS or HUD.

And this anecdote shows how congressional budgeting and bureaucracy intersect.

Here’s the famous satirical video on overpaid firefighters in California.

Last but not least, here are two very good posters that capture bureaucrats in action, as well as link to other amusing bureaucrat humor.

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We have some good news to share.

A government has just announced that it is going to end the unfair practice of giving government bureaucrats pension benefits that are far greater than those available for workers in the economy’s productive sector.

Can you guess which jurisdiction took this important step, notwithstanding the greed, political sophistication, and power of government bureaucracies?

Is it the federal government in Washington, which provides bureaucrats with much higher levels of overall compensation than workers in the private sector?

Is it Ireland, which a few years ago actually cut bureaucrat salaries by more than 13 percent?

Is it California, which is infamous for over-compensated bureaucrats?

Is it Denmark, which has the world’s most expensive bureaucracy?

Is it Italy, which has some of the most coddled government bureaucrats in the world?

Is it New Jersey, where it’s possible for a bureaucrat to have six government jobs at the same time?

Is it the Cayman Islands, which actually contemplated the imposition of an income tax to finance its bloated bureaucracy?

Is it Portugal, which overpays bureaucrats more than any other nation?

Those jurisdictions are all be good guesses. Or, to be more accurate, that’s a good list of jurisdictions where reform is desperately needed.

But all those guesses are wrong. The nation that is ending special pension privileges for government bureaucrats is the People’s Republic of China.

Yes, you read correctly. A communist-run nation is implementing this pro-market reform. Here are some of the details from CNTV.

China will reform its public sector pension system to reduce disparity between the public and private sectors, Vice-Premier Ma Kai said Tuesday… Under China’s dual pension system, civil servants and employees in state agencies do not need to pay for their pensions — the government provides full support for them. But employees of private enterprises have to pay 8 percent of their salary to a pension account. After retirement, private urban employees usually get a pension equal to about half of their final salary, but civil servants get much more without making any financial contribution. …now the reform is coming. The aim is to build a system for Party, government and public institution staff that is similar to the one used by the private sector. This move will affect around 37 million people: 7 million civil servants and 30 million public institution staff.

Wow, bureaucrats will have to live under the same rules as folks in the private sector.

What a radical concept! Maybe we could even try it in the United States at some point.

By the way, one additional indirect feature of the story is worth a mention. China actually has the beginnings of a private Social Security system.

Because the system is still developing, I don’t put it on my list of nations with private Social Security (though it is on the Social Security Administration’s list), but the goal is to slowly but surely shift to a funded system.

Assuming that actually happens, China could mitigate the fiscal consequences of a very large demographic crisis caused by that nation’s barbaric one-child policy.

In any event, China’s at least moving in the right direction (see here, here, and here for more information), which is more than can be said for the United States.

P.S. While China has moved in the right direction in recent decades, it still gets a relatively low score from Economic Freedom of the World. Which helps to explain why I think it’s silly for people to fear the supposed Chinese Tiger.

P.P.S. If you want to see far more striking examples of Chinese people being successful, check out Hong Kong and Taiwan.

P.P.P.S. Though at least some Chinese government officials have a very perceptive understanding of the European welfare state.

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I periodically share polling data on issues ranging from which nations most support capitalism to the degree to which government is a leading cause of stress.

Or how about the poll of Americans on the best and worst Presidents since World War II, or the survey data on what share of government spending is wasted.

Today, we’re going to expand on that collection by reviewing some potential good news about attitudes of young people and attitudes about guns. But this isn’t about how young people owning guns, or how they feel about guns.

Instead, we’re going to review two separate pieces of information, one about whether young people want to work for the federal government and another about an online poll about gun control that backfired. And both are somewhat encouraging, albeit not very scientific.

With regards to young people, I was very pleased to read a story in the Washington Post indicating that President Obama is failing in his attempt to make government jobs “cool again.”

Six years after candidate Barack Obama vowed to make working for government “cool again,” federal hiring of young people is instead tailing off and many millennials are heading for the door. The share of the federal workforce under the age of 30 dropped to 7 percent this year, the lowest figure in nearly a decade, government figures show. …top government officials, including at the White House, are growing increasingly distressed about the dwindling role played by young workers.

Let’s hope this is true. The last thing we want is talented young people diverted from productive employment into the suffocating embrace of government bureaucracy.

But the key issue from my perspective is why young people prefer the private sector.

If it’s because they want to do something meaningful, or because they recognize government bureaucracy is a black hole of inefficiency, or because they don’t want to be a burden on taxpayers, I would view any of those explanations as a positive sign. Perhaps even an indication of growing social capital.

But there’s a less-optimistic explanation. Maybe young people actually do want overpaid positions as regulators, paper pushers, and memo writers, but haven’t had much luck simply because the process is so inefficient and/or the money isn’t there because of the spending restraint in recent years.

Danzig said that the federal shutdown, furloughs and pay freezes in recent years have eroded the attraction of working for the government. …For those millennials who still want to land a government job, the hiring process can be an infuriating mystery. And the government’s Pathways internship program, designed to help launch young people on a federal career, is so beset by problems that only a trickle of workers has been hired. …then Congress imposed the automatic budget cuts called “sequestration.” …Budget cuts have forced agencies to slow the hiring pipeline in the past two years, and with job prospects in the private sector improving after the long economic slowdown, millennials are increasingly taking jobs outside government, where they can see a better chance of advancement.

The most encouraging part of the story is that some young people who did land government jobs have decided to jump ship and go into the private sector.

That’s a win-win for taxpayers and the economy.

These millennials no longer are a burden on people in the productive sector of the economy and they’re also presumably now doing things that are far more likely to add value to society.

Sort of like when a welfare recipient is rescued from government dependency and becomes self-sufficient.

But you won’t be surprised to learn the Obama Administration isn’t giving up.

The agency’s director, Katherine Archuleta, has been visiting college campuses to urge students to consider federal careers. …“We know hiring millennials is really critical to the future of the government,” she said. …Meanwhile, the Obama administration has been working to revamp the Pathways federal internship program for college students and recent graduates.

None of this is a surprise. The White House presumably understands that a bigger government workforce means more voters who are likely to support candidates that want to expand the size and scope of government.

Our second example comes from the scroungers at PBS. The government-subsidized broadcasters did a story on gun control and included an online poll.

There was nothing remarkable about the story, just the usual pro-gun control agitprop, but the polling results must have been a big disappointment to the PBS crowd.

Wow, 95 percent-4 percent in favor of the Second Amendment.

To be sure, online surveys are completely unscientific and I’m sure some pro-gun rights people must have actively encouraged votes.

Nonetheless, I still find the results amusing if for no other reason than they undermined the narrative that PBS doubtlessly was hoping to create.

P.S. Based on this actual polling data, many millennials are quite confused and inconsistent in their views about public policy, so they probably are very well suited for careers in government. Which is all the more reason to push them in the private sector where a bit of real-world experience would probably help them think more clearly.

P.P.S. Since the title of today’s column was about young people and guns, I can’t resist sharing this feel-good story from Georgia.

A local gun club gave young people an opportunity to pose with Santa Claus and some of their favorite weapons.

Reminds me of the time I took my kids into the woods of Vermont so they could shoot an AK-47.

There was snow on the ground, but Santa Claus was absent, so I can’t say I matched the experience the gun club provided.

However, as you can see by clicking here, I raised my kids with good values about the Second Amendment.

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I’ve shared humor targeting particular bureaucracies, such as the Postal Service, IRS, TSA, Department of Energy, and National Park Service, but I don’t have nearly enough material mocking government bureaucrats in general.

I should have dozens of examples. However, looking through my archives, I found just a handful of examples: a joke about an Indian training for a government job, a slide show on how bureaucracies operate, a cartoon strip on bureaucratic incentives, a story on what would happen if Noah tried to build an Ark today, and a top-10 list of ways to tell if you work for the government.

I also found a good one-liner from Craig Ferguson, along with some political cartoons from Michael Ramirez, Henry Payne, and Sean Delonas.

Those are all funny, but it’s not nearly enough. So let’s add to the list.

Here’s some insight on what it’s like to get overpaid and underworked.

By the way, if this image looks familiar, it may be because it has the same look as this six-frame image about libertarians.

And if I haven’t exhausted your interest in anti-bureaucrat humor, here’s a related image.

And last but not least, here’s a new element discovered inside the bureaucracy, and a letter to the bureaucracy from someone renewing a passport.

Let’s close with one serious point.

We should probably be happy that many bureaucrats are lazy. Sure, it’s an inconvenience when you’re waiting in line at the Postal Service or DMV, or when you’re on hold trying to get a straight answer from some random bureaucracy.

But do you really want zealous and motivated people at the EPA, OSHA, EEOC, FDA, and IRS?

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In April of 2013, I introduced a Moocher Hall of Fame to “celebrate” some very odious examples of welfare dependency.

Since that time, I keep thinking that it’s time to do something similar for government bureaucrats. This compilation from last December would be a good place to start, though I’d have to figure out whether to have group memberships so that we could include the bureaucrats at the Patent and Trademark Office who get paid to watch TV, as well as the paper pushers at the Department of Veterans Affairs who got big bonuses after creating secret waiting lists that led to the death of former soldiers.

But if we’re creating a Bureaucrat Hall of Fame, I won’t want to discriminate against foreigners.

The U.K.-based Telegraph reports, for instance, that an unnamed doctor from Italy is a very worthy candidate for this award.

The notorious inefficiencies of Italy’s state sector were laid bare on Thursday as news emerged of a Sicilian doctor who has done just 15 days’ work in the past nine years.

How has he “achieved” this degree of non-work?

…the doctor disappeared off on a university training course, reportedly paid for by taxpayers’ money, when he started work in 2005. Returning to work on October 31, 2008, the doctor immediately asked for, and obtained, paid family leave until May the following year. Then he worked 15 days at the hospital before calling off sick until July 2009. Recovered from illness, the doctor obtained a place on another university training course, once again reportedly swapping his wage for payment from the state university, which lasted until June this year, said wire agency ANSA. The doctor is now allegedly planning more time off to obtain a doctorate which will finish in December 2016.

By the way, our lazy doctor has lots of company. Indeed, Sicily sounds like the California of Italy.

The problem is pronounced in Sicily, where an army of around 144,000 regional staff – both permanent and temporary – includes 26,000 forestry workers, more than in British Columbia in Canada. Around 7,000 Sicilians have been given government jobs teaching work skills to Sicilians without jobs.

With that amount of waste and featherbedding, no wonder Italian taxpayers are beginning to revolt.

Here’s a specific example that boggles the mind.

Red tape on the island has also created surreal working weeks for those employed by the local government. In March, a vet in Trapani complained that the work he was contracted to carry out for the local authority had been spread over a such a long period he was required to do just one minute’s work every week. “Once a week I go to the office and stamp my pass,” said Manuel Bongiorno. “I walk in, wait for a minute to go by, then stamp the pass again. It’s been going on for months,” he added.

I don’t know if “vet” means he’s an animal doctor or a former soldier, but he doesn’t qualify for membership in the Bureaucrat Hall of Fame because he apparently wants to do some work.

That’s preposterous, but what would you expect in a nation where government is so incompetent that the wrong people are appointed to high-level jobs that shouldn’t even exist.

So you can see why I don’t really care which party rules Italy. The names may change at the top, but government always comes out ahead.

Though a New York Times columnist actually wrote that America should become more like Italy. And he wasn’t being satirical. At least not on purpose.

P.S. The U.K. government has raised its terror threat level from “substantial” to “severe.” I realize this is a serious issue, but I couldn’t help but think about the humorous version of European threat levels.

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Which nation has the most costly bureaucracy?

Well, if the answer is based solely on how much it costs to employ bureaucrats, you can see from this chart that Denmark comes in first place.

As an American taxpayer, I’m glad to learn that there are other nations that squander more money on civil servants.

But I get the feeling that the crowd in Washington is miffed that the United States didn’t wind up at the top of the list.

I’m being satirical, of course, but that’s what came to mind because is seems that our political masters are doing everything possible to waste money on needless bureaucracy.

For instance, here are some disturbing details for a report published by CNBC.

The federal government has a serious problem keeping tabs on its employees, from an FCC worker watching porn while at work, to DHS employees collecting overtime pay to sit on Netflix or talk on the phone. And now, a new report from the Patent and Trademark Office found that at least 19 paralegals have been getting paid $60,000 to $80,000 a year to sit on Facebook, online shop and watch TV — costing taxpayers about $5.1 million in the last four years. Even more egregious — the auditors said managers looked the other way and billed the hours under “other time” while also giving each of the workers thousands of dollars worth of performance bonuses during that same time period. The managers “were completely aware of the volume of ‘other time’ hours during the relevant time frame and took little action to prevent such waste,” the IG said. The auditors said one manager even dubbed the billing code the “I don’t have work but I’m going to get paid code.” …The report said “nonproductive time” racked up to between 50 and 70 hours in an 80-hour pay period.

But let’s be fair to the bureaucrats.

The story says they were goofing off because nobody gave them any work.

Whistleblowers told auditors that the paralegals just didn’t have enough work to do, so they spent their time doing other things — some even volunteered for charity organizations while clocked in at the Patent and Trademark Office. …whistleblowers said the paralegals rely on judges to assign them work and there weren’t enough judges on staff to assign new cases.

Or maybe the judges are lazy and inefficient, which is not exactly an unknown trait inside government.

In any event, the most outrageous part of the story is that the bureaucrats at the Patent and Trademark Office were given thousands of dollars in performance bonuses. For what?!? Doing a superlative job of watching TV?!?

Though I must admit this isn’t as bad as the bureaucrats at the Veterans Administration, who gave themselves bonuses while letting veterans languish and die on secret waiting lists.

And to add insult to injury, the bureaucrats at the Patent and Trademark Office (and their lazy and inefficient bosses) work at a luxurious new taxpayer-financed “campus” in suburban Virginia.

As the old saying goes, nice work if you can get it.

Though “work” is obviously a gross overstatement.

The bottom line is that we have a bureaucracy that is far too big and costs far too much.

P.S. Not only does Denmark have the most expensive bureaucrats, it’s also home to “Lazy Robert,” who is a proud member of the Moocher Hall of Fame (and doubtlessly also a passenger on the Party Boat).

P.P.S. I’ve shared more anti-libertarian humor than pro-libertarian humor, so it’s time to impose some balance. Here’s something I just saw on Twitter.

Needless to say, Obama hasn’t exactly been a civil libertarian on surveillance issues.

P.P.P.S. And speaking of humor, the PotL just send me this video from her region of the world.

There’s no political angle, of course, but it fits in with some of the other terrorism-related humor I’ve shared.

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