Government job cuts make NO economic sense

[Moonbox]

No. much of what they do is workaday, ordinary, and we know they work thanks to a history of seeing it in action.

We're here talking about something out of the ordinary, and...to reiterate my point--is a fairly unconservative way of thinking.

They're layoffs man. This isn't uncharted territory. Previous governments have initiated large cutbacks in the past and the country didn't blow up. Regardless, the point remains that we can only argue whether or not cut backs are a needed/desirable. Bringing up the possibility that the cut backs will be implemented poorly is a silly argument to use against the proposal in general. I can just as easily suggest that the implemenation will be fantastic and we'll have a wholly positive outcome. I'm not trying to be rude, but it IS a pointless argument to make.

We know we can trust the wise heads to do the right thing, after all. My complaints (not denunciations, but a timid suggestion of caution) are meaningless, as you say...

...and yet, for some reason (unstated) your full-throated defense and support of it--and your opposition to a cautious approach--is meaningful, indeed.

The government spent $20M to have Deloitte, a company with some of the most knowledgeable and professional accountanting consultants in the world analyze operations from Sept 2011 to the end of March to find cost savings. The fact that the government sought expert guidance, that far in advance, suggests that they were trying to make the process as planned out and deliberate as possible. Respectfully, I have far more faith in Deloitte's consultants and their professionalism than I do in your vague misgivings and mistrust of the government.

Well, I'm not positive you're wrong, as I already pointed out. If it seems I'm waffling on this point (trying to have it both ways, or what have you) it's only because I don't feel as sure abotu all this as you seem to. And I find so much surety about such an unknown a little curious.

What certainty? I know as little about how the cuts will affect us as you do. All I know is that the government is making long overdue public sector cuts and I'm happy about this. If they botch it, we'll know in a few years and we can vote accordingly. Given that they spent $20M to find the proper cost savings, however, I'm very hopeful that this will do more fiscal good than bad. My glass is half full. Your glass is half-empty. Neither stance is more curious than the other.

[Michael Hardner]

Regardless, the point remains that we can only argue whether or not cut backs are a needed/desirable. Bringing up the possibility that the cut backs will be implemented poorly is a silly argument to use against the proposal in general. I can just as easily suggest that the implemenation will be fantastic and we'll have a wholly positive outcome. I'm not trying to be rude, but it IS a pointless argument to make.

That's a very good point. I generally agree with what you're saying here, although I would probably debate what the government does with the savings.

Also, to point out, you and BH can't really have a debate here (as you pointed out) because the government isn't publicizing as much as they could. That's not new, but they could be more explanatory if they wanted to.

[bleeding heart]

What certainty?

Please, we were having an honest discussion up until now.

My glass is half full. Your glass is half-empty. Neither stance is more curious than the other.

On the contrary, I think my glass is half-empty, and yours is four-fifths full. And that's a real difference.

[dre]

Also, to point out, you and BH can't really have a debate here (as you pointed out) because the government isn't publicizing as much as they could. That's not new, but they could be more explanatory if they wanted to.

Sorry Harder, but youre on a need to know basis, and that wont change unless we implement some type of functional representitive government.

[Michael Hardner]

Sorry Harder, but youre on a need to know basis, and that wont change unless we implement some type of functional representitive government.

I would argue, on the contrary, that Canada has used its current system quite well. Maybe 3 parties work better in this system than 2?

[Moonbox]

Please, we were having an honest discussion up until now.

What do you mean?

On the contrary, I think my glass is half-empty, and yours is four-fifths full. And that's a real difference.

Okay well the conversation seemed like an actual conversation until this...

[TimG]

You mean the government would gladly employ more employees than are necessary?

The government has tasks it needs to do and a budget that it needs to meet. If the government workers cost less then they could do more tasks for the same money. This means that more people will be employed. The union takes the position that it is better to see important services cut than allow its members to accept wage/benefit rollbacks while trying to whip up public resentment against the government. I am simply pointing out the crass hypocracy of the union position and reminding those people that work to pay the wages of government workers that they are being screwed over by the unions.

[punked]

The government has tasks it needs to do and a budget that it needs to meet. If the government workers cost less then they could do more tasks for the same money. This means that more people will be employed. The union takes the position that it is better to see important services cut than allow its members to accept wage/benefit rollbacks while trying to whip up public resentment against the government. I am simply pointing out the crass hypocracy of the union position and reminding those people that work to pay the wages of government workers that they are being screwed over by the unions.

Unions give up wage increases all the time for job security if the government offered that at the table something could be done. However you are being disingenuous if the Unions took a roll bank this government would not offer job security so this is something you need to be preaching on both sides. Sorry to burst your partisan bubble.

[Argus]

Heard today on the news that on any given day 19000 PS are on sick leave and why, because they can. And I hang out with some, I see it all the time.

This reminds me of a Dilbert cartoon. Wally tells the pointy haired boss that statistically, 40% of sick leaves are on Monday or Friday, and the pointy haired boss immediately grasps that from the numbers, his employees are just trying to fake sickness to get a long weekend!!

Did you know there were over 400,000 federal workers So 19,000 is probably something like a 3%-4% absent rate.

Big deal.

Edited June 22, 2012 by Argus

[Argus]

What is illogical are government worker unions that refuse to consider pay or benefit cuts in order to keep people employed. If the government has to lay off workers to balance the budget then the union is the only one to blame.

Let's just suppose for a moment that PSAC agrees to an across the board pay cut of 5% or 10%. Do you honestly think the government would then decide not to lay people off? Or if they did, how long would it last? A year or two? Three or four? Then they'd be laying people off again -- unless they agreed to another pay cut -- and then another -- and then another. Even if the government is doing fine and doesn't need to lay people off, it will still threaten to just to get that pay cut.

When you come right down to it, they're not so very different than private sector employers in that regard.

[Peter F]

The government has tasks it needs to do and a budget that it needs to meet. If the government workers cost less then they could do more tasks for the same money. This means that more people will be employed. The union takes the position that it is better to see important services cut than allow its members to accept wage/benefit rollbacks while trying to whip up public resentment against the government. I am simply pointing out the crass hypocracy of the union position and reminding those people that work to pay the wages of government workers that they are being screwed over by the unions.

And what were the reasonable pay cuts Treasury Board asked for ?

I'll answer it for you: None. You are creating a fiction to justify the job cuts where there is no need to do so. The government has plainly said the cuts are to cut back on government spending. They have not made up a bunch of bullshit about asking for wage cuts but the union refusing them.

In fact Treasury Board has signed a whole wack of contracts with unions and not a single wage cut in the lot nor any demand for

a wage cut nor any refusals to sign because of wage cuts. Your entire story is a fiction with no basis in reality.

[ironstone]

Well said.

And they're not paying taxes either. 67% of their salary in EI, 20% won't be paid in taxes = 87% of their salary in costs to government. The fact that they'll be consuming less, thus paying less in sales/gas and other consumption taxes and it's a clear loss to the economy.

Mass layoffs in the public sector have never made financial sense.

But they don't have to. They're just a political ploy to appeal to the hardline core supporters who like to see people in pain. Makes them feel powerful to make other people suffer.

I wouldn't worry too much about the people getting laid off.They will get a very generous buyout to help.Remember the real "mass layoffs"during the Chretien years?Do you recall the stories of how many of them were hired back as consultants?

Mass hirings in the public sector do not make sense either.If there wasn't such a high rate of absenteeism in the public service perhaps we wouldn't need so many of them.

[jacee]

I wouldn't worry too much about the people getting laid off.They will get a very generous buyout to help.Remember the real "mass layoffs"during the Chretien years?Do you recall the stories of how many of them were hired back as consultants?

Mass hirings in the public sector do not make sense either.If there wasn't such a high rate of absenteeism in the public service perhaps we wouldn't need so many of them.

Yes ... buyouts/severance, another cost to add to the mix that looks more and more like political pandering than 'savings'.

All environmental services have been targeted as well as any other personal dislikes Harper wants to get rid of.

It's not financial/economic: It's Harper paying off his backers.

[capricorn]

If there wasn't such a high rate of absenteeism in the public service perhaps we wouldn't need so many of them.

These surveys and reports of high absenteeism in the public service pop up every few years.

Nothing will change and bureaucrats know all too well the status quo will live on. All leave benefits are the result of years of negotiations and form part of collective agreements. There's not a chance in hell any of them will be rolled back or swapped for other benefits. Give it a few years and the same issue will resurface in the media.

[TimG]

And what were the reasonable pay cuts Treasury Board asked for?

You missed the point. Why would management bother asking when the union has already set the tone: no wage roll backs. Management also does not need union permission for service cuts so it means service cuts are going to be the first choice. If the union wanted to save jobs with wage reductions/benefit cuts then the onus on the union to make it clear that it is an option they are willing to discuss because they are the ones who made it very clear in the past that such discussions are off the table.

Ultimately, my point is government exists to provide services to people. It does not exist to provide over sized wage and benefit packages to civil servants. If people are unhappy about the level of service they receive from governments they should be asking the union some hard questions about why government workers should continue to enjoy luxurious benefit packages and job security while the rest of the private sector sees their wages and benefits dropping over time.

Edited June 25, 2012 by TimG

[Moonbox]

Yes ... buyouts/severance, another cost to add to the mix that looks more and more like political pandering than 'savings'.

All environmental services have been targeted as well as any other personal dislikes Harper wants to get rid of.

It's not financial/economic: It's Harper paying off his backers.

Buyouts/severance are still far cheaper in the long run than actually paying the contracts. Buyouts happen in the private sector all of the time. It saves the companies money.

[Peter F]

Ultimately, my point is government exists to provide services to people. It does not exist to provide over sized wage and benefit packages to civil servants. If people are unhappy about the level of service they receive from governments they should be asking the union some hard questions about why government workers should continue to enjoy luxurious benefit packages and job security while the rest of the private sector sees their wages and benefits dropping over time.

Yeah yeah. Its the unions fault that government is cutting services. If union pay/benefits was 50 percent less then government would employ 50% more right? just like in the real world.

[August1991]

Let's just suppose for a moment that PSAC agrees to an across the board pay cut of 5% or 10%.

What effect would such an agreement have on aggregate demand?

Argus, you have to see the question from two perspectives: the short run, and the long run.

In the short run, there is clearly inadequate aggregate demand because everyone and his brother is trying to pay down his debts.

Thats the problem with tax cuts as stimulus. Too unfocused.

You are better off targetting the specific activity you want.

Government bureaucrats can't pick winners, and they shouldn't try.

The purpose of a "stimulus package" is to provide aggregate demand when too many ordinary people simultaneously decide to save, deleverage or pay down their private debt.

One way to have a stmulus package is for the government to borrow and hire more employees. Another way is to borrow and reduce taxes. The problem with the second way is that people often simply use the tax cut to pay down their mortgage, and in effect further deleverage.

----

Western economies are suffering an infection: we are collectively trying to save. In the long run, saving is good but when everyone does this too much at one time, it is bad.

Edited June 26, 2012 by August1991

[punked]

What effect would such an agreement have on aggregate demand?

Argus, you have to see the question from two perspectives: the short run, and the long run.

In the short run, there is clearly inadequate aggregate demand because everyone and his brother is trying to pay down his debts.

Government bureaucrats can't pick winners, and they shouldn't try.

The purpose of a "stimulus package" is to provide aggregate demand when too many ordinary people simultaneously decide to save, deleverage or pay down their private debt.

One way to have a stmulus package is for the government to borrow and hire more employees. Another way is to borrow and reduce taxes. The problem with the second way is that people often simply use the tax cut to pay down their mortgage, and in effect further deleverage.

----

Western economies are suffering an infection: we are collectively trying to save. In the long run, saving is good but when everyone does this too much at one time, it is bad.

Now is the time to fix any bit of infrastructure which needs fixing. You want an oil pipeline from BC to NS now is the time to do that. You want fast rail from Ottawa to Montreal now is the time. Everyone is willing to give us money for cheap while they save, we could be keeping our workforce trained we could be investing in the country to make it highly competitive for when others start spending again. No else is going to spend for us but we need to spend or we wont grow. This depression wont last for ever and others will start to spend when they come out of it, we could be more competitive by investing now and we could grab a huge percentage of the market share when we come out of this thing. The time is now, only problem is the opposition were the ones who forced Harper to save the economy last time now he is going to fiddle while Canada burns because the scary opposition does not have the power to do what we all know needs to be done.

[TimG]

You want an oil pipeline from BC to NS now is the time to do that.

The private sector wants to build these pipelines the only thing required is that the government get out of the way.

You want fast rail from Ottawa to Montreal now is the time.

We could employ more people if we simply dug holes and the filled them up.

It would be a more useful investment than high speed rail in this country.

we could be keeping our workforce trained we could be investing in the country to make it highly competitive for when others start spending again.

The skills needed for internationally competitive industries are not enhanced with government infrastructure projects.

Look to Japan if you want evidence for the failure of Keynesian stimulus policies. 20 years of spending and they have a massive deficit and moribund economy. The problem with Keynesians is there is never is a time to stop spending which means debt keeps growing and growing until we see a mess like Europe.

IMO, keeping the deficit under control now is an investment that has a much higher ROI than any possible 'infrastructure spending'.

Edited June 26, 2012 by TimG

[dre]

IMO, keeping the deficit under control now is an investment that has a much higher ROI than any possible 'infrastructure spending'.

A rather silly statement. It entirely depends on what kind of infrastructure projects you are talking about... obviously theres some wastefull ones, but in general good instructure is a key enabler of economic growth.

Go take a look at the countries that spend the least on infrastructure per capita. See how people there live in mud huts, and forage for roots and berries?

[TimG]

A rather silly statement. It entirely depends on what kind of infrastructure projects you are talking about... obviously theres some wastefull ones, but in general good instructure is a key enabler of economic growth.

Countries with no infrastructure do benefit from investment. But we already have most of the infrastructure that we need so the incremental benefit is marginal at best.

Go take a look at the countries that spend the least on infrastructure per capita. See how people there live in mud huts, and forage for roots and berries?

See comment above. More importantly, I would say the following are key criteria for a wealthy society:

1) Capitalist economy;

2) Rule of law with minimal official corruption;

3) Universal public education;

Infrastructure spending is a consequence of wealth - not a cause of it.

[CPCFTW]

Countries with no infrastructure do benefit from investment. But we already have most of the infrastructure that we need so the incremental benefit is marginal at best.

I agree with you on most things, but I do think some infrastructure in Canadian cities is crap.

I would think spending heavily on infrastructure in Toronto specifically could do a lot of help for the economy.

From what I recall, Toronto has the worst commute times in the world, and they will only get worse as the GTA is growing very quickly. That certainly isn't conducive to a productive society. Investing in world class public transit in the GTA (and maybe expanding some roads/highways) would improve the efficiency and productivity in an area containing 1/5th of the Canadian population.

For example, if 1-way commute times in the GTA are 1 hour on average, and we managed to reduce that in half, then 6 million people will have an extra hour of time per day. That time can be used for improving their quality of life/happiness, working more, innovating, etc.

I'd also suggest offering free wifi in public transit so people can work/study while commuting.

The problem is Dalton bankrupted Ontario for his windmills, so we can't expect much from him. And the feds were given a mandate to balance the budget, so it doesn't make any sense to blame them.

Edited June 27, 2012 by CPCFTW

[TimG]

For example, if 1-way commute times in the GTA are 1 hour on average, and we managed to reduce that in half, then 6 million people will have an extra hour of time per day.

Have you actually costed out what it would cost to achieve that? I suspect it would run into the trillions. If you actually looked at the ROI for a project that likely to be funded you would be hard pressed to justify on that alone. I also did not say there was no benefit - just that the net benefit is small compared to the cost.

I'd also suggest offering free wifi in public transit so people can work/study while commuting.

People who need that have 3G/4G cellphones. People who don't want to pay likely don't benefit from such expenditures.

The problem is Dalton bankrupted Ontario for his windmills, so we can't expect much from him.

This is the entire problem: give governments a license to spend and it wasted on useless fads. Better off not spending the money.

[CPCFTW]

Have you actually costed out what it would cost to achieve that? I suspect it would run into the trillions. If you actually looked at the ROI for a project that likely to be funded you would be hard pressed to justify on that alone. I also did not say there was no benefit - just that the net benefit is small compared to the cost.

I haven't, but I do think it's something policymakers should consider... I don't think getting a ROI over the 1-2% yield on long term bonds should be that hard to beat.

People who need that have 3G/4G cellphones. People who don't want to pay likely don't benefit from such expenditures.

Good point here, but I was referring to underground transit where there is no cellphone service. User fees could be a good idea to mitigate some of the costs or make an operating profit though.

This is the entire problem: give governments a license to spend and it wasted on useless fads. Better off not spending the money.

I never suggested a license to spend, but I do think internet connectivity and faster public transit are two good places to spend to enhance the productivity of a service economy.

Edited June 27, 2012 by CPCFTW