fbpx

Of Public Sector Millionaires

お金の硬貨の上に座って仕事に悩む人間

Life is a long succession of vested interests, though we are inclined to see everyone’s but our own. The term now having mainly a negative connotation, we usually think of some interests—namely those of a pecuniary nature—as being more vested than others. A money-interest is widely thought to be more corrupting than any other. If someone does something of which we disapprove, something dishonest, and we discover that he has benefited financially from it, we say aha, now we understand!

Often, of course, we are not wrong; yet sometimes the situation is psychologically more complex than what is captured in that cynical “aha” moment. People can easily persuade themselves that what is in their own interest is also in the interest of humanity, their country, the town in which they live. Even the most unimaginative people can be highly inventive when it comes to rationalization. There is scarcely anyone so dull of intellect that he cannot make a thousand excuses for himself when the occasion requires.

Medical journals, at least those of any standing, now require authors of scientific papers to declare any conflict of interest, principally any arising from funding. A scientist paid by a company is supposed to take into account any bias such a connection may introduce into his work. And this is by no means unreasonable. In the courts, even the most honest of expert witnesses may be influenced by whether he is retained for the plaintiff or the defendant, for the prosecution or the defense. The desire to oblige, whether conscious or unconscious, can be subtly corrupting even without financial inducement. And there is ample evidence, in the field of scientific research—especially in medicine—of the commercial corruption of researchers.

It is a crude view of human life and psychology, however, to suppose that only financial inducement can constitute a vested interest. A worldview, one could say, is as much a vested interest as a block of shares (though to be sure, worldviews are often not completely unrelated to personal economic interest).

When Marx, in the preface to his A Contribution to a Critique of Political Economy (1859), said that it is not consciousness that determines social being but rather social being that determines consciousness, he was not entirely wrong if we take his words as a rough empirical generalization about most of the mental life of most people most of the time. Of course, embracing Marxism as an epistemological principle remains a bad idea—it’s a principle that has done untold mischief in the world by reducing all disagreement to a difference in economic interests, the settling of which can only occur through violence. The person who insists that human beings think and act only in what they believe to be their economic interests must have had only the slightest acquaintance with humanity.

Worldviews determine economic interests as much as economic interests determine worldviews. I have close friends, for example, who genuinely believe that the extension of government serves the interests of the people. They have always worked in the public sector, and worked very hard, too, giving good and faithful service—doing far more, even, than they were strictly obliged to do.

If they have served the public sector well, it can also be said that the public sector has served them very well. The individuals of whom I speak are in the first (but I am sure not the last) generation of public sector millionaires. In becoming such, they have done nothing illicit or corrupt; they have merely taken what was offered them and acted with bourgeois financial prudence and restraint. To repeat, I have never heard them argue in favor of anything but increased public expenditure, including on their own departments, for the benefit of humanity. It is important to add that I have never heard them argue for greater emolument for themselves—though there is a tendency for at least some revenues taken from the taxpayers to end up in the pockets of those who work in the public sector.

Suffice it to say that I have never seen any declaration of conflict of interest in a medical journal by a government-employed scientist whose work implies, calls for, or suggests an increase in governmental outlays. The fact that he will not himself benefit economically—if it is a fact—is deemed sufficient to make a declaration of conflict of interest unnecessary. I do not mind this, for, like Queen Elizabeth I, “I have no desire to make windows into men’s souls,” even if I were able to do so.

Still, the blithe unawareness of some people’s vested interest, once those people self-designate as being on the side of the angels, can sometimes startle. There was, for example, an article published recently on the website of the most important British liberal newspaper, the Guardian, about the underrepresentation of ethnic minorities in senior positions in British healthcare. It was written by the founder and chief executive of a private consulting company that, inter alia, advises state institutions on how to raise the number and seniority of people of minority backgrounds on their payrolls and who, I feel sure, genuinely believes that he is working toward the unity of society rather than its balkanization.

The purported goodness of his company’s view of the world is proved by the very assertion that ethnic minorities are underrepresented in senior positions in healthcare. (This, by the way, could be only remotely consided accurate if doctors were excluded from the computations. We can infer that the company does not deem doctors as holding senior positions in healthcare.) For this company, then, the real purpose or business of healthcare is the administration of its administration.

Adverting to the vested interest of the company is not, as I say, proof that what it says is misguided or that its premises—that differences in outcome between groups in themselves bespeak invidious discrimination, and that the best remedy is via politico-bureaucratic fiat—are wrong.

Once we start down the track of supposed refutation ad hominem we enter the bourn, or swamp, from which no traveller returns, to adapt Hamlet’s soliloquy very slightly. Being human, we all sometimes argue ad hominem, if for no other reason than that it is more enjoyable than dry abstraction. But so far as we are able, we should resist the temptation. Once an argument has been proved wrong by other, valid means, we can relax and speculate enjoyably as to the motives of the person who argued falsely.

No doubt the consulting company whose founder and chief executive wrote the article is counted in official statistics as being in the private sector. It seems appropriate to ask: Is it really, just because it is privately owned? Once the public sector expands beyond a certain size, the distinction between private and public blurs or even disappears. An increasing proportion of the private sector, so called, is the continuation of government by other means. And this is so whether the companies involved are small or large. I leave it to readers to imagine the consequences.

Reader Discussion

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.

on January 28, 2015 at 11:17:19 am

1. Q: What does Dalrymple have in common with Jefferson, St. Paul, Hayek, C.S. Lewis, and SpongeBob Squarepants?

Even the most unimaginative people can be highly inventive when it comes to rationalization. There is scarcely anyone so dull of intellect that he cannot make a thousand excuses for himself when the occasion requires.

A: They are all cited in my quotation file. Welcome to this elite-ish club.

2. Dalrymple correctly observes that people may have a pecuniary interest when advocating increasing the share of resources directed by government. Yet the analysis supporting Dalrymple’s observation also supports the converse: people who advocate increasing the share of resources directed by private actors may also be influenced by pecuniary interests.

Now, what would cause Dalrymple to overlook this obvious corollary? I leave it to the readers to imagine

read full comment
Image of nobody.really
nobody.really
on January 28, 2015 at 12:07:27 pm

[…] Of Public Sector Millionaires […]

read full comment
Image of Unfunded Future Forgiveness - Freedom's Floodgates
Unfunded Future Forgiveness - Freedom's Floodgates
on January 28, 2015 at 16:39:51 pm

"Yet the analysis supporting Dalrymple’s observation also supports the converse: people who advocate increasing the share of resources directed by private actors may also be influenced by pecuniary interests."

No it doesn't.
Resources are always flowing from the private to the public sector because wealth is only created in the private sector, then taxed and finally consumed by the public sector offering goods and services to the public (or friends).

read full comment
Image of christos kitromilides
christos kitromilides
on January 28, 2015 at 17:35:47 pm

Federal legislators are required (supposed) to report their net worth (as a range?).

It would be useful to know how that range changes (increases) year over year of "public service." Of course, that should be applicable to all "public" servants in all positions. Won't happen, but back track Harry Reid and for balance Oren Hatch; look back at Lyndon Johnson. Then, there is the "revolving door" (Citi Bank, e.g.) plus sinecures like Fanny Mae that enriched those select few at the cost (huge) to so many.

If we continue, we will ultimately have our equivalent of France's ENACs; broader-based of course.

Academe is on the same course, along with the "non-profits."

read full comment
Image of R Richard Schweitzer
R Richard Schweitzer
on January 28, 2015 at 17:39:58 pm

'@ Nobody:

Ah ! But **I** have long quotations by Nobody stored in my records!

read full comment
Image of R Richard Schweitzer
R Richard Schweitzer
on January 28, 2015 at 17:44:50 pm

Federal legislators are required (supposed) to report their net worth (as a range?).

It would be useful to know how that range changes (increases) year over year of “public service.” Of course, that should be applicable to all “public” servants in all positions.

Why do you have a greater interest in tracking the net worth of the janitor at your local grade school than the net worth of tobacco executives or people packaging collateralized debt obligations?

read full comment
Image of nobody.really
nobody.really
on January 28, 2015 at 18:57:53 pm

"Why do you have a greater interest in tracking the net worth of the janitor at your local grade school than the net worth of tobacco executives or people packaging collateralized debt obligations?"

Now THAT one is certainly worthy of being placed in the ever growing file of Nobody quotes!!!

One word, of course! BIND!
The janitor cannot bind me. LBJ, et al certainly can and did.

read full comment
Image of gabe
gabe
on January 29, 2015 at 09:46:13 am

Resources are always flowing from the private to the public sector because wealth is only created in the private sector....

I wish people who felt this way would follow John Galt's lead and move to places without a public sector. Try Somalia, or parts of Afghanistan, or perhaps a Malaria-infested rainforest somewhere. Then write back with how fabulously productive you are.

Those of us who are less ideological and more evidence-based will continue to muddle through in the parts of the world that have demonstrated themselves to be the homes of productivity -- which, perhaps coincidentally, are places with substantial public sectors.

read full comment
Image of nobody.really
nobody.really
on January 29, 2015 at 09:57:30 am

“Why do you have a greater interest in tracking the net worth of the janitor at your local grade school than the net worth of tobacco executives or people packaging collateralized debt obligations?”

One word, of course! BIND!
The janitor cannot bind me.

Ah. So, comparing the unwelcome and unbidden effect that janitor has had on you to the unwelcome and unbidden effect that the collateralized debt obligation vendors have had on us all -- destroying trillions in GDP and throwing millions out of work -- you're really vexed about that damn janitor, huh?

Some people have to walk for miles to fill a jar of questionable water for their families each day; others merely have to turn on a tap -- plus pay the publicly-established utility assessment. Some people are drowning; others are saved by lifeguards -- but then have to pay taxes to pay for lifeguards. Now, which of the people I've described are enduring oppressive circumstances? Your answer will say nothing about the people you're judging -- but it will say volumes about you.

read full comment
Image of nobody.really
nobody.really
on January 29, 2015 at 10:12:05 am

BIND! - as in impose legally binding obligations on me. Frankly, I don't give a rip what the janitor does or if he even does anything (not unlikely, BTW). what does concern me is what a Legislator who is authorized to impose binding obligations on me may be doing in terms of acquiring wealth from those who stand to gain from the imposition of obligations on me.
Let the janitor read his Playboy in the basement or play video games - heck, I don't even care if he uses his time to select his fantasy football team and makes a bunch of money doing so. It does not impose any obligation on me.

Why do you assume that because one wants to gain some assurance that the *binders* are not being unduly influenced that such a concern is also proof that one does not wish to recognize (or pay) the need for some taxation in support of a SMALL public sector or that one is not sensitive to, or supportive of, peoples who are less fortunate than them. That liberal streak coming out in you again?
C'mon, Nobody this argument is beneath you.

read full comment
Image of gabe
gabe
on January 29, 2015 at 11:33:53 am

You are missing the point. I was not making a moral or political judgement.
I was just stating a very elementary fact.
The public sector can only produce or distribute (perhaps great or best of breed) goods and services, after taxing the private sector. Therefore, when you claim that there is a flow of resources from the public to the private sector, what you are actually saying is that the flow of resources from the private to the public sector should not be reduced or indeed should be increased, because the public sector can produce or distribute goods and services more efficiently than the private sector.
I would not argue about that claim because it will be a waste of time. You either get it or not. And of course if you make your living in the public sector you have no incentive to get it, do you?
By the way, why don't you move to a country with a really large public sector, like Cuba, North Korea, or Greece. You are still allowed to leave USA, don't you?

read full comment
Image of christos kitromilides
christos kitromilides
on January 29, 2015 at 12:01:49 pm

BIND! – as in impose legally binding obligations on me….

[O]ne wants to gain some assurance that the *binders* are not being unduly influenced….

C’mon, Nobody this argument is beneath you.

What is it with you Republicans? Watch out for those “takers”! And be mindful of “binders”! Especially binders of women!

Ok, ok, this is beneath me – but it’s fun!

[W]hat does concern me is what a Legislator who is authorized to impose binding obligations on me may be doing in terms of acquiring wealth from those who stand to gain from the imposition of obligations on me.

Great. Two observations:

1. You initially proposed tracking the wealth of ALL public servants. Arguably there’s greater value in tracking the wealth of federal legislators and high-level executive branch folk – which are a tiny minority of public servants.

2. I sense your real concern is with externalities. You have a concern that public officials might make decisions that cause you needless cost or deprive you of appropriate benefit – and tracking net wealth might signal when someone was profiting from doing so.

But, of course, private sector people cause externalities, too. The recent economic collapse was fabulously costly, and I can tell you that *I* did not consent to bear those costs – but I do.

That said, what could I learn by tracking the wealth of someone who engaged is externalities? Say I tracked the wealth of someone selling collateralized debt obligations. He might get bonuses for selling more of these bogus financial instruments. But he also might get bonuses for selling perfectly sound financial instruments; thus, bonuses are not much of a signal. True, Adam Smith says that we should expect employers to have to pay a higher price to get people to do something dishonorable than to do something honorable, all else being equal, so large bonuses might signal that something fishy was afoot. But I suspect markets are not sufficiently efficient to make such a price signal clear.

I confess, at a gut level I share gabe’s view that it makes more sense to track the net worth of Congressmen and cabinet secretaries than of investment bankers. But I struggle to articulate why.

Let the janitor read his Playboy in the basement or play video games – heck, I don’t even care if he uses his time to select his fantasy football team and makes a bunch of money doing so. It does not impose any obligation on me.

Sure, so you say. But when we discover that the janitor uses his spare time making money by letting the air out of footballs at NFL games, THEN we’ll see how you react….

read full comment
Image of nobody.really
nobody.really
on January 29, 2015 at 12:41:47 pm

Nobody:

But we DO track the private enhancements of bankers - see the SEC, the AG and a host of other public sector actors who have, and will continue to, bring suit against the miscreants among them. after all, we were all deeply *bound* by what Martha Stewart did weren't we.

Lastly, I thought it was the janitor who deflated the footballs. Let's get the EPA involved in this one - not only will they find out who did (no doubt through a guidance letter) but they can also tell us how that expelled air is casuing global warming!

read full comment
Image of gabe
gabe
on January 29, 2015 at 13:36:14 pm

You are missing the point. I was not making a moral or political judgement.
I was just stating a very elementary fact.

Perhaps. Then again, perhaps I do get the point -- and simply disagree. When I find an idea to be a "very elementary fact" devoid of "moral or political judgement," perhaps I have stumbled upon a universal truth. Or perhaps I have stumbled on a dogma.

People often distinguish between 1) voluntary/market transfers of resources and 2) compulsory transfers of wealth/taxation. People often focus on certain economic models that show how to measure the benefits of voluntary/market transactions, but do not show how to measure the benefit of compulsory transaction. From this, people often conclude “wealth is only created in the private sector….”

This thinking reflects two errors.

First, and most simply, this thinking conflates A) the distinction between voluntary/market transfers vs. compulsory transfers with B) the distinction between public and private actors. To state the obvious refutation, the public sector sells stuff. It sells college educations, and access to public parks, and access to toll roads, just as the private sector does. When I read someone saying that it is an “elementary fact” that the public sector has no other ways to raise revenue than taxation, I must conclude that the author is letting dogma blind them to fact.

Ah, but perhaps this isn’t a statement about revenues, but about sequence: The public sector had to tax in order to GET the initial resources with which to provide later goods and services, even if offered for sale? That’s a fine assertion, but where’s the support? At least as far as the New World is concerned, pretty neigh 100% of the land was claimed by a government before any lasting European settlement was created. In short, government action preceded European private action.

Ah, but what about those initial European governments – Spain, Portugal, France, England? THEY taxed people before asserting at claim to the New World, right? Fine, I’m game: Wind back the clock as far as you like, even to the point of great ape societies, and show me a time when individual private actors acted without a symbiotic relationship with a coercive group leader.

In short, Enlightenment philosophy is built on the view that the individual somehow precedes the society from which the individual comes. It’s a fine view, if not a view well grounded in fact. And people who cannot conceive of any other view are tempted to assert this view as “a very elementary fact” that conveys no “moral and political judgement.” They would be mistaken.

Second, this thinking confuses the weakness of economic models with fact; put another way, the map is not the territory. Yes, it’s possible to build models showing the benefits of voluntary transactions. But the models typically assume that transactions are costless. In contrast, today’s markets -- and the property rights upon which markets depend -- would be hugely impeded without public services. The fact that models fail to reflect the productivity of these services reflects a deficit in the models, not in the services.

To appreciate this fact, I encourage people to consider doing business in Somalia or Afghanistan or a malaria-plagued rainforest. It would rapidly become apparent how productive the US public sector is – whether or not any given model would acknowledge this fact.

By the way, why don’t you move to a country with a really large public sector, like Cuba, North Korea, or Greece.

When I retire, I just might. And when that time comes, I might ask someone named christos kitromilides for a recommendation!

read full comment
Image of nobody.really
nobody.really
on January 29, 2015 at 13:52:29 pm

I thought it was the janitor who deflated the footballs. Let’s get the EPA involved in this one – not only will they find out who did (no doubt through a guidance letter) but they can also tell us how that expelled air is casuing global warming!

Ha!

But of course it would contribute to global warming. All else being equal, air under high pressure will tend to be hotter than air under low pressure, so the air emitted from the balls would be hot. (As would air emitted from your tires; bear this in mind the next time you find yourself freezing to death in a snowstorm.)

read full comment
Image of nobody.really
nobody.really
on January 29, 2015 at 14:43:41 pm

So if I let the air out of my tires will that melt the snow - or is that the argument you used with Christo?

Ha!!!

read full comment
Image of gabe
gabe
on January 29, 2015 at 15:03:47 pm

"The fact that models fail to reflect the productivity of these services reflects a deficit in the models, not in the services."

True - the models may suffer from this defect; yet, it is not necessarily true that your conclusion is correct, I/e., that there is no defect in the services.

While there is much good that is "supported" (not created) by public services, I suspect that what most commentators object to is the level of "productivity" associated with the provision of those public services.
Yes, an agency such as DARPA has in fact generated some very significant technological innovations that ultimately lead to wealth creation - but they are the exception that proves the rule. Generally speaking, the private sector does provide a more responsive and innovative approach to services / goods unburdened by certain political or legacy / agency prescriptions (or more accurately PROSCRIPTIONS). Further, the private sector usually does not issue "guidance letters" etc that impose somewhat draconian *transaction costs* upon the client base. This too should be factored into your new *model.*

I do like the argument on acquisition of land in the New World. am I to now understand my friend NOBODY to be advocating the competitive and salutary effects of European Colonialism - surely, you jest!!!!!!!

Just saying!

Oh and GO SEAHAWKS!!!!! (we don't need no stinkin' deflated footballs -hopefully we will not be deflated sunday evening).

read full comment
Image of gabe
gabe
on January 31, 2015 at 21:03:00 pm

I've finally figured out gabe's secret identity!

read full comment
Image of nobody.really
nobody.really
on February 01, 2015 at 10:54:20 am

Luv'd it!

But Nye is best used speaking to children where facts and logic are not of such importance.

GO SEAHAWKS!!!!!!

read full comment
Image of gabe
gabe
on February 01, 2015 at 23:26:36 pm

You're such a nice man Dr. Dalrymple, to assume that these public sector parasites genuinely believe that pursuing their self-interest is really, really good for humanity. Of course, it's not a lie if you really, really believe it, right?

read full comment
Image of Grandma
Grandma
on February 02, 2015 at 10:22:42 am

TD has interesting insight into the Bad Faith resourcefulness of the (almost certainly) unimaginative, in his essay The Knife Went In.

The state is the product of, well a lot of blood shed yes but not least of the 'market of ideas' and the vote winning arguments, rhetoric, that sell those ideas.

We might agree in principle that the ideal state is that which ensures negative freedom; freedom from the illegal transgressions of others as opposed to ensuring desire based positive freedoms.

Of Bad Faith I contend Cultural Marxism, feminism, left liberalism generally, has so severely eroded moral fortitude and resilience, particularly by undermining the traditional family, Burke's 'dearest domestic ties', without which no 'little platoons'.

The best wealth, innovations, capital (especially social capital) arose out of conditions of austerity, (at least in the bad faith sense of the word). I don't desire a return to such conditions, not entirely anyway. However a lot less choice in the 'sexual market place' would do a lot of people a lot of good. For a society to flourish sustainably there needs to be a high degree of good faith but modern attitudes to sexual relations ensures that bad faith is pervasive.

To quote Jane Austen (Elizabeth Bennett)

"She began now to comprehend that he was exactly the man who, in disposition and talents, would most suit her. His understanding and temper, though unlike her own, would have answered all her wishes. It was an union that must have been to the advantage of both; by her ease and liveliness, his mind might have been softened, his manners improved, and from his judgment, information, and knowledge of the world, she must have received benefit of greater importance. But no such happy marriage could now teach the admiring multitude what connubial felicity really was. An union of a different tendency, and precluding the possibility of the other, was soon to be formed in their family.

How Wickham and Lydia were to be supported in tolerable independence, she could not imagine. But how little of permanent happiness could belong to a couple who were only brought together because their passions were stronger than their virtue, she could easily conjecture."

With the advent of contraception, treatment of STD's, industrial scale abortion, the general left liberal relaxing of social mores (which many cultural 'conservatives' are grievously guilty of, I don't think Boris Johnson is a moral conservative, for example) there has been a massive increase of 'unions' of a 'different tendency'.

Lydia is wilfully frivolous, but almost endearing with it, unlike most of her modern equivalents... Her elopement with Wickham caused much distress. Darcy saves the day with financial intervention. When Lydia returns home with her new 'husband' she is oblivious to the trouble she has caused and triumphant at displacing Jane, her older, wiser, sister, from her place at the table.

Leftist are something like this, usually worse on account of their 'sophistication', and they expect the state to be the Darcy to their folly.

read full comment
Image of Kiljoy
Kiljoy
on February 02, 2015 at 10:33:03 am

I meant negative *Rights* vs positive Rights.

read full comment
Image of Kiljoy
Kiljoy

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.