PAYING THEIR WAY
Inflation and supporting the growing amount of government dole will be the death of private workers
BY DOUG FRENCH
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Doug French, associate editor of Liberty Watch: The Magazine is an executive vice president of a Nevada bank. He is the 2005 recipient of the Murray N. Rothbard Award from the Center for Libertarian Studies.
Other stories by Doug French
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In relation to the span of world history, the 57 years since 1950 is but a speck of dust. But the America of 1950 seems light years from this country today. Joe McCarthy was railing that there were 205 Communists in the State Department, while Estes Kefavuer fretted over organized crime. L. Ron Hubbard published Dianetics, The Modern Science of Mental Health, and the first 500-mile NASCAR race was run at Darlington Raceway, (OK, some things stay the same).
But most importantly, only 28.3 percent of Americans in 1950 received a significant portion of their income from the government, while more than 30 percent of American workers were not employed in a government-reliant job. That was the last time private workers exceeded government beneficiaries in America.
Now, according to economist Gary Shilling, nearly 53 percent of all Americans receive a majority of their income from government programs, while at the same time, less than 30 percent of Americans can be considered private workers. This just seems down right un-American: not exactly what Jefferson, Adams and Washington had in mind.
And according to Schilling’s analysis, the trends will get worse for the primary reason that the population is aging. Baby Boomers are poised to belly up to the Social Security and Medicare troughs, raising the percentage of people living on the dole to 55 percent.
That was the percentage in 1980, before Ronald Reagan scaled back government (slightly). By the year 2000, half the population looked to Uncle Sam for sustenance. Bill Clinton may have said “the era of big government is over,” but now under George Bush, government is growing again.
Shilling gets to his number by counting government employees (one out of five Americans), adding to it the one out of five who receive Social Security or government pensions, plus 19 million food stamp recipients, five million receiving housing assistance, and five million getting education grants. Shilling also adds in the dependents of those counted above.
According to his research, Shilling projects that 60 percent of Americans will live off checks from the government by 2040, while only 25 percent will work for private employers. On its face, it hardly seems possible that a quarter of the population could support everyone else. Some of this can be explained by technological improvements that make workers more efficient and thus able to generate more goods, services and taxes.
But it will also require increasing levels of government debt provided by foreigners and money creation from the Federal Reserve to support the idle and taxpayer-subsidized majority.
Here in Nevada, just over half of legislators collects a check from taxpayers, despite the state’s constitution containing a separation of powers doctrine. Thus, the Silver State exemplifies the trend Shilling projects for the country as a whole, and nothing is likely to change. In fact, prominent local businessmen like Brian Greenspun, John Ritter and Jim Rogers are pounding the table, begging to be taxed more.
Expanding state government means more government workers and ultimately more retired government workers. According to the Comprehensive Annual Financial Report of the Public Employees’ Retirement System of Nevada for the fiscal year ended June 30, 2005, the average monthly compensation at retirement for regular state and local government employees as of June 2005 was $4,600 per month. For police and fire retirees, the average was $6,578. The report also indicates that the average age at retirement for regular state employees is 59, and is even lower for police and fire members who retire on average at age 55.
Taxpayers pay the freight for both the working years and retirement for these government workers, many of whom make $100,000 plus per year, with healthy cops and firefighters living longer than the average Nevadan. From July 1, 1949 to June 30, 2005, membership in NVPERS had grown from 3,000 members and 64 retirees to 93,995 active members and 30,999 retirees and beneficiaries.
Polls show that many baby boomers do not intend to retire. Most won’t be able to even if they want to. Inflation and the burden of supporting the growing majority on the government dole will keep them on the job until they keel over dead.
