Government, Inc.: the cost of government competition with private enterprise

Recently, Wall Street Journal columnist John Fund observed, “the politics of the next decade are likely to center on a debate over how to deal with a public sector that often seems to exist more for the benefit of its employees than its citizens.”

As America observes Labor Day 2010, it is time to recognize that the paradigm in America’s political and labor discourse has dramatically shifted.  While the great debate and struggle of the 20th century was labor versus management, the 21st century has ushered in a new dichotomy: government vs. private enterprise.

Since President Obama’s inauguration in January 2009, total private sector employment has decreased by 3.3 million jobs, while the government workforce has grown by a net 34,000.

This trend comes amid another transformation in the American workforce.  Earlier this year, the Bureau of Labor Statistics reported that 12.3% of U.S. workforce belongs to a labor union and, for the first time in U.S. history, more public sector employees (7.9 million) belong to a union than private sector employees (7.4 million).

It is not surprising that campaign spending by public sector unions favors Democrats.  What is surprising is the imbalance in their preferences.  In 2008, the International Firefighters PAC contributed $2.7 million to candidates, 87% to Democrats, Service Employees International Union PAC, $2.3 million, 94% to Democrats, American Federation of State, County & Municipal Employees PAC, $2.1 million, 98% to Democrats, and American Federation of Teachers PAC, $2.2 million with 99% to Democrats.

From botching its response to Hurricane Katrina to failing to address the mortgage crisis to ineptly handling the oil spill in the Gulf of Mexico, the federal government has become too big to succeed.  The reason?  Government, in an effort to be all things to all people, cannot provide the basic services fundamental to its core mission.  Above all, the federal government is spread too thin, attempting to carry out activities best left to private enterprise.

The total federal payroll is 2,803,000. Of that, 1.9 million are in non-postal, non-uniformed military positions.  More than 850,000 or 44.7 percent of the non-postal, non-military are in positions that are commercial in nature. Those are functions also found in private companies — small business and large corporations.  However, fewer than 20 percent of the 850,000 positions have ever been subjected to the “Yellow Pages” test, which applies market competition to commercial functions of the government to determine the best value provider.

When campaigning for his stimulus bill in 2009, Mr. Obama said his goal was to “create 3 million new jobs, more than 80 percent of them in the private sector.” Senate Majority Leader Mitch McConnell (R-KY) replied, “Well, do we really want to create 20 percent of the jobs in the public sector? That would be 600,000 new government jobs. That’s about the size of the post office work force.”