In an article for Time, Rich Lowry goes after President Obama’s statement that the private sector is fine he says this:
From the beginning of the recession in December 2007 until today, federal, state, and local governments altogether have lost 400,000 jobs—-in an economy that employs 130 million people. About 85% of people work in the private sector. The public sector can be doing “dandy,” and if the private sector is still only doing “fine,” the vast majority of Americans will be in a weak and perilous job market.
State and local workers perform important functions. Never before, though, have they been considered engines of short-term economic growth. Teachers aren’t entrepreneurs. Cops and firefighters don’t hire people. Lacking the discipline of the market, the public sector is woefully inefficient. As a purely economic matter, you’d much rather add private rather than government workers.
If you think about it for a minute, you’ll realize that some of this applies to most of the people in the private work force also–I’m not going to be hiring anybody any time soon and neither are most private sector workers. Thus he’s saying that all that really matters are the rich. The thing is most of the gains from the depth of the recession have gone to the rich and yet we’re still in pretty bad shape. What he’s leaving out is demand–customers are needed to buy the products. And customers buy products if they have money and it doesn’t matter if the money comes from a public or private sector job.
Also, you should always beware of statistics. For example, if you go to the link that Lowry provides as a basis for his number you’ll see that the loss of 400,000 public sector jobs starts in December 2007; if you instead look from when Obama was elected it’s 600,000 and:
Since Obama was elected, the public sector has lost about 600,000 jobs. If you put those jobs back, the unemployment rate would be 7.8 percent.
But what if we did more than that? At this point in George W. Bush’s administration, public-sector employment had grown by 3.7 percent. That would be equal to a bit over 800,000 jobs today. If you add those hypothetical jobs, the unemployment rate falls to 7.3 percent.
Both of those numbers, it should be said, are holding all else equal: If more workers had reentered the labor force, the unemployment rate could be higher. And if there were 1.4 million more Americans with jobs, they’d be spending money and creating jobs for other people. So private-sector employment could be higher, too.
Go here for the statistics in context. He, of course, throws in a crack about how inefficient the public sector is. I guess he doesn’t think healthcare matters:
Mitt Romney wants private insurers to compete with Medicare. I’m actually OK with that in principle: as Austin reminded me last week, there’s evidence that competitive bidding for Medicare contracts could lower costs by around 8% in urban areas that have lots of providers. That won’t save the republic, but it’s nothing to sneeze at either.
At the same time, private insurers already compete with Medicare. It’s called Medicare Advantage, and so MA has mostly fallen flat: it costs more than traditional Medicare and provides only slightly better benefits. Romney hasn’t yet explained how his version of MA is going to be better than the current version of MA, and until he does I don’t see much reason to be interested in his proposal as anything more than boilerplate rhetoric to demonstrate that he’s a free market kind of guy.
And Social Security has administrative costs of about .6% (about 2.3% for disability), that’s a lot lower than private pensions.