In an era of too big to fail there is something growing by leaps and bounds that should frighten everyone. I'm talking about the federal government, which is now completely out of control.
In the past ten years, when not including the post office, federal employment is up 15% versus just 1% in the private sector. It's a problem that cuts across political party lines and increasingly puts the government in a position of serving the public to compete with the private sector. It's not just healthcare reform that will still find a way to morph into a monster that throws not-for-profit competition against for-profit-home-grown businesses.
The government is setting itself up to go beyond regulating business practices to dictating winners and losers in a particular industry. President Obama has publicly lobbied for the smartest graduates to avoid Wall Street and consider the government. Why is the government growing so large, and why does it need the smartest graduates that could impact society better by getting money moving through the system? One thing is for sure: it's becoming more and more appealing to work for the government from an economic point of view.
There has been a major uproar after USA Today reported on the massive spikes in federal employee pay. But, the uproar isn't loud enough. Some of the peculiars that stand out include:
- Average annual salary of federal employee: $71,206 versus $40,331 in the private sector
- Average annual salary with benefits of federal worker: $119,982 vs. $59,909 private sector
- 19% of federal workers make $100,000 plus, up from 14% year over year
- There are more federal employees making $100,000 than $40,000 a year
Initially, I thought that redistribution of wealth was only about shifting money from people that work hard to people that elect not to work hard. I understood that big government was on the agenda, but it's only now coming into focus just how big this government is going to be. This is a nation within a nation whose members have rights that come before those paying their actual salaries. I'm not putting down firefighters, policemen, or teachers but we are talking about layers and layers of bureaucrats being paid top dollar to keep tabs on the public and push through the agenda. When the city of Washington, DC can dole out millions in bonuses in the midst of a recession, where we have been told everyone would share in the sacrifices, then there is something seriously wrong.
The biggest living organism in the world is the Amillaria Osoyae, a fungus that covers 2,200 acres in the Blue Mountains of eastern Oregon...it's 2,400 years old! The thought of this monstrosity sends chills down my spine. Every now and then it sprouts what is called a "honey mushroom" which looks like a creation of Frankenstein. The thing is that something this huge is going to cause damage, and this fungus does. By drawing water and carbohydrates needed to nurture itself the Amillaria kills evergreen trees. Just think of the economy as the same kind of biosphere. Funding and talent are needed to nurture capitalism and it is being drawn into this immense fungus otherwise known as the government. Interestingly, the evergreen tree refers to perpetual renewal. That's what capitalism is all about. It gets bumped and bruised but it renews itself and would have survived a few big banks going out of business.
I have to admit, however, that I'm not sure capitalism could survive a government determined to soak up all the resources and nutrients. The giant fungus in Oregon is mostly underground and out of sight, but getting larger and larger. The steroid fueled growth of our government has largely been underground and out of sight. But its golden mushrooms are in full view now and they are not pretty!
Pass me the hedge cutters.
I think Time Magazine's "Person of the Year" should be Angela Merkel. As it stands, Ben Bernanke got the nod. I'm not surprised, and he did some good things after moving too slow out of the gate.
However, I'm worried about the exit strategy or rather the lack thereof. In fact, the Fed has already pushed the envelope too far. I hope that this doesn't stop Congress from taking a more active role in oversight in making the Fed more transparent. In the meantime, the short list was very interesting. Usain Bolt (here's a question to ponder; was the Jamaican sprinter more deserving of the Time award than the President of the Nobel Peace Prize?) and the Chinese worker. General McCrystal came in second in the voting, and Nancy Pelosi made the top five, too, along with Bolt.
Then there was the Chinese worker. But from my perspective the Unemployed American Worker is a more compelling story. The news for Bernanke couldn't come at a better time with his reconfirmation coming up tomorrow.
Economic Data
Housing Starts/Permits
The data was positive within the starts and permits components. Although housing starts were in line relative to consensus at 574,000, there were strong m/m increases worth noting, and no declines. Starts rose 16.3% in the Midwest and 12.3% in the South. As for building permits, the result surpassed consensus by 14,000, coming in at 584,000 for November. The Midwest was the only region to notch lower m/m permits, whereas the South (+11.0%) and West (14.0%) enjoyed strong gains. Extension and expansion of the housing tax credit, in addition to slightly improved economic conditions, are reflective in these numbers.
Disclosure: None
