Sunday, February 20, 2011

Pay Me My Money Down

Ezra writes:
There's been a lot of concern lately that states or municipalities will default on their debt. This is considered the height of fiscal irresponsibility -- an outcome so dire that some are considering various forms of federal support. But the talk that states or cities will default on their obligations to teachers or DMV employees? That's considered evidence of fiscal responsibility. And perhaps it's a better outcome, as defaulting to the banks makes future borrowing costs higher, and can hurt the state economy in the long-run. But it's not a more just outcome.
From a purely fiscal point of view, I don't know if this ends up being a better outcome. If you're a bright young person considering public sector employment and the guarantee of future income security is thrown into doubt, you're going to demand a higher up-front salary, one commensurate with the money you'd make in the private sector.

That is, unless the idea is to not pay a comparable salary and thus leave the public sector unable to compete for talented employees. Then you don't get similar fiscal problems, you just get a public sector that can't hire good people. And I imagine that the future ability of the public sector to hire talented employees isn't something especially worth protecting in the Republican worldview.

Let Bruce tell you all about it.

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