The New York Times is lamenting the loss of public sector jobs, claiming this is hurting economic recovery.
This is consistent with President Obama's whining that public sector cuts are what is keeping the economy supressed, since "the private sector is doing just fine."
The fallacy that leads to these conclusions is the idea that public employment and private employment are equal in terms of economic impact.
But this is utterly false. They are not equivalent-- they are diametrically opposed. A public sector job can only be paid for by taking money from the private economy (in the form of taxes), or borrowing against that power to take and funding the public job by public credit. A public job cannot increase production because its very existence is as a parasite on the productive element of the economy.
Is it fair to characterize public sector jobs as parasitic? Not all are, but the overwhelming majority are. A private sector job exists because a person has the capacity to produce something of value for which another person will pay him or her. The value of the production is high enough that an individual has an incentive to acquire it (and compensate the producer of it). Also, that compensation is high enough that the producer has incentive to provide it.
But most public sector jobs produce something of such little value that few, if any individuals demand it to the degree any one person has the incentive to provide it.
Only when the demand is aggregated by the community is there enough demand to entice someone to produce that public service.
For example, you might be willing to hire a private security provider to follow you around and protect you for $1 a day. But who would supply that service for the low wage of $365 a year? People have opportunity costs, and elect to produce or provide certain things based on what their other options are. If someone can make $50/day mowing lawns, why would they endanger their lives for $1/day?
But how much would the average person pay for a single, dedicated security officer? $10/day? $100/day? Most of us simply aren't willing to pay much for it.
But if we pool our resources with others (like say, in a gated community that has a private security staff), we can lower our individual costs to an acceptable level, while still providing enough financial incentive for *someone* to provide the service, as it is now worth their while.
The important point here is that most public services- by nature- are things we each value individually very little. That is to say, they are not economically valuable-- it is production of little value.
Thus, the net effect of most public sector jobs is to take a fraction of the production that is of substantial economic value and divert it to "production" that is of little economic value, but we still think it good to have.
This is why privatized libraries and swimming pools and such often fail. People like having them available, but don't want to bear the full cost of having them available. Everyone in the town pays to have the public library, but far fewer people actually use it. It is viable only because some people are paying for something they don't use. Otherwise, one could just charge a fee-for-service and have a viable private business that would be self-sustaining. I'm not saying public libraries aren't a good idea, or that economic value is the only kind of value. But the point is crystal clear that operating a library is not a boom to a local economy: it is something of little economic value that is sustained by other forms of production that *are* of greater economic value.
This is why you cannot have a an economy prosper by growing the public sector and government jobs. Governments by and large do not produce items of high economic value; rather, they consume economic value to produce things no one really feels is individually important.
This is why the NY Times and our President are gravely mistaken in their view that expanding government can help the economy. Government is bad for the economy, the more of it you have, the greater the economic burden.