Reality In Greece

This is just a semi-anonymous comment on a popular blog quoting an unnamed source.  That said, it rings true.

As an aside, not one Greek public employee has been laid off over this mess. They are sucking the blood out of the country and because they are so numerous they represent the biggest voting block in the country. The situation there is hopeless. Talking with a friend last night she talked about the number of big companies that have been holding on with the hope of it turning around. Since the first of the year they are calling it quits. In her Athens neighborhood whenever a store front business goes broke a “Jewelry for cash” shop springs up. According to her, and she’s been extremely credible, most Greeks are at the end. There’s nothing left to sell, credit cards are tapped, and every maneuver imaginable to stave off personal economic disaster has been used. People are beginning to go hungry. They may not have technically defaulted but they are beginning to technically starve.

The situation in the US with public employees and the electoral dynamic involved is exactly the same.  The only reason the US is not in the same position as Greece is that the US has the world’s reserve currency and Greece, by joining the Euro, doesn’t have its own currency at all.  It has nothing to do with working hard or being lazy as some kind of national character.

Greek austerity, essentially imposed by a dictator acting on behalf of international financial interests – to a large degree US financial interests – is killing people.  It has to stop.  The Greeks themselves have to stop it.  I hope they do.

It will then be the rest of the world that is indebted to Greece, as western civilization always has been.

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9 Comments

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9 responses to “Reality In Greece

  1. Andrew MacDonlad

    No it isn’t; you’re just flat out wrong in this post. The number of Federal government employees has shrunk dramatically in the last 30 years:
    http://www.politicususa.com/en/big-government-obama-reagan

    Lots of federal employees leaving not because of firing but mostly through attrition.

    In fact, most departments are struggling to fulfill their congressionally mandated duties due to lack of personnel:

    http://www.washingtonpost.com/politics/irs-tight-budget-hurting-taxpayers-watchdog-says/2012/01/10/gIQAXVXwqP_story.html

    The biggest problems for US spending are as follows:

    1. Medicare
    2. Medicare
    3. Social Security
    4. Medicare

    http://www.cbo.gov/ftpdocs/108xx/doc10871/Chapter3.shtml

    This isn’t like Greece at all. Our heathcare system is broken, not our federal government employment system.

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    • Hello Andrew.

      So nice to have thoughtful commentary. I have to disagree that your link indicates that federal government employment has “shrunk dramatically in the last 30 years.” The linked article describes only “non-military” employees and shows that it’s hovered around 3 million the whole time. I’m assuming, though it would take more time than I have right at the moment to verify this, that it does not include or account for state government employment that is a direct result of federal mandates, nor contracts that result in what is effectively government employment albeit one step removed.

      I don’t disagree that Social Security and Medicare are huge problems. There’s a discussion in there somewhere, also probably more worthy of another post, about the quasi-nationalization of the health care “industry”, just as there has more recently been a quasi-nationalization of the banking industry.

      Give me a little time on that to see what I can come up with.

      The larger point, that “austerity” is and will continue to be a disaster in Greece, may be primarily grounded in anecdotal proof right now. Sometimes anecdotal proof is more reflective of an agenda than reality; but the same can be said of statistical studies by governments or banks (or do I repeat myself) or think tanks.

      I’ll get back to you.

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      • Andrew MacDonlad

        Well, to be more accurate, total civilian employment in government has dropped by about 30% in per capita terms over the last 30 years. In addition, authorized military personnel have also shrunk dramatically over the last 30 years as well, so total federal employment has decreased significantly and in per capita terms it’s gone through the floor.

        Also, total government employment in the last 30 years has about tracked population growth:

        http://www.data360.org/dsg.aspx?Data_Set_Group_Id=228

        By far the largest share of local government expenditures is for education (about 70% of the total local spending) and so it’s not surprising that local government employee counts track population growth.

        http://www2.census.gov/govs/apes/10locus.txt

        Moreover studies on compensation for federal employees (the most well paid of the bunch) show that, at worst, federal employees are overpaid by about 10% of their private sector counterparts. Most studies show compensation to be about equivalent.

        As to the issue of contractors, it’s true that the number of government contractors has increased. It’s hard to get a handle on their exact count, but one of the best attempts is here:

        http://wagner.nyu.edu/performance/files/True_Size.pdf

        Even including all contractors, including military, the rate of growth of federal employees still tracks pretty closely to population growth. Note however, that almost all of the growth in contractors is for *military* contractors (most of which came during the Bush era and probably had a lot to do with Af/Iraq). You can see that by looking at this:

        http://www.usaspending.gov/explore?&carryfilters=on&tab=By%20Prime%20Awardee&fiscal_year=2011&tab=By+Prime+Awardee&fromfiscal=yes&trendreport=top_cont

        Almost all of the top contractors are military.

        So federal government employment ex military has fallen behind population growth, and it isn’t due to a shift downward to lower levels of government. Inc. of military , total government employment growth fairly well tracks population growth.

        Our situation is *nothing* like Greece or Italy. If anything, we should probably be adding federal government employees. We are spending too much money without enough oversight, which is directly related to lack of manpower.

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        • Well yes, that last chart points to 270,000 paid federal government contractors, with the 100th on the list receiving $635 million. This is a sizable shadow government payroll, doing my best to practice understatement.

          I agree that most of the top 100 are defense contractors, which is not surprising. It’s a little surprising to find Merck in that group. And MIT. And Johns Hopkins.

          “Nothing” like Greece or Italy? That’s going a little too far, methinks. Bloated government is bloated government, whether this side of the Atlantic or in the Mediterranean. The nature of the bloat may be different. Greece and Italy may be more inclined to social spending, encouraging frank government dependency among their populations. In the US it is the creaking bloat of Empire, which is a more nuanced kind of dependency: it’s hard and dangerous work, this ultimately violent effort to subdue the rest of the world and cleanse it of communism, or terrorism, or some other “ism” of the hour. Our soldiers and sailors work hard and risk much. But it’s an effort grounded in force and violence, or the threat of it. It has no application to voluntary and peaceful interactions. You wind up in a situation where you’ve cultivated an institutional interest in suppressing or displacing those kinds of interactions, lest they overtake forced and coerced interactions, leaving the institution to lose its reason for existence. Put another way, the institution fight to preserve itself at the expense of the free market. Does this not make the institutional actors dependents, but of a more forceful and dangerous kind?

          Police forces are a wholly domestic analogue, cleansing the nation of “crime”, an increasingly elusive category, encompassing at this point all kinds of conduct with no moral content of any kind. And employment in police forces has exploded in the last 30 years.

          https://strikelawyer.wordpress.com/2011/02/20/civil-unrest-failure-of-the-rule-of-law-some-revealing-justice-department-statistics-greenfield-fail/

          Adding to the official government payroll may well be an improvement from the standpoint of transparency, no argument there. That article you link to makes the point that one of the apparent purposes of delegating so much to contractors is to obscure the true size of government.

          The Greeks and the Italians are heavily, hopelessly indebted for their folly. So are we. Time for a jubilee.

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          • Andrew MacDonlad

            Your reply is non-responsive of the point that even with contractors and military included, total size of the government payroll has only grown in line with population growth since 1980s (and has shrunk in per capita terms as compared to the 1960s-1970s).

            I grant you that the sins of the empire make it harder for us to reel in military spending. But it isn’t military spending that is raising the government’s percent of GDP.

            Total US spending history:

            Notice the role Medicare has played in keeping the share of government spending up.

            Now, there is always fat to trim in any government, you’ll get no argument from me there. But the *growth* of government spending is almost exclusively in programs that are highly efficient from an administrative point of view. Medicare spends about 2% of its budget on administration, compared to about 17% for private insurers (see: http://www.kff.org/medicare/upload/7731-03.pdf, page 3)

            The fact pattern of spending since 1980s is as follows:

            1. Defense spending as a share of GDP has gone down
            2. Government employment, defined broadly, has essentially only kept pace with population growth
            3. Discretionary spending as a share of GDP has gone down
            4. Medicare + Medicaid spending has skyrocketed as a percent of GDP
            5. Social Security spending, as a percent of GDP, has been increasing modestly.
            6. These two programs have very low administrative costs

            Conclusion:
            Unless you’re serious about reforming health care, you aren’t serious about dealing with the deficit. “Bloated government,” as defined as either unnecessary bureaucracy or poorly spent funds, is not a driving factor in growing the government budget deficit. In fact, all evidence suggests that any category of government spending that could be defined as “bloated” has shrunk as a percent of GDP in the last 30 years.

            So no, we are not like Greece at all. Our problem is not sclerotic government (not by a long shot) but rather medical entitlement spending.

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            • Non-responsive? Moi?

              The little chart shows a bloated government apparatus that consumes nearly 25% of GDP, up from under 20% circa 1970. Either is way too much. 10% is plenty.

              The only point I was making was that it’s going too far to say that the US is not like Greece “at all”. That doesn’t mean there aren’t some differences.

              Health care, yeah. But pensions, too. You’re looking at an aging population. We need a baby boom, AND a jubilee. That will fix everything.

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            • Also, Andrew, regarding “reforming” health care. I devoted some thought to this years ago, and I don’t know if you would find this idea intriguing at all but I thought I’d bounce it off you.

              There are some things the government does well, in my opinion. Primarily things that involve high volume mass production and standardization for a very predictable need. Like equipping an army, for example.

              You can run a fairly large hospital for about a half billion $ per year. Put an average of two in every state. Throw in a few clinics and intermediate care facilities like nursing homes.

              Make it all free for users.

              So, for maybe $100 billion a year or so the government provides free health care directly. Medicare and medicaid are abolished. Costs are controlled. Government is out of private health care completely, other than maybe the regulation of health insurers.

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              • Andrew MacDonlad

                Large hospitals are desirable on many grounds, the first of which is that coordinated care centers have better health care outcomes. If the specialist can easily pull up the chart on his computer that your primary doctor made notes on, or even call him up directly with a question, then that’s a huge win right off the bat. They also are, as you note, more efficient.

                If what you’re advocating is essentially like a single-provider system like the VA in which the hospitals are government provided and health care is provided for a minimal use charge, then I’d be all for that: http://minnesota.publicradio.org/display/web/2009/08/17/va-clinic-care/

                The UK has a similar system to what you propose. They spend about £100 billion per year for the NHS, which would be about $750 billion if scaled to the size of the US (note that Medicare + Medicaid cost the US government about $750 billion). If you need elective surgery or want to see a doctor faster, there are a number of private doctors that accept fee for service insurance schemes or cash.

                However, while efficiency gains are always worthwhile, it doesn’t really address the problem of why healthcare costs are spiraling out of control. The two main cost centers for the healthcare system are those that are chronically ill and those needing end of life care. Lots of very expensive pharmaceuticals and medical devices have been developed to treat people in both of these positions. Until you address the growth in cost of those two areas, you haven’t, as Obama and his people put it, “bent the curve”.

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              • I think there are some chronically ill people. And then a lot of hypochondriacs.

                Just kidding.

                If there’s all this spiraling, and people feel that government should meet that need (not that I agree with that), all I’m saying is that the government should do it directly and leave everyone else alone. Right now my thinking is that we’re stuck in this nightmare where health care is hybrid government/private, really quasi or pseudo nationalized, and the main beneficiaries are – of course – the insurers who have the best lobbying personnel and skills in DC. You know, the typical corporatist/mercantilist model that works so well for the defense industry brought to your friendly family doctor. It’s quite intolerable, really.

                Like

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