New School Politics

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Reason’s latest issue cites a study done by economist Gary Schilling:

More than half of all Americans–53 percent–now depend on government for their income. In 1950 the figure was just 28 percent…Shilling totaled up federal, state, and local government workers, plus private-sector workers who owe their jobs to government, plus recipients of Social Security, other transfer payments, and benefits such as food stamps. He also tacked on dependents…adjusting his figures to avoid double-counting…

Those on the left are often quick to rebuttal economic growth with the fact that it often comes more rapidly to the wealthy than the poor, and while I do not dispute the fact that the free market creates income inequality I do not think that it is (a) necessarily a bad thing nor that it (b) overrides the fact that growth in a free economy improves economic opportunity and standard of living in general.

However, this study may prove that government is contributing to the gap between rich and poor by retarding potential growth in incomes for those 53% of Americans.

Here are my assumptions:

-Those 53% of Americans are generally less wealthy–ranging from the bottom to middle quintiles of income earners

-Government related employment has less potential for upward mobility in income

-Government related employment provides greater job security

-A government provided income corresponds to productivity levels less than an income from the private sector does (and likewise, that government dependants can count on a relatively stable income regardless of inconsistencies in–or lack of–productivity)

-A government provided income reduces the incentive to be hard working, productive, self-sufficient, and resourceful.

Thus, I am led to conclude that the government is contributing to the inconsistency in income growth because while productivity grows due to the private sector–and the incomes of those with ownership in the private sector accord–the public sector necessarily lag behind because (a) they are not responsible for any growth in productivity and (b) the income they do incur is completely dependant on that of the private sector (i.e. from taxes).

It is a story of nature and incentives: the nature of the private sector is such that income is directly tied to productivity and thus there is a greater incentive to produce; the nature of the public sector is that it is dependant on the productivity of the private sector and thus those who are dependant on the public sector have an income tied to the productivity–not of themselves–but to the productive others.

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The Perhaps the government has contributed to income inequality… by New School Politics, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.