Only the US Will Experience Gains in Working Population

This will have a tremendous impact on the relative strength of the US economy in the world

Why Government Productivity is Always Less Than the Private Sector

Want to understand why government productivity is inevitably much worse than the private sector?

Imagine there are two companies. Lets call them Alpha and Beta.

At Alpha, employees get reviewed frequently and are rewarded with raises if they meet their goals. Those that don't meet their goals for many quarters are fired and replaced with new employees. The company's motto is: Adequate is Not Good Enough.

At Beta, performance reviews have few consequences. Employees don't get raises for meeting goals, but rather for years of employment with the company. Employees who fail to meet goals are allowed to stay with the company as long as they want to. The company's motto is: Adequate Is Good Enough. 

What would you expect to happen?  Beta employees who are ambitious and can meet goals realize they can make more money working at Alpha. Alpha employees who can't or don't want to meet their goals get fired or quit and go to work at Beta.  Over time, what happens? Alpha ends up with more of the better performers, Beta ends up with fewer.

Now if Alpha and Beta are both in competitive industries, Alpha does well and grows; Beta shrinks and eventually goes out of business. But what if Beta has no competition? What if they can literally force their shareholders to give them money to stay afloat? They just keep getting worse and bigger.

It's just that way with the public sector and the private sector. The private sector attracts more of the ambitious goal-oriented employees; the government attracts the less ambitious people who seek employment security over accomplishment. Neither will ever be made up entirely of one type or the other, but the skews will be in opposite directions.

Economics 101: That which you reward you will get more of. That which you penalize you will get less of.

Growth and Productivity. Simple Math

The clueless (e.g. the media and politicians) keep asking why economic growth has remained slow. The answer is simple mathematics (which might explain their inability to understand it). More and more resources are being shifted away from sectors with high productivity into sectors with low productivity (e.g. government, education, and healthcare). These low productivity sectors are all ones that government subsidizes, so it should not be a surprise. Neither should the resulting slow growth be a surprise.

Wages and Productivity

Everyone is complaining that wages are not growing as fast as they used to. Do you think the information below might have something to do with that? Why would you expect wages to grow rapidly when productivity is not?

Everyone Loves Teachers Don't They?

At last night's debate, President Obama accused Mr. Romney of  believing that class size “doesn’t make a difference” and that hiring teachers won’t create jobs. Romney denied this and said he loves teachers, too.  But if Romney had been more honest than political, he would have said, "More teachers and reduced class sizes don't seem to matter much to educational performance."

Over the last half century we have spent more and more on K-12 education -- mostly for hiring more personnel. Class sizes are down 40%. What has this gotten us? Nothing measurable. Of course, teachers love having lower class sizes. It makes their job easier. But is this the objective?

If you were running a store, surely your staff would like you to add more help. How long would you continue to do that if sales didn't increase at all? You wouldn't. You couldn't.  But, unlike rational enterprises, the education industry is run for the benefit of the employees and their unions, not the customers (i.e. the parents and students).

Creating jobs is not the objective. Creating additional economic value is, and adding more employees to produce the same output doesn't do that.







 
US Average reading scores (NAEP long-term trend assessment tests)