In last Sunday's Crossroads section, Steve Walters wrote an article about decreases in state and local employment. I was struck by the following statement attributed to Laura Dresser, a labor economist with _ I'm sorry but its true - a left wing think tank embedded in the University of Wisconsin. (As always, I say this by way of description. Knowing that a speaker has a perspective doesn't meant that we ought to dismiss what they say.)
Asked about the impact of losing 18,800 government jobs in Wisconsin, Dresser said, "That's shrinking the economy."
struck me is the use of the transitive verb, i.e., the notion that by
reducing government employment we have "shrunk" the economy from some
state that it would otherwise have occupied.
That could be true but doesn't determining whether it is so require knowing a lot more than government employment levels?
the problem. The state is not like the federal government. It can't
borrow money from China to finance current operations. While politicians
have gotten good at accounting tricks that balance the day of
reckoning, it must balance the budget. Whatever level of employment it
maintains must be paid for. Paying for government jobs requires - you
guessed it - taking money out of other parts of the state economy - in
this case, from taxpayers.
Now, that might be a good thing to do. It might even lead to economic growth. The efficient provision of needed
roads, education, fire protection, etc. can be essential to a healthy
economy. There are even people who might argue that, under certain
circumstances (not all), public employees would spend more money than
taxpayers and this will boost economic demand. (Count me as skeptical
about the how often this is true and whether we can even know when it is
true or have the state "manage" demand in this way.)
simply say that reducing government employment and allowing taxpayers to
keep the money that would have gone to pay them 'shrinks" the economy
strikes me as wrong. As I have written before, saving the taxpayers
money is not a bad thing.
Cross posted at Purple Wisconsin.