Posted on 04/01/2011 11:51:34 AM PDT by BenLurkin
The structural problem is that government has too many mouths to feed. It’s possible to quantify that problem. The result is a metric that I call the Deadweight Ratio. It tells you how many beneficiaries of government spending there are for every private sector job.
The Deadweight Ratio suggests that Connecticut and New Jersey are, despite well publicized budget deficits, in better shape than most states. It also says that California and New York are going to be sickly credits for a long time to come.
Every state has one set of people contributing to the coffer—namely, private sector workers—and another drawing from it—namely, government workers and welfare recipients. In healthy states, the contributors outnumber the users. In unhealthy states the reverse is true.
California is in trouble. For every 100 people employed in the private sector it has 113 people drawing benefits. A person working at Disney or Intel or a fast food franchise is carrying his own weight plus that of one other person—a teacher, say, or a Medicaid recipient or a retired prison guard.
Many factors contribute to California’s budget crisis. The state has a big university system, an influx of needy immigrants and an expansive notion of how involved the government should be in people’s lives.
Up to a point, the private sector is willing to carry government employees and welfare moms on its shoulders. Beyond that point, it is not, however worthy the recipients of government largesse are. Employers leave. The jobs go to other states or overseas. That leaves what’s left of the private sector in even worse shape.
(Excerpt) Read more at blogs.forbes.com ...
Tennessee has a DW ratio of 87.5%, not very good.
Mississippi is the worst at 120% and Nevada is the best at 43.5%.
Pay your taxes.
April 15th is right around the corner.
They didn’t count the number of deadweight workers in the companies. That is at least 90%.
Actually state workers in California seem to be in line with other states. The amazing thing is the Medicaid to Contributor ratio (it is almost 1 to 1). Mississippi is the only other state which even comes close.
California used to be the state in which you moved when you did not have a job. My dad hated it there, but he moved back to California four different times for a job in his life.
If I understand his methodology, his math doesn’t work. I added columns two and three and then divided it by column one. For Mississippi I got a dead weight ration closer to 110 than the 120 he lists. Perhaps the error is mine but I don’t see how he got his numbers.
related:
“Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. “
http://www.freerepublic.com/focus/f-news/2698176/posts
I’d be interested to see if the bigger part of the problem is too many government jobs or too few in manufacturing.
Interesting that both a very conservative state (MS) and a very liberal one (CA) are near the top along with a swing state (NM.)
Seems that ideology has less of an effect on this number than overall demographics does.
MD’s numbers are surprisingly good. However, I wonder if the private sector number includes government contractors who wouldn’t have a job if not for gov’t money, same with (Northern) Virginia.
As much as we complain about government workers, it’s really entitlements that are killing us.
Nice article ,thanks for posting this thread.
Minnesota is at 57.2, but if you throw in our pipsqueak governor, the figure jumps to 109.7.
Just need to make a point none seems to realize around here. Public workers pay taxes too and because their salries and benefits are higher, they pay MORE than private sector employees.
This deadweight ratio nails it.
It is simple, objective, user-friendly. Even a voter in California or Michigan can understand it.
Its still all wealth created by the private sector.
A way to test that number is to look at the ration of Federal money spent in those areas vs the amount of taxes collected in those areas.
Interesting post (& thread). Thanks.
later
Not the point at issue in this thread. It’s not the issue of taxation — no one disputes that public-sector employees pay taxes. The point being made here is one of creation of value: the author is taking employment as a proxy for that concept.
It’s not a perfect metric, but it’s a reasonable thing to point out that while not EVERY private sector employee contributes, or contributes equally to the creation of new economic value, NO public sector employee ever creates new value. They simply “push around”, or redistribute, or otherwise re-direct the value created by others.
He is, in other words, comparing private sector employees to “direct labor”, and public sector to “overhead”, to put it in terms a business owner would use. If your overhead ratio exceeds unity, you have a big problem, regardless of the business you are in.
Not the point at issue in this thread. It’s not the issue of taxation — no one disputes that public-sector employees pay taxes. The point being made here is one of creation of value: the author is taking employment as a proxy for that concept.
It’s not a perfect metric, but it’s a reasonable thing to point out that while not EVERY private sector employee contributes, or contributes equally to the creation of new economic value, NO public sector employee ever creates new value. They simply “push around”, or redistribute, or otherwise re-direct the value created by others.
He is, in other words, comparing private sector employees to “direct labor”, and public sector to “overhead”, to put it in terms a business owner would use. If your overhead ratio exceeds unity, you have a big problem, regardless of the business you are in.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.