Christopher Deming's Blog

Jesse Walker from Reason Magazine came to the University of Michigan to talk with students about the conspiracies that seem to float through the political center. Check it out!

Steve Horwitz gets to the bottom of the poverty question:

In a recent Michigan Capitol Confidential article, James Hohman points out that governmental largess has created a bit of a bind for state and city governments that are looking to pare down spending. With revenues falling, legislatures nationwide will have to make tough choices regarding public services, benefits, and employment. This is especially difficult when the primary employers in a given area are employed by the state. As an example, look to the below graphic, indicating the number of people employed in Detroit.

Hohman notes, “In Detroit's case, six of the top 10 employers are not private businesses at all, but government entities: public schools, the city government, the U.S. government, Wayne State University, the State of Michigan and the U.S. Post Office. Two others are health care providers intrinsically tied to government policy, the Detroit Medical Center and the Henry Ford Health System.”

In a similar vein, Christopher Westley of Mises.org notes a similar situation occurring in Wisconsin.  See the below list. Westley says, “This leaves Wisconsin's legislature in a bind. The federal stimulus granted it an artificial lifeline, but that runs out this year. Meanwhile, its massive public-sector payroll cannot be met by income taxes on that same sector.”

Largest Wisconsin Employers

1. Walmart
   2.     University of Wisconsin–Madison
   3.     Milwaukee Public Schools
   4.     US Postal Service
   5.     Wisconsin Department of Corrections
   6.     Menards
   7.     Marshfield Clinic
   8.     Aurora Health Care
   9.     City of Milwaukee
   10. Wisconsin Department of Veterans Affairs

When governments find themselves in the business of employment, government tends to hire more and provide more cushy benefits packages that are “affordable” when property rates and incomes are artificially high (thanks to a boom generated by the manipulation of interest rates).  When the bust inevitably comes, public sector employment is no longer affordable, and the state must do what other enterprises must do: shed the malinvestment. The state gambles with the lives of its employees. Rather than taking a position of fiscal responsibility, they dole out benefits they couldn’t otherwise. (To see the breadth of this problem, check out how out of whack public sector employment in Michigan is.) The turmoil caused by this is disheartening. Folks lose their jobs and benefits they’ve been accustomed to.

Nobody wins when government plays with the money, with employment, and the lives of its citizens.

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