Tuesday, June 12, 2012

Doing Fine?

Every politician at one time or another makes a gaffe. This is usually an isolated comment that begs to be taken out of context. An example of this is Mitt Romney’s statement in January that “I like being able to fire people.” He was speaking specifically about liking to be able to drop one health care provider and switch to another, but the sound bite was too irresistible not to repeat multiple times. And it dovetailed nicely with the image of Romney as a vulture capitalist.

Another type of gaffe is the one defined by journalist Michael Kinsley thusly, “A gaffe is when a politician tells the truth.” An example of this is President Obama’s comment on Friday, “The private sector is doing fine.” No one took that bite out of context. Its meaning was clear. The president was saying that his main focus was on the cutbacks in the public sector, which is shedding jobs, and less on the private sector, which is adding jobs—although at a rate that will take ages to bring the country to anywhere near the employment level of the Bush administration. Many media outlets reported that the president “backtracked” or “walked back” his gaffe, but that’s not really accurate. In his clarification four hours later, he emphasized, “Listen, it is absolutely clear that the economy is not doing fine.” Now, that is a quote no president really wants to have coming out of his own lips, but he said it anyway to make sure people knew he was not out of touch. But he purposefully did not take back his comment that the private sector was doing fine. The president’s original comment should not be treated as a gaffe but as a clear indication of where his priorities are.

This is similar to Romney’s “gaffe” in February when he told CNN, “I’m not concerned about the very poor.” Just as Obama was making the point that one group presented a more urgent situation than other, so Romney was emphasizing his concern for the middle class. There may be valid reasons for this emphasis, but it never sounds good politically when you say you’re not concerned about the very poor. Similarly, if you’ve been laid off by a company, it cannot be very comforting to hear the president say that the private sector’s doing fine. Does the president really want to be seen favoring one group of workers (public employees) over another (private sector employees)—especially when the group he is favoring represents only eight percent of the workforce?

Any damage to Obama from this particular remark goes beyond the fact that people out of work may resent him for not feeling their pain. It betrays a faulty understanding of the economy. After all, if the private sector were “doing fine,” then it would be producing enough tax revenues so that state and local governments would not have to be laying off employees. Moreover, there is an all-too-easy rebuttal for Republicans to make. Yes, local and state entities are shedding jobs faster than the private sector but, even so, unemployment in the government sector is still at only 4.2 percent (according to the Bureau of Labor Statistics) compared to an overall 8.2 percent unemployment rate. So on what basis would the president be singling out government employees for special concern?

Think about it. If you work for a private company, you are helping to earn profits that pay for your salary. Moreover, you and your employer are paying taxes that pay for public employees’ salaries. On the other hand, if you have a government job, you may be doing something very worthwhile, but you are not helping to generate profits. You might be collecting taxes or fees, but overall you and your fellow public sector employees collectively are not bringing in enough to pay your own salaries.

You may ask, what is the difference between being paid a salary out of company profits and being paid out of taxes or fees collected for government services? It is true that services like education and law enforcement are ones that people would willingly pay for in the marketplace if they were not provided by the government. You can think of teachers and police as being hired by their local districts or cities and that the taxes and fees that pay their salaries as being little different from the profits earned by private companies. And those particular jobs nearly approximate the private sector because citizens theoretically have some control over them as services because budgets are subject to elections and bond levies. But the more that funding for these services comes from the federal government, the less like a marketplace it becomes. And keep in mind that we are speaking of public services that people value. We are not even talking about the federal bureaucracy which, in spite of any public good it does, is a net drain on the economy moneywise.

This is not to say that employees in the public sector do not provide necessary services. But employees in the private sector only get paid as long as it makes economic sense to pay them. When the economy turns bad, they are at risk of losing their jobs. When those workers lose their jobs, there is less money for paying workers in the public sector.

Morally, a national leader shouldn’t distinguish between workers in one sector and another when it comes to showing his concern. And economically, it makes absolutely no sense to favor public employees over private employees. After all, you need people in the private sector to be working so that you can pay people in the public sector. The president’s position is a bit like addressing a food shortage by saying the farming sector is doing fine and we should be worrying instead about supermarkets.

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