Better Fewer, But Better

File:5.29.10NYPDByLuigiNovi6 1

Many commentaries today on the subject of public sector pay, my favorite of which are by Jonathan Cohn and Adam Ozimek.

But I would posit that the important issues here are different from the ones people are talking about. One key issue is the actuarial health of public sector defined benefit pensions. The issue here is that the health is poor. Whether or not the pensions are “too generous,” they’re as generous as they are and they generally aren’t funded properly. The other key issue is the quality of services. If it’s true that public sector workers earn more than superficially similar working in the private sector, then I don’t necessarily have a problem with that. After all, paying people more should mean you get better people. High quality people and high quality public services are important, and I’m happy to pay for them. But of course if we’re not getting high quality public services, then something’s gone wrong.

That strikes me as the crucial point. If there’s a change we could make that would reduce overall teacher compensation while not degrading the quality of education, then of course we should make it. My read of the landscape is that the reverse is probably true—there are changes we could make that would substantially improve the quality of American education, but they would almost certainly require an increase in overall teacher compensation since they involve decreasing teachers’ job security. Whether parallel situations exist in public safety services, I couldn’t say. Beyond that, at the state and local level I’m inclined to say that it’s more common to see people being paid to do things that really shouldn’t be done at all—does New York State really need people out there preventing the scourge of interior designing without a license?—than that they’re being paid too much per se. I would say that $0.00 is the right amount for Indiana to be paying people to oversee the licensing of hypnotists, and the Indiana legislature did the right thing by voting to abolish the hypnotist-licensing system as of this summer. But if I’m mistaken and it’s actually quite important to be licensing hypnotists, then we should probably be paying the licensers pretty well to make sure our candidates have sufficient psychic strength to resist being glamoured by the people they’re supposed to regulate.

When you think about the federal government, the people regulating the financial services industry pretty clearly need to be paid more so that their incentive is to do a good job and get promoted, rather than to do a bad job and cash in. Similarly, regulatory agencies with worthwhile missions need to be able to hire lawyers and scientists good enough to go toe-to-toe with industry stooges. But a regulatory agency with a non-worthwhile mission is by definition overpaying everyone it employs.

V.I. Lenin offered related thoughts in 1923 that I think are worth your time.