Monday, February 23, 2015

Public Sector Millionaires

"Life is a long succession of vested interests, though we are inclined to see everyone’s but our own," says Theodore Dalrymple in this article in which he points out that senior public servants these days are often millionaires. The difference between public service millionaires and most others is that the public servants tend to deny that they are acting entirely in their own interests, preferring to delude themselves and others that they are pursuing their careers solely for the benefit of society.

Wellington, the capital city of New Zealand where I live, now has the highest household income (at nearly $100,000) and GDP per capita ($58,000) in New Zealand. It is no coincidence that it is where most of the public servants live. I have written before about how I have noticed the decline of Wellington's private sector economic base over the past couple of decades. Suburbs that used to be filled with factories and distribution companies are now empty of all commercial activities except for 'large box' retailers and recreational businesses that serve the prosperous bureaucrats that remain.

And prosperous they most certainly are. At the highest executive levels, public servants may still earn less than those in the private sector but across the board the relationship between salaries in the public and private sectors is significantly reversed. A divisional manager in a government department with a few dozen staff is likely to receive an annual salary of $150,000 to $200,000, whereas if you take an equivalent role in the private sector - say, a manager of a regional factory for a national manufacturing company with a similar number of staff - the role would be lucky to earn $100,000 and more likely about $70,000 to $80,000. And I know who would have the most risk and stress in their job - the factory manager, who undoubtedly is continually fighting for the factory's survival against international competition.

Many public servants appear to have no idea how the tax revenues that pay for their positions are generated. That is because many of them have never had a job where they have had to pay their own salary out of the margin from selling the products and services they produce. They have no idea about the economic value that must be created to generate the profits on which the taxes are levied that pay their salaries. They don't have to compete for customers - the people public servants love to call 'customers' are not customers at all, but rather members of the public who are forced to deal with them. They have no appreciation of the plight of the business owners who, if they have a bad month of sales, aren't able to draw any income out of their businesses at all, or who have to borrow to pay provisional and terminal taxes because their revenues have dropped after one good year.

It is no surprise that public servants almost universally have left-wing political views - after all, turkeys do not vote for an early Christmas. They regard the economy as just one big money-go-round, a zero-sum game in which they are entitled to grab what they think is their fair share. Public servants invariably regard themselves as empathetic types, bestowing their largesse with other people's money on those they regard as the deserving in society, and yet in their well-off Wellington suburbs they are often as isolated from the deprived in our society as anyone. And they have no empathy at all for those in the private sector struggling on much lower incomes than themselves.

When I was growing up, our rich neighbours were those with their own businesses. Today they are public servants, and I think that is an indictment on our our society and a sign of our ultimate economic decline.

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