America

America passes a milestone!

We now have more poeple employed in government than manufacturing and construction.

Employment in government and manufacturing

—– Graph from Contrary Investor, 9 December 2008 — subscription only.

It’s a milestone.  But to what end does this road lead us?

See these reports for For other perspectives


(1)  Factors Underlying the Decline in Manufacturing Employment Since 2000“, Congressional Budget Office, 23 December 2008 (8 pages)

(2)  See Can you see the signs of spring in the coming of winter? A note about the recession (10 September 2008).   Esp note graph #2, “US exports of goods and services as a % of GDP.”  It is often said that “the US no longer makes things.”   Not so, as exports have grown as a fraction of the US economy for 30 years.   That is important and good news.  America must earn its way in the world, and by some means other than as a largely unwanted global policeman.

Afterword

Please share your comments by posting below.  Per the FM site’s Comment Policy, please make them brief (250 words max), civil, and relevant to this post.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

For information about this site see the About page, at the top of the right-side menu bar.

For more information from the FM site

To read other articles about these things, see the FM reference page on the right side menu bar.  Of esp interest these days:

Implications for the future, about structural changes to America from this crisis

  1. Treasury Secretary Paulson leads us across the Rubicon, 9 September 2008
  2. Say good-bye to the old America. Welcome to our new socialist paradise!, 17 September 2008
  3. Another voice warning about the nationalization of AIG, 18 September 2008
  4. Another step away from our Constitutional system, with applause, 19 September 2008
  5. America appoints a Magister Populi to deal with the financial crisis, 21 September 2008
  6. Legal experts discuss if the Paulson Plan is legal, 21 September 2008
  7. German Finance Minister Peer Steinbrück explains how the world is changing, 30 September 2008
  8. America has changed. Why do so many foreigners see this, but so few Americans?, 1 October 2008
  9. America is changing. Read some chillling words from a liberal economist, 2 October 2008
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Categories: America

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126 replies »

  1. FM,
    Any chance you could dig up and post the data series for these graphs and perhaps extend them back in time? How about a similar graph, say over the last hundred or more years, showing total private sector employment and total public sector employment?
    .
    .
    Fabius Maximus replies: (1) No, insufficient time.
    (2) There is little economic data before the 1930’s, and increases slowly in the following decades. Employment data was first collected in the 1940’s (unemployment during the Great Depression can ony be estimated).
    (3) Over long periods of time economic data becomes incomparable. See the long discussion about Jane Austin’s “Pride and Prejudice”: how rich was Mr. Darcy in our terms?

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  2. And America becomes more like New Jersey. Time was that the largest employer in NJ was farming. Then pharmaceuticals. Now it’s government. Government’s appetite for money sucks the life out of the rest of the population. As the productive citizens vote with their feet and move to North Carolina the state of New Jersey has become home to two symbiotic groups of people — government workers and the rich liberal dilettantes who buy elections by lavishing taxpayer financed goodies on the public employee unions in exchange for votes.

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  3. To apease the people, give them worthless jobs, and convince them they are hard working individuals making an impact (somewhere). It is very scary what you show FM. I just posted a blog on how we have become a monarchy based on who gets elected and selected for offices. They are only going to continue to feed the beast.

    Don

    FM Note: His new post is “Calling Off the Boston Tea Party” — Well worth reading!

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  4. Chris,

    I suspect the situation is a little more complicated, and a little less flattering to the productive citizens.

    Notice how the productive citizens move to states receiving more federal money relative than federal taxes paid, and away from the state that receives the *least* amount of federal money, relative to federal taxes paid.

    http://www.nj.com/news/index.ssf/2008/07/nj_gets_lowest_state_return_on.html
    http://www.nemw.org/taxburd.htm (This is from 2005– I couldn’t find more recent lists of all the states.)

    I agree that New Jersey politics are dysfunctional, to put in mildly. But your entrepeneurs aren’t quite the rugged individualists they’re pretending to be. They’re moving to states that are getting money pumped into them by the government
    and out of states that are in effect donating that money. (They aren’t necessarily receiving that money themselves, but it’s weird to think the overall economic market they’re taking advantage of isn’t more hospitible thanks to the extra infusion of cash.)

    Also, the large number of people who live in NJ but work in NY is going to unbalance the statistics a little. Probably the number of state employees in Jersey is still absurd. But a slightly more even-handed look at what’s going on in our economy would probably help.

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  5. Pingback: Two--Four
  6. It leads to economic stagnation, at best, and slower or faster reductions in real after-tax disposable income in the more expected cases.

    The gov’t sector is the force-based sector, while the private sector is the peace-based sector. Yes, democracy means there is some agreement on who the representatives are that decide against whom how much force is used, but gov’t collects money by force. Companies collect money by agreement.

    Even with better macro-economic fiscal & monetary policies, more gov’t employees means slower growth.

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  7. 1) Lawyers, legal secretaries, tax advisors, etc., have effectively been employed in government.
    2) Some percent of manufacturing is DOD – related.
    3) Software development and R&D are part of manufacturing.
    4) Much of mining and transportation is part of manufacturing.

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  8. @ DBake

    Correlation does imply not causation. There are any number of other factors as to why the productive class is moving from the Garden Gtate to greener pastures. Lower taxes? Less regulation? More growth? Non unionized?

    Spin it any way you want but the simple fact that more people work for the government than in the business of making things is a sad, sad, statistic…

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  9. Note the only significant reduction in the size of government, in this recent history, occurred during the Reagan presidency, 1980-1988. Total government employment returns to about the level where he started by the time he turns over the reins to Bush I, even though US population grows about 9% over the same period. Even though Clinton presided over a significant reduction in defense and intelligence staff during his terms, it only shows up as a temporary slowdown in the growth rate. Similar temporary slowdown with Bush II during the aftermath of the dotcom bust. Why does our government employment need to grow nearly twice as fast as our population?

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  10. The parasites now outnumber the hosts, a sure sign of, well, dead and dying hosts. The parasites will finally die out when there are no more hosts. Of course, in the long run we are all dead anyway. In NJ we’ll just die faster.

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  11. DBake, just to be clear, this chart reflects the national problem. Government vs. manufacturing numbers for NJ are not indicated, so I’m not sure what your point is.

    BTW, NJ has been rated as the least business-friendly state in the US, and business owners are voting with their feet.

    Yes, the number of NJ state (and county and local) government employees IS absurd.

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  12. A few things to think about –

    (1)If manufacturing and construction (which the chart shows – not just manufacturing) are sectors that have seen productivity growth then you could expect payrolls there to flatline even as they produce more and generate more tax revenues. So in that sense, what we are seeing should not be (in itself) seen catastrophically

    (2)But in light of (1) taxpayers should demand and expect productivity growth out of government employees. After all, just about everything gone in government is manipulation of information. We have had a revolution in information technology so it is reasonable to ask “why can’t government employees be expected to do more using these tools, just as their taxpayers have.”

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  13. “Why does our government employment need to grow nearly twice as fast as our population?”

    Because that’s the name of the game:

    #1 grow government
    #2 pay for it with ruinous inflation and deficits funded by the Federal Reserve
    #3 hand over more power to politicians
    #4 Go To #1

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  14. Notice that that red line trajectory is pretty straight, regardless which political party is in power. The blue line moved up and down with the business cycle, at least for a while.

    This is the most depressing chart I’ve seen in a long time. Something fundamental seems to have just happened, but nobody except ‘contrary investor’ and this site seems to have noticed.

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  15. What exactly does the “manufacturing” number mean?…does it refer to people doing manufacturing *work* or to people in manufacturing *businesses*? For example, does it count an engineer designing turbines for GE, or only the people actually building them?

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  16. So what does this chart look like when you include all the people who live off their “entitlements” (effectively government employees, paid to produce no value?) I’ve seen this kind of chart showing that each value-producer is paying for one government employee likely to be dedicated to making their life harder, and I’ve seen the charts projecting that, for instance, the baby boomers are going to be needing 50% of my life’s effort to keep themselves in the manner to which they’ve become accustomed, but I’d really like to see an aggregate. Mix that in with the amount to which the Fed devalued the dollar in the last year, and the “bail-out” debt that you’ve committed them to … I really want to be able to explain to my children just how it was that they were born into slavery.

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  17. The notion that manufacturing is QED “productive” needs to be challenged.

    Manufacturing, after all, means dehumanizing work, pollution, and related problems: Blake’s “Dark Satanic Mills and Orwell’s Wigan Pier.

    Much of the criticism of 2GW relates to the imposition of Taylorism, scientific management, on the military. Taylorism is the sort of management adapted to manufacturing. Efforts to effect 4GW reflect efforts to overcome Taylorism, as applied to the military.

    So the notion that manufacturing is “productive” raises questions.

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  18. We are long away from that resounding quote: “After all, the chief business of the American people is business.” ~ Calvin Coolidge, POTUS 1923-1929. Someone should tell them that “1984” was not a blueprint for governance, nor “Atlas Shrugged” the gameplan to our future. Another sad realization is that, when you add them all together, the taxes and fees we are assessed by all of the governments we struggle under take over 50% of our earnings. What will our progeny do and pay?

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  19. As the percentage of people who have a direct interest in expanding government influence grows, the tendency of government to expand its influence will grow as well. Somewhere in the vicinity of the point of collapse, cooler heads will prevail and government will be scaled back. After some period of time (10-20 years probably) people will start to forget the lessons and the influence of government will grow again.

    And so it goes, back and forth. People might be careless and their attention and memory may have short time frames, but they are not insane or suicidal. We will periodically approach the abyss, but I don’t believe we will venture in.

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  20. This is far scarier about government. Manufacturing will never employ relatively large numbers of people again, unless we have a dark age and forget about robots and such things.

    The country in the world with the biggest drop in manufacturing in the past 20 years is China, with 20M fewer people in manufacturing now versus the late 1980s. The old factories with giant Mao statues in China’s “Rustbelt” cities were closed, and new modern plants with enough modern manufacturing technology and management practices replaced them – but with far fewer workers.

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  21. @Irwin and Greg,

    I don’t know that I was trying to spin anything. I was pointing out that a lot of the so-called productive people are themselves benefitting from government largesse, whether through subsidies, contracts, or catering to patrons who are themselves government employees. It’s hard to get exact statistics on that, but the fact that businesses are moving to places that receive more federal money than they pay in taxes is worth keeping in mind.

    If people are disgusted by Jersey’s economic condition, perhaps they should stop accepting its money.

    And correlation doesn’t imply causality? — Fine. But then don’t tell me you know what’s causing businesses to leave Jersey. All you’ve got is correlation, just like me. And I have no doubt that bad economic policies are part of the problem in Jersey. I never denied it. I was simply pointing out that at lot of those people selling themselves as part of the productive class are perfectly willing to profit off tax dollars themselves.

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