Paul Krugman is certainly right that Larry Kudlow is operating in a fantasy-land when he claims that cutting the pay of federal employees could significantly reduce deficit spending. (David Frum did the math, and concluded that a 5 percent cut across the board would save about $13 billion. A drop in the federal budget bucket.) But I think Krugman misses a key reason why this notion is such a key part of conservative imagery, as he put it.
Go back to that Wall Street Journal piece Kudlow was working from, and read the opening bits:
Government employees on average have higher pay and bigger benefits than the private-sector employees who support them with taxes. This has become a well known fact.
When private firms run extended losses—spending more money than they take in—their employees must share in the necessary adjustments. But how about when governments spend much more than they take in, running huge and extended deficits? What should happen then? This is something Americans who work in private companies might consider while they file their tax returns over the next week.
Maybe it’s not immediately apparent, but what’s operating here is good old-fashioned resentment. “Those highfalutin government employees have secured themselves sweet deals largely sheltered from the ups and downs of the economy, a luxury unavailable to hard-working Americans in the private markets! If they were working real jobs out here in the real world like the rest of us, they wouldn’t be enjoying such cushy circumstances. It’s not fair!” Or something to that effect.
This resentment of federal employees as an illegitimately privileged class strikes me as pretty common amongst conservative populist types. Just look at the comments inspired by one of my previous posts shit-talking the Tea Partiers. And this resentment is coupled to a lazy – but, I suppose, understandably human – assumption that such an injustice cannot possibly be of insignificant practical impact, and cannot possibly come cheap, since those federal employees’ much-mythologized privilege is so much greater than everyone else’s. So it’s further assumed that righting that injustice would surely bring with it a large improvement in our fiscal situation.
In that sense, the logic of it is rather similar to that involved in opposition to earmarks and pork barrel spending. Since many people find the practice of earmarks so objectionable in principle (we’ll set aside whether they should find it so objectionable) they assume it must be equally damaging in practice. But, of course, the real world is a messy and ironic place, so in reality earmarks make up less than one percent of annual federal expenditures.
One other thing I would note. This resentment of federal employees is an example of the strange tendency among conservative populists to forgo actually improving the circumstances of average Americans in favor of making sure the misery is as equally distributed as possible.
To whit: It seems to me that federal employees enjoy unusually good salaries and benefits because they work for a political institution, rather than a purely economic one. As a political institution, subject to votes and elections, the federal government has to worry about voter perceptions, and whether it’s seen as treating its employees with the proper levels of respect and decency. Private businesses, meanwhile, don’t have to worry about anything except the bottom line. The obvious lesson would seem to be that if American workers as a whole want to enjoy the same circumstances of federal employees, then they need to find ways of forcing private businesses to respond to those same extra-economic incentives. And this will probably involve various forms of collective action: government regulation, consumer movements, organized labor unions, etc.
But it’s a lesson at least some Americans appear determined not to learn. Instead, they seem to want to take the same cruelties and vicissitudes of the private markets which they already live under, and inflict them on federal workers as well. It’s exceedingly bizarre.