What If Barack the Government Job Slayer had Been More Like Reagan the Government Job Creator?

Okay, I think we can all agree that the participation rate is a sign that the economy is weak and the credit crisis was devastating.  There’s no denying that.  But what’s really held back the labor reports over the last 5 years is the rate at which the government has destroyed government jobs, not the participation rate.  To emphasize this point, let’s just review what Barack the Great Slayer of Government Jobs, has achieved since he took office.

Barack Obama is on pace to preside over the only Presidency in the post-war era to average negative government employment growth.   Since 2009 when he took office the total size of the government workforce has declined by 706K jobs.  That’s about 3.1% of the government workforce.  That’s not a huge number, but let’s put that into perspective.  During Ronald Reagan’s first 5 years in office the government created 623K jobs which expanded the size of the government workforce by 3.8%.  Ronald Reagan was a huge creator of government jobs.  In fact, over the course of his entire presidency the size of the government workforce expanded by 9%.

Now, what if Barack Obama were more like Ronald Reagan?  What if the government workforce had expanded by 3.8% up to this point during the recovery rather than contracting by -3.1%?   There would be about 1.5 million more people employed today than there actually are.    The total size of the workforce would be roughly 138 million people in this case.  And instead of talking about the declining participation rate we’d be talking about how we’re at all-time highs in employment.

If only Barack could have been more like Ronnie.

Cullen Roche

Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services. He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance and Understanding the Modern Monetary System.

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    • So when we talk about “government jobs” we should just turn a blind eye to about 85% of them? How do you rationalize such a view?

      • He wants to leave out the data that makes his political agenda look bad. Talk about misleading. LOL.

      • Since the President is Chief Executive of the federal
        government and NOT the governor of fifty states and
        mayor of 20,000 cities.

        • The federal government whose workforce has been shrinking for the nearly *two years* your table ignores? That federal government? :-)

        • The state and local govt cuts over the last 5 years have been largely the result of federal cutbacks. If the federal govt disburses funds to the states then their balanced budget amendments are easier to hit. If the federal govt cuts back then the state and local govt’s have to cut back also. So you’re not really representing the story correctly there.

          Besides, federal employment is down since 2/2009 when Obama took office. I corrected your error there last time, but still trot out the statistics ending in 2011. Why are you providing an intentionally narrow view of this situation?

          • Obama’s been the victim of “bare bones” federal spending because the Republicans wanted it that way. No budget has passed for four years. I don’t see how Obama can take credit for something he tried not to have happen. It’s been like trying to climb a mountain with no rope, and no clothes. It looks good in black and white though. http://imgur.com/a/ySDMi

            • By no rope and no clothes you mean majorities in both houses until 2010. And calling the 2009 spending bills (9 of them tied together) a “budget” is very misleading.

      • How is a U.S. president responsible for the hiring and firing at the state and local level of “government jobs”?

      • I concur with John on this issue, Mr Roche, as your thread is very missing for the reader…You state “government employment” and then begin to discuss two American presidents, whom have little control over other governmental units staffing other than their own…

        Hear is the real picture of the federal nanny staffing since 2008…

        http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/7190-private-jobs-down-46-million-from-january-2008-federal-jobs-up-114

        • Maybe we’re both writing from the future and don’t realize it’s actually 2011.

          Either way, he’s going to have to revise his thinking. :-)

      • Looks like 2.7 million in Jan 2009 and about same
        October 2013. I don’t count Obama
        as responsible for state and local numbers
        anymore than I hold him responsible when the garbage
        isn’t picked up. My point is I don’t see a huge drop
        in federal civilian employment. I don’t think there is
        any ideology involved in these statistics. Do you?
        I just think when you report these numbers they should
        have labels on them and then you can let your readers draw their
        own conclusion. Sounds fair not ideological to me.

        • Indeed, you can look at that updated federal employment chart and draw your own conclusion. And if that conclusion is federal employment is “up,” that conclusion would be wrong. There’s nothing ideological about it.

          Further, if you examine the trend for the majority of the Obama administration up to the present and conclude the trend is flat, your head might be tilted without your realizing it. If it were a stock, it would be on a sell signal.

            • Why not start in January 2009 instead of March
              2009? In any event we’re talking about approx
              100,000 difference, about 3.7%. This could
              be statistical noise over the course of 5 years.

              • Five years seems like a pretty decent period for smoothing out noise, especially when the topic of the post was specific to the Obama presidencies. One could argue that simply focusing on two endpoints is noisier, as you miss the trend displayed by the intervening data points.

                But okay, back the chart out to 1989 (or 1945, if you like). You see the absolute peak for federal employment, with or without the census pops, under Bush I, followed by a decline.

                On a per-capita basis, it’s even stronger. A 10% drop in federal employment during a period when the total US population increased 30%.

              • This article’s a bit tongue-in-cheek. I don’t actually blame Obama for all the job losses though I probably think he’s more to blame than you seem to think. But I do think it’s pretty interesting that he’s widely thought of as this “big govt” president and yet the govt workforce is shrinking under him. The point is, we’ve cut a lot of govt jobs and yet things are pretty good overall. We shouldn’t be satisfied with the economy, but things aren’t nearly as bad as so many people make it all seem.

                • ” … things aren’t nearly as bad as so many people make it all seem …”

                  Sentiments like that will get you drummed out of the Econobloggers Association.

                • You’re being too kind Cullen. “Pretty interesting” is a metaphor for the craziness of some to ignore evidence because it doesn’t conform to their world view.

                  The best quote I’ve seen lately, “Just because the answer isn’t what you want doesn’t mean your questions haven’t been answered”.

                • You also failed to mention that, under Reagan, the democratic congress created the vast majority of those jobs.

                  Under Obama, the Tea Party led GOP congress has successfully slowed down the growth in the national bureaucracy.

                  • So it was the Democrats that spent all that money on the military while cutting back on education? Got it! Thanks!

                    • Actually, the 80′s democratic congresses spent heavily on both military and education but Reagan vetoed many an education bill.

                      I think the point was that the president, no matter who he is, determines what is spent where.

                      Most of that is due to the liberalness or conservativeness of the various congresses.

        • The point is: the number of total federal employees has been completely flat. Flat is the same as slow shrinkage.

          If Obama had ‘added’ 600,000+ jobs instead, then there would be many more people with jobs and it could be argued those 600,000+ would have created additional jobs via their personal spending. Nearly a million jobs makes a difference, even in an economy as large as the US has.

          Reagan accomplished everything he accomplished by adding debt which was used to pay for new federal employees as well as fund state governments.

          Obama simply hasn’t had that luxury of being relatively debt free and taking over a relatively stable economy as Reagan did. Obama has no choice but to cut in order to tame the massive deficit.

          This isn’t a blanket defense of Obama but on this score, the point Roche make holds up.

  1. What jobs exactly should he be filling? Are we short on Bureaucrats? Hmm.

    Web programmers? I hear Healthcare.org is looking.

    • Why don’t we start by investing in our failing infrastructure? Or are you waiting for it to fix itself?

      • On infrastructure.

        At the risk of being discounted and berated by the quasi intellectual liberal contingent out there, I’ll admit that I live in Arizona. Now, I grew up in California, and I spend quite a bit of time there still today. Over the years, I have noticed something quite stark about how the two states differ in their ability to install and maintain their highways, in particular. Arizona utilizes private non-union contractors to build their freeways. The State incentivizes the contractors to finish ahead of schedule. We have beautiful “roads and bridges”. Especially in comparison to those in parts of California. Our state income tax rates are about half of what Ca charges it’s residents. Our property taxes are much lower as well. Our sales tax rates in AZ are a little higher than CA on a combined ( state + local) basis, but our overall state tax burden is lower.

        As far as I can tell, the “infrastructure” in AZ is fantastic. Where is all this griping about infrastructure coming from. It’s a state level challenge. As far as I’m concerned, the Feds should not be funding infrastructure with federal dollars. States that use their money wisely have great infrastructure.

        Whether it’s fundamentally an accounting gimmick or otherwise, taxation sucks purchasing power from individuals who are naturally inclined to be better stewards of their money than anyone else. While taxes at some level are necessary, I think that many Americans are already severely overtaxed.

        If the government chooses to print money to inefficiently pay for their excessive promises, that’s fine with me. But I think there are a lot of smart and rational people out there (e.g. John Kerry and his tax evading boat docking strategies) who don’t want to pay more in taxes than we already do.

        • Agree 100%. Our roads here in AZ are some of the best in the nation. On a side note…our schools system has lagged for years but recently the state has been pushing more money to private charter schools and, believe it or not, to Catholic schools by way of tax credits and the results have been astounding. AZ is very politically independent which I think is much of the reason they are able to pull these policies off.,

        • So you’re against the federal highway system? Arizona would be a backwater without I10 and I40.

          • No I just think on balance, states need to look out for their own interests more and stop depending on the Federal Government to “solve” every issue. I’m the first to admit that a lot of folks that wave the “states rights” flag need to understand that its more than just rhetoric. In most cases, I’m for taking things as local as possible.

          • Interesting assumption. Somehow you gathered that because I think we are overtaxed, and I think that some states demonstrate more efficient execution in their use of our tax dollars, that I am “against” a federally conceived program like the interstate system. (Which, by the way, is mostly funded by the states right now. Fuel taxes provide most of the funding and the Feds take about $.18 per gallon, and the states take about the same amount or more).

            No, I am not “against” all federal programs. But, I do happen to believe that we as citizens do not demand enough from our elected officials in terms of efficient use of our tax dollars, at the federal level.

            I am glad that I live in a state that uses their money fairly wisely, and where the tax burden is not onerous.

            • It’s not an assumption. These are your own words: “As far as I’m concerned, the Feds should not be funding infrastructure with federal dollars.”

              I’m not sure what you mean by “federal dollars” and how they differ from other dollars, but I’d bet most people would be happy to accept “federal dollars” as payment in kind for services rendered, like paving a road or building a bridge.

              I do agree with you about taxes at the federal level, they should be eliminated entirely except for those actions we might want to punish. When a sovereign currency issuer taxes its citizens it is simply the destruction of wealth. It’s much better to just print the money into existence. It’s fiat after all.

            • Your state is probably very dependent of out of state infrastructure.

              I assume your power is supplied by coal, natural gas, or other fossil fuels delivered by rail, pipelines, road (all infrastructure). I assume much is private but they are still infrastructure.

              Any power transmitted by the grid is by infrastructure.

              Much of your water supply is probably transported through ducts and pipes (infrastructure).

              I assume goods come through the ports of Long Beach and Los Angeles (infrastructure) and delivered by rail or highways (infrastructure).

              The damage a single tractor trailer does to the road is equal to the damage 10,000 cars do to the road. These tractor trailers are probably causing dramatic damage to the roads around the Cailifornia ports.

        • Highways and bridges make up around 25 to 35% of our infrastructure. You have to include rails, water supply, waste water, the electrical grid, waterways, etc.

          Doesn’t Arizona have a water supply problem? And wasn’t most of the current supply funded by federal money? Wasn’t Hoover Dam federally funded? Does this federally funded dam produce cheap electricity?

          Our ports are third rate. They are too shallow for the super ships that transport to other countries. Our rail system is in poor shape. Too often trains have to travel at very slow speeds. Our power grid system is outdated. We lose too much power transporting electricity.

          You would think people would consider bringing our infrastructure up to date as conservatism. The vast majority of engineers trained to build these infrastructures are conservatives. And most of the construction companies in these fields are private.

          • The lake behind the Hoover Dam probably needs to be dredged. Sediment builds up over the years and toxic metals concentrate. The dam supplies water and electricity.

            It needs to be maintained. This is called conservatism. Don’t let the left wing nation building neo-cons at Fox news tell you otherwise. They rather spend money on left wing overseas imperialism.

            • So, you love to pay taxes? My guess is that you are not in the 39.6% federal bracket.

              My primary gripe is that I think we are overtaxed. Between federal and state income taxes, property and sales taxes, fuel taxes, excise taxes on autos, phones, cable tv, hotel use taxes, local municipal taxes, etc, we pay an awful lot of our earnings into a large and often inefficient system.

              I have no problem with paying “my fair share” but it’s kind of ridiculous when our elected officials behave like royalty while we pump our hard earned dollars into the kiln.

              • No I do not like taxes.

                But you were commenting on infrastructure. Infrastructure spending only makes up about 2 to 3% of our GDP and it shows. Our infrastructure is an embarrassment.

                The bulk of our taxes go to Medicare, Medicaid, Social Security, public sector pensions, overseas nation building. We spend peanuts on infrastructure.

                The late Barry Goldwater must be turning in his grave regarding all of this left wing overseas imperialism. Where did all of these left wing neocons come from?

                • I spent 10 days in Europe earlier this year, when I returned I was embarrassed by our infrastructure. They are actually investing in this stuff.

  2. Are you saying he’s just not creative enough on generating new make-work occupations?

    If so, I have a few ideas for him:

    1. Signpost painters – they can candystripe all of our signs during Christmas, and then strip the paint off during the rest of the year.
    2. IRS collection agents with nothing to do – oops, he thought of that one already.
    3. TSAW agents – They could be hired to watch TSA agents to make sure they are doing their jobs correctly.
    4. Surveillance camera installers – I hear it is in fact going to be a great job growth area in the future.

    My point is just that when the private sector creates jobs, it is typically becuase there is demand for a good or service behind the job creation. In the government, not so much. It’s more like installing people to do things that we could likely live without. But whatever, if it keeps someone busy, and they get a check, at least they won’t be wandering around commiting crimes… I guess.

    • Look, you won’t find a bigger proponent of private investment around than me. But I find this claim about govt vs pvt jobs to be spurious at times. There are lots of pvt sector jobs that are pretty useless. The fact that people have demand for speculating in houses, or video games or the next version of a useless tech gadget or gossip website, does not mean that’s a productive use of private spending. This idea that pvt jobs are always good and govt jobs are always bad is based on some silly rational markets thinking. The fact is, people are highly irrational and they spend money on lots of really dumb stuff. The fact there’s private demand for it doesn’t mean it’s good.

      I’ll give you the fact that govt is much more susceptible to corruption and malfeasance in spending, but that doesn’t mean that all govt spending and employment is therefore bad. It just means we have to be more careful how we allocate those resources. That doesn’t mean they can’t be carefully allocated. And yes, there are LOTS of things that need to get done in this country that the govt could pay people to do. Someone mentioned infrastructure above and that only scratches the surface….

      Let’s be careful about painting with such a broad brush. The story’s more complex than that.

      • Not to mention that Federal Government spending supports almost all of the only way we can actually save current productivity for the future, scientific research. Real per capita support for science has declined more under Obama than any president in history.

        If you look at real economic benefits government spending in the US has had a ROI far exceeding that of the private sector. Take the internet as a classic example, the expansion of a pure government investment.

    • Block grant the money to the states for teachers. Everybody’s happy and our kids get smaller classes.

      • Don’t get me wrong. I have friends and family who do wonderful things as public servants. Police officers, teachers, etc. My family has a long tradition of serving in the military, and I know some very smart people who work hard to protect us from cybercrime and similar dangers.

        The ostensible fund pooling system of taxation which pays for important commonly shared services that are orchestrated by our elected officials and carried out by their organizations seems to be a fairly logical way to accomplish all manner of things.

        However, the inherent presence of counter-productive conflicts of interest in the public sector places the onus on the electorate to act as stewards of our own tax dollars. Unfortunately, civilians on-balance have become increasingly disengaged in the stewardship process over time. And, the taxation system applies to a shirinking proportion of the population, as income disparity increases and tax laws change.

        My sense is that our tax dollars, and the dollars marked by debt accumulation of the Treasury are not being spent as efficiently as they could be. Therein lies the issue. Why the heck would I want our elected officials to hire more people, when they can’t efficiently manage the resources they already have?

        • People aren’t disengaged. You’re just making things up. Voter turnout in 2012 was 3% higher than in 2000 and down from 2008/4. The bigger problem is that more people are falling for idiotic ideas like the ones espoused by gold bugs and tea party advocates. This is the party that thinks the government is bankrupt and that we need to move back to a gold standard. These people have no idea what they’re talking about, but their talking points gain votes because they sound rational to the common man.

          • 42% of eligible voters don’t bother to show up. Next time you are at a social event ask a few questions.

            1. How many justices on the Supreme Court?
            2. Name 3?
            3. Who is the minority leader in the Senate?

            Etc.

            The electorate is generally disinterested and disengaged.

            You may socialize with a group who is highly educated and aware, but if so, you are in the minority.

        • The perfect isn’t the enemy of the good.

          It’s ok to bitch about Bureaucracy, normal in fact. But the reason Bureaucracy thrives is because no more efficient system has been devised, but only if you believe in market forces.

          Your tax dollars don’t buy or pay for anything. They are an accounting identity, destroyed once received at the Treasury. It’s a nice trick being a sovereign currency issuer.

          But let’s live it up while it lasts, how about $20T deficit spending in the next 5 years? Lot’s of Big Digs and tunnels into Manhattan but spread out to the states. Let the Bureaucracies thrive and slosh some real money around the place!

          • Not a problem. Let the deficits run. Just let me keep my money. I’m better at spending it than they are.

            • Hey…I just thought of something! If QE is really just fiscal policy in a monetary Halloween costume and truly as inflationary neutral as they all say it is…why don’t we just abolish the income tax?!

  3. On the infrastructure question. The Federal government uses private companies to do infrastructure projects.

  4. Recessions are terrible times to increase Govt direct investment and spending (excludes dollar transfer programs of course. Make the size of the Govt # of employees, contractors, etc appropriate to what we, as a society deem necessary and then cut taxes to maintain ~full employment aggregate demand.

      • Yeah and 90% of economists believe in really stupid things such as the intertemporal budget constraint, banks loan out deposits and are reserve constrained, the US must borrow dollars from China, the market sets the interest rate and that budget deficits increase interest rates and so on…..what’s your point?

  5. Simply counting heads on the government payroll doesn’t tell the full story.

    Edward Snowden was vetted by a private contractor doing the job formerly done by government workers. Does that scenario of private companies replacing government workers make conservatives eager for less government happy or chagrined? Private companies that contract with the government use some of their revenue to buy and wield political influence to expand their operations.

    On the other hand, government workers normally are legally prohibited from buying political favors and are typically not driven like capitalists to relentlessly grow their enterprise. If conservatives would give this matter a moment’s thought, they would side with more government workers and fewer private contractors.

    • “are typically not driven like capitalists to relentlessly grow their enterprise.”

      That is a joke correct, Mr Caplan?

  6. U.S. manufacturing jobs are down from almost 20 million in 1980 to about 12 million today.
    Kind of a bigger long-term trend that federal employment numbers.

  7. I was hired by the USDA in 1981 to work in a “target area” related to conservation initiatives. At that same time, some additional State employees were also hired. It was all federally funded, some directly, and some as “pass through” funds to the State even though the State was considered the official employer. Ronnie RayGun Reagan really piled on the federally funded jobs in the 1980′s. I ended up being a trainer for a couple hundred of them. :-) Just say’n.

    CR is completely correct in his assessment. Doesn’t matter if you liked Ronnie and hate Obama, or vice versa. That’s just the facts. Can’t argue with the facts.

    • Obama is wrong when he suggests that “the only time government employment has gone down during a recession has been under me.” It’s not true if you just look at the recessionary period itself, and it’s not true if you look at a combination of the recession and the recovery — in both cases, it happened during the 1980-1982 recession. And while government employment did eventually go up following the Reagan-era recession, the rise began more than a year after private-sector employment picked up, which negates Obama’s argument that his predecessors were able to compensate for weak private-sector job creation with accelerated government hiring. We rate Obama’s claim False.
      http://www.politifact.com/truth-o-meter/statements/2012/may/10/barack-obama/barack-obama-says-government-job-losses-his-watch-/

      • That the government hiring trailed rather than lead isn’t an argument that the govt. hiring didn’t help. And fiscal spending on Defense exploded, enabling private sector hiring in select sectors.

        The private sector expands when the government spends.

        • It’s not meant to be an argument against govt hiring, it’s meant to point out that As the private sector grows, Govt Jobs grow this was the case with Regan Not with Obammy

    • I strongly believed that Raygun trade the War on the Iron Curtain, for Tip O’Neal’s social agenda…

      If the Repubcos controlled the CONgress very little grow in federal staffing would have occurred…

  8. Where would the money to employ this extra 1.5 million government employees have come from (approx $150 billion / yr) – larger deficits presumably?

    If governments can “create” jobs by just borrowing money and employing people, why is there ever any unemployment?

    • Well, theoretically, there is nothing stopping the govt from just printing up money and hiring everyone who wants a job. Now, whether that’s a good idea or not is a totally different matter. I’ll let you decide. :-)

      • History (and human Nature) has already Decided:

        There was a perception that WPA employees were not diligent workers. Employers said the “WPA is bad for people since it gives them poor work habits. They believe that even if a man is not an inefficient worker to begin with, he gets that way from being on WPA.”[32] Having been on the WPA made it harder for alumni to get a job because employers said they had “formed poor work habits” on the WPA.[33]
        A Senate committee reported that, “To some extent the complaint that WPA workers do poor work is not without foundation. … Poor work habits and incorrect techniques are not remedied. Occasionally a supervisor or a foreman demands good work.”[34] The WPA and its workers were ridiculed as being lazy. The organization’s initials were said to stand for “We Poke Along” or “We Putter Along” or “Whistle, Piss and Argue.” These were sarcastic references to WPA projects that sometimes slowed down deliberately because foremen had an incentive to keep going, rather than finish a project.[35]
        New Deal officials reportedly took measures to prevent political corruption. In particular President Roosevelt created a “division of progress investigation” to investigate complaints of malfeasance.[36]
        http://en.wikipedia.org/wiki/Works_Progress_Administration

        • Have you read “Hard Times” by Studs Terkel? The book describes the many families saved by the Father getting WPA work and salary. It was common for women to kick out their husbands for failing to get a job. They often ended up as vagrants. Many young WPA workers learned trades, young photographers took pictures for the Agricultural Dep’t that brought the misery to to the attention of the well-off. Many became famous. And do you know of the accomplishments of the CCC? I am old enough to know this, how young are you?

  9. Reagan had an almost 4% increase in govt. jobs because the economy started to recover. Obama would give his left nut for that 4%. Instead they have decided to spin the non-recovery into some sort of brilliant intentional reduction of the federal government. What is this guy a libertarian? Obama “lost” these jobs….he didn’t cut them.

    • There were many factors for why the federal government grew during the Reagan years. Possibly the biggest reason was Reagan’s desire to bury the Soviet Union in military spending.

      My dad and many of the dads of my fraternity brothers enjoyed the best years of their careers during the Reagan years. They were NASA and defense contractors. Many of these jobs were federal but did not show up as military even though they all rode the defense spending wave.

      • Correct on the source of the Reagan hiring. Mostly space and military.

        Again, this is a cute blog post, but has been the subject of several academic studies, and it’s not easy to measure.

        You have to break out discretionary vs. non-discretionary items, for example, which is not easy.

        Some of the hiring follows economic/GDP growth (inspectors, etc. for certain programs); as one poster remarked.

        It’s a very difficult measurement, believe me.

        I will defend Reagan somewhat in that he had a plan (method to the madness? MAD- remember that?) .

        Obama- he’s always playing the victim card. What a leader.

        Good luck.

  10. Cities and states are shedding jobs because of pension concerns — not only do they want to reduce jobs to free up money for pensions and health care, but they also want to reduce their future costs.
    In many instances, municipal governments have HIGHER total costs for employee pay and benefits even though they have smaller payrolls. The city of Detroit, for example, has more retired workers on the payroll than active workers.
    You can’t do macro without understanding the micro.

  11. Obama is one stock market crash away from complete mutiny by his last few entrenched loyalists. He has been able to cling to this awkward illusion of success because folks have trouble reconciling new all-time highs in a manipulated equities market and the steaming pile that is the balance of his leadership. This might be the week!

    • The equities markets are enjoying record highs because corporations are enjoying record profits. Their levels will come down when profits come down, if that ever happens.

  12. Any discussion of federal government employment that does not take into account the number of contractors is useless.

      • During the Reagan years there was an uptick in federal jobs in fields like with the U.S. Army Corps of Engineers. They sound military, but most of these jobs were federal.

        In recent years the USACE has had their hands tied. There is a federal fund (Harbor Maintenance?) that is supposed to go to the USACE to upkeep our nation’s waterways, but ends up not being spent in order to make the federal deficit look smaller than it is. Meanwhile our infrastructure keeps falling behind the rest of the world’s.

        • Instead of spending our money on infrastructure we rather spend our money on Medicare, Social Security and other expanding welfare entitlements.

  13. This is a very interesting take on a hot political issue. Very clever. One can see by the comments that the anti “big gubbamint” crowd, with no education in economics or any kind of Master’s Degree, takes your research with great umbrage. Bravo!!

  14. I see no discussion about the relevant role of government and where any deficit money should be spent.

    There are three kinds of markets: Elastic, Inelastic, and Mixed. Elastic markets are those where competition is natural, and hence prices are competitive. For example, if you go to the grocery store to buy aspiring, and the brand you want is out, you can easily buy another brand.

    Inelastic is were natural competition is constrained. For example, Ports, Military, Water, Sewer, Electricity. Ports are a natural land mass, and hence it is not easy to have competing ports in the same area. It wouldn’t do to have competing air forces, etc., as the duplication costs would be inefficient. Water, electricity, sewer, does not need competing infrastructure.

    Inelastic markets MUST be government owned or government regulated. In other words, for an efficient economy, government must be constrained to those things it does best, or only it can do, and those things are INELASTIC.

    Mixed markets consist of both elastic and inelastic. Medical is a good example, where sometimes there is competition (elastic) and sometimes, for example, when you are unconscious, the market for you becomes inelastic. You don’t care what the costs are if you are dying, and hence regulation must enter the picture here, due to the market suddenly shifting to inelastic.

    We have an inefficient economy when the economic surplus is consumed for overhead. That overhead is usually a function of poor definitions. The definitions are obscured so predators can take rents. Rents are costs above the necessary cost of production.

    The financial industry takes rents both in pricing (by boosting prices in various ways) and takes usury rents through its monopoly on money creation. Rehypothecations and compounding debts (refinance) allows the debt numbers to go exponential. Since debts are a claim on the money supply, said supply soon collapses, and real assets are harvested.

    Government takes rents when it makes claims that are outside of its natural bounds. The rents are in the form of inefficient and unnecessary overhead.

    So, how the money is made, where it travels, the composition of the money supply, and the overall law structure of society (for markets) all inter-relate.

  15. Obama does not care about adding Federal employees. He only cares about one thing – increasing the number of Federal Dependents as large as humanly possible. That means getting as many people as possible into SNAP, Medicaid, Disability, WIC, Obamaphones, etc…….., because that is where the votes are. The mechanical function of refilling EBT cards can be handled by robots. You don’t need flesh and blood employees for that, do you?

  16. I don’t know about you, but grand plans requiring more government bureaucracy being rolled out with unrealistic timelines coupled with a shrinking federal workforce sounds like incompetent leadership to me.