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Slashing the public sector will cure everything... right?
We know the government is looking to reverse the current trend of spending more than it's collecting in tax. The big question that remains is how?
The most popular suggestion is that a machete should be taken to the number of public servants. Glossing over the inevitable consequences of the work or service they used to do not being done anymore, apparently this will cure the immediate financial problem. Sounds good in theory, but there's just one or two things that confuse me...
Now I'm a simple man with no expertise in economics or politics, but as I see it from my armchair perspective, if you have a public servant being paid a wage, they'll mostly spend it in the private sector, e.g. food, goods, services, fuel. So that's effectively taking money from the private sector in the form of taxes, and then redistributing it back into different parts of the private sector. And in exchange for this, they donates part of their time to administering or enforcing some part of government legislation or provide the public with a free service.
If you replace this wage with benefits, they'll have very little to spend in the private sector at all, and in return, contribute nothing. Whatever money you give them, they're not using it to make bonfires, so it's not actually being wasted. Its just being redistributed, is it not? So in the big picture, where's all these savings coming from?
Multiply this by hundreds of thousands as some are proposing, and the net result is... what? To my thinking, very little other than lots of people sitting at home doing nothing while public services degrade to dereliction.
Am I thinking about this too simplistically? Or is sticking it to the public sector just a matter of principle?
The most popular suggestion is that a machete should be taken to the number of public servants. Glossing over the inevitable consequences of the work or service they used to do not being done anymore, apparently this will cure the immediate financial problem. Sounds good in theory, but there's just one or two things that confuse me...
Now I'm a simple man with no expertise in economics or politics, but as I see it from my armchair perspective, if you have a public servant being paid a wage, they'll mostly spend it in the private sector, e.g. food, goods, services, fuel. So that's effectively taking money from the private sector in the form of taxes, and then redistributing it back into different parts of the private sector. And in exchange for this, they donates part of their time to administering or enforcing some part of government legislation or provide the public with a free service.
If you replace this wage with benefits, they'll have very little to spend in the private sector at all, and in return, contribute nothing. Whatever money you give them, they're not using it to make bonfires, so it's not actually being wasted. Its just being redistributed, is it not? So in the big picture, where's all these savings coming from?
Multiply this by hundreds of thousands as some are proposing, and the net result is... what? To my thinking, very little other than lots of people sitting at home doing nothing while public services degrade to dereliction.
Am I thinking about this too simplistically? Or is sticking it to the public sector just a matter of principle?
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Using the blunt tool of general cuts will lead to things getting worse. It'll be 79-83 all over again without the chance of a war, oil revenues, selling off the family silver or loosening financial controls
Otherwise you will just replace their wage (much of it spent in the private sector) with dole money and housing benefit which may cost almost as much.
However, true to form, it's middle-management and mandarins who are usually asked by the politicians, "Who shall we make redundant?" to which the answer is, "Ohh well.. unprecedented times.. front line services will take a hit.." thus saving similar amounts, but putting ten times as many people on the dole queue.
Think about it - up for redundancy are:
1 Sir Mandarin on £200,000 p/a/ - Under-secretary to the adminstrative side-officer secretary to the whatever.
OR
10 Care workers on £20,000 p/a
Who's loss damages society the most and creates more strain on the welfare system?
Yeah, it's things like this that makes me so cynical of their motives.
They're trying to instil a perception among ordinary folk that shedding boatloads of public sector jobs is the medicine that will benefit us all. But like this, there's lots of caveats they gloss over:
For instance, sacking a 20 grand a year civil servant doesn't save 20 grand:
So the net saving is... what? A lot less than 20 grand.
Okay, sack enough and the deficit reduces, and that balances the books. Great! Now we know this is not resulting in lower taxes, but it seems they would like us to believe there's no downsides to this for us ordinary folk. And that, I have a problem with.
As said before, former public servants are no longer spending money in the private sector, so in the big picture, nothing has been solved. Then of course there's the inevitable consequences of the departments those public servants worked for are now less effective at carrying out their statutory duties due to reduced resourcing.
Pity our government and their sycophant press in their eagerness to look for a scapegoat, are so eager to gloss over this.
This is the most sensible thing I've heard lately. If only Brown had presented it as eloquently as you...
No. We just need to be in a situation where there is no need for them in the public sector. It is not the role of the public sector to keep unemployment down.
Yes - but the public sector (i.e. the taxpayer) will have to pick up their dole money, their housing costs and other benefits. So in practice you put someone on the dole, demoralise them and the country is no better off financially. Better to keep them in a wage - even if it means cutting that.
You're all heart!:D
No, but the original point that I can't rationalise in my head is in the big picture view, does it matter how many public sector workers you have? We all pay taxes, that goes towards paying them a wage, which they then give back to us. With this money merry-go-round, we give them goods and services, and they give us administration and services. The money isn't being burnt.
So from that simplified perspective, there doesn't seem to be any tangible benefits to cutting the public sector as opposed to raising taxes. The net result is effectively the same. Other than the former results in state provided services no longer being effective while loads of people sit at home doing nothing.
I think much of this is the government would prefer this scenario so they can wash their hands of any blame. If you have a large public sector, the blame for any deficit falls at their feet and the onus is on them to deal with it. But if you have a large unemployment benefits bill causing a deficit, the onus is on the private sector to deal with it.
That's probably similar to why government is so fond of privatisation. Get as many 'services' of their books as they can, then they can absolve themselves of any blame when that service doesn't work or costs too much to run.
Well if the purpose of employment in the public sector is some kind of welfare scheme to keep people off the dole then I dont suppose their is any limit to how many public sector workers you have.
Mind you, we saw in eastern Europe how unsustainable such a policy is.
That's the inevitable result of outsourcing and having a service based economy.
Nor does the public sector entirely employ people in Britain; for example the NHS recently gave a contract for supply of cloths, sponges, etc to a company based in and operating from India.
How do you work that out then? Benefits cost the taxpayer far less than public sector salaries.
Rubbish!!! 'Almost as much' are you joking?
The only way for this to make any real savings given that, as you've eloquently stated, simply sacking public workers doesn't save much money (indeed it'll have a negative effect on the economy for the reasons you save in your OP) is to get rid of a number of public services wholesale. That way you save on infrastructure costs, utilities, resources etc and maybe raise a small amount from the private sector by selling the services to them.
Sacking public workers doesn't really save money if there are no private sector jobs for them to go into. The only way to save money is to privatise services and take them out of public spending altogether. This will be the road the government will go down. They've already started with education.
Outrageous. How is it that a once great nation such as ours is now reliant on dusters from dusky squeegee merchants in the Sub-continent. Somewhere, Gandhi is surely gloating. But really, should we be surprised, after 13 years of statist control and disastrous marxist economics, that it's come to this? If Broken Britain is ever going to Araldite itself back together we have to start somewhere. And a campaign for a truly indigenous J-Cloth is as good a place to start as any.