Wednesday, October 05, 2005

Nagin, define "essential"?

"Essential" in government employment has a drastically different meaning than in the private sector.
Mayor of New Orleans Announces Layoffs

Mayor Ray Nagin said Tuesday the city is laying off as many as 3,000 employees — or about half its workforce — because of the financial damage inflicted on New Orleans by Hurricane Katrina.

Nagin announced with "great sadness" that he had been unable to find the money to keep the workers on the payroll.

He said only non-essential workers will be laid off and that no firefighters or police will be among those let go.

"I wish I didn't have to do this. I wish we had the money, the resources to keep these people," Nagin said. "The problem we have is we have no revenue streams."

Nagin described the layoffs as "pretty permanent" and said that the city will work with the Federal Emergency Management Agency to notify municipal employees who fled the city in the aftermath of Katrina, which struck about a month ago.

The mayor said the move will save about $5 million to $8 million of the city's monthly payroll of $20 million. The layoffs will take place over the next two weeks.

"We talked to local banks and other financial institutions and we are just not able to put together the financing necessary to continue to maintain City Hall's staffing at its current levels," the mayor said.
If the people being let go are "non-essential" employees, why were they being employed in the first place? If they were indeed indispensable and necessary to the New Orleans government's functions, wouldn't that make them, well, essential?

So, Nagin, there are two possibilities. You're terminating people who actually were essential but are now unaffordable, which means you need to be more precise in who you call "essential." Or you've been employing a lot of people who are truly not essential, which means your government has wasted a lot of the taxpayers' money to hire unnecessary people. (This is setting aside the issue of what government employees are actually essential.)

A note to those who fear the supposed rise in unemployment, and perhaps depressed wages because the newly unemployed will be willing to work for less, from people laid off from government jobs. Bastiat in "What Is Seen and What Is Not Seen" addressed the issue using the example of soldiers:
Now comes demobilization. You point out to me a surplus of a hundred thousand workers, intensified competition and the pressure that it exerts on wage rates. That is what you see.

But here is what you do not see. You do not see that to send home a hundred thousand soldiers is not to do away with a hundred million francs, but to return that money to the taxpayers. You do not see that to throw a hundred thousand workers on the market in this way is to throw in at the same time the hundred million francs destined to pay for their labor; that, as a consequence, the same measure that increases the supply of workers also increases the demand; from which it follows that your lowering of wages is illusory. You do not see that before, as well as after, the demobilization there are a hundred million francs corresponding to the hundred thousand men; that the whole difference consists in this: that before, the country gives the hundred million francs to the hundred thousand men for doing nothing; afterwards, it gives them the money for working. Finally, you do not see that when a taxpayer gives his money, whether to a soldier in exchange for nothing or to a worker in exchange for something, all the more remote consequences of the circulation of this money are the same in both cases: only, in the second case the taxpayer receives something; in the first he receives nothing. Result: a dead loss for the nation.
What if the local government does not pay for all the discharged employees' salaries, such that the local economy actually does lose? Let's say that federally funded road construction were severely curtailed in West Virginia. Since most of the money comes from the rest of the U.S., that cut in spending would indeed be an economic drop for West Virginia, and Robert Byrd wouldn't be as popular.

But consider this: why did anyone in the first place consider it fair to pay for their government using tax monies from another jurisdiction? When we consider what is not seen, we realize that the cutback means an economic boost for the other states, whose people are unfairly taxed to support pet projects elsewhere. Nothing is actually lost.

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2 Comments:

Blogger Brad Warbiany said...

Perry,
You can easily make the point that the reason these employees are no longer "essential" is that the businesses and residents they're jobs are designed to serve are gone. Ask yourself why the tax base is gone, and it's because workers and businesses fled to new places. A lot of those people aren't even coming back.

Not to say that their job functions were ever something that a libertarian like myself would call "essential" functions of government. But as Bastiat would say, if you hire a sow to dig you a ditch, and he completes the ditch, he has suddenly become a non-essential employee, has he not? What is seen is that your ditch is complete. What is not seen is the un-dug ditches all over the rest of the land :-)

Wednesday, October 05, 2005 2:47:00 PM  
Blogger Perry Eidelbus said...

Certainly true, although these jobs were typically meant to be long-term and continuous, not short-term contractual. And even in municipalities not experiencing sudden population decreases, employees are often classified as "essential" and "non-essential." Here in New York, we have a distinction made between "essential" projects and "non-essential" ones. By what standards, and why are city and state governments embarking on "non-essential" projects? If they're really needed, they're hardly non-essential. If they're not really needed, the politicians should admit that they're pork. That's why I find the common use of "essential" to be ridiculous when it comes to government spending.

What bugs me is that the New Orleans' mayor's explanation implies that firefighters and police are "essential" while others are not. Considering how New Orleans police have spent a lot of time going door-to-door so they can confiscate peaceful residents' firearms, I'd start looking at the police as non-essential, if not in fact harmful to self-defense.

Wednesday, October 05, 2005 4:31:00 PM  

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