Trump's Federal Pay Freeze Will Mean a Raise for the Rest of Us

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“Without you, I’m nothing.” A version of the latter is frequently uttered by movie stars and athletes to their fans.  Absent the individuals who buy tickets to their games and movies, or who watch them on TV, these celebrities would be largely unknown.  And they would earn very little money by extension.  Celebrities of the film, television and sports variety, along with businesses more broadly, well understand that consumers conduct a daily vote with the fruits of their labor.  Without them, they’re nothing in the figurative sense.

What’s obvious to those who’ve won customers in the competitive markets is frequently glossed over by government workers shielded from market signals.  If anyone doubts this, try walking in to a Post Office to speedily get a passport, or asking a government agency for help, or calling any agency in search of a quick answer.  It’s a statement of the obvious that “government services” is an oxymoron. 

All of the above is interesting given the basic truth that there are no government workers earning actual salaries absent private sector production.  For one to say that government work is a direct effect of private sector wealth creation is to waste words so obvious is it.  While big government and government spending don’t power economic growth, they’re certainly the result of it.  The dollars don’t fall from the sky despite what some believe.

This is a reminder that government jobs come at the expense of private sector earnings.  That the federal government costs $4 trillion per year means that Americans (and realistically, people around the world…think about it) in the private sector earn less.  Government is a cost that limits savings and investment.  If the federal government cost $400 billion per year instead, Americans would earn more.  Probably a lot more since investment would surge.  Figure that successful investments multiply wealth and productivity.  Bastiat’s unseen when it comes to government spending is sick inducing.  Suffice it to say, absent all this waste over the decades it’s not unreasonable to suggest that cancer would have already been cured, that WiFi and Netflix would be as yesterday as the payphone and Blockbuster are now, plus private flight would be kind of common.  Government spending is the biggest tax of all for it shrinking the experimentation without which there is no progress.

Which brings us to President Trump’s recent decision to freeze pay for more than 2 million civilian federal workers.  As readers can imagine, the outcry from the left was typically hysterical.  The always emotional Michael Hiltzik of the Los Angeles Times referred to Trump’s wise decision as his “most cynical and self-destructive stunt yet.” It seems attempted trade wars don’t register with the Times scribe.  One wonders if Hiltzik was similarly up in arms when President Obama wisely froze federal worker pay in 2011….

If there’s a criticism of Trump now, and the apparently penny-pinching Obama in 2011, it’s that they didn’t do more than freeze pay.  Logic dictates that they slash federal worker pay.  That the private sector can do much better (and at lower cost) what the feds aim to do is yet another statement of the obvious.  Assuming a massive decrease in government spending and worker pay, whatever services previously offered by the feds would soon enough – if desired – be offered by the profit motivated. 

Better yet, the workers who would depart federal employ in response to slashed compensation would be much better off.  It’s not healthy for individuals to be in jobs that they almost as a rule cannot lose.  Such false incentives reinforce our worst human qualities.  On the other hand, when we run a little bit scared it forces us to stretch ourselves, to innovate, to experiment.  Silicon Valley thrives precisely because so many businesses formed there eventually go bankrupt.  The ruthless way in which markets root out the bad in the Valley is the source of its relentless innovation.  If it were run like the government is, the Valley would be the picture of bleak.  The very real possibility of failure – and the total loss of a paycheck – is what helps bring out the best in private sector workers just as a lack of failure saps the on-the-job-intelligence of government workers.

So President Trump is talking about freezing federal pay? While progress in a sense, implicit in Trump’s decision is that the work done by the two million civilian workers not only fits within strict constitutional limits, but that it’s also necessary.  No on both counts.  A truly laudable move by Trump would be for him to go to Congress with a request to slash federal pay, all the while holding up every federal activity to a harsh constitutional light to see if the power is enumerated.  Such actions would redound to a majority of Americans who don’t work for the federal government, but who pay for it through worse health, lower living standards, and substantially lower pay.   

Until then, it would be nice if government workers would at least acknowledge that a bad day for them is merely a pay freeze.  Talk about cushy benefits on our dime. Take a bow, America. 

John Tamny is a speechwriter and writer of opinion pieces for clients, he's editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). His new book is The End of Work, about the exciting explosion of remunerative jobs that don't feel at all like work.  He's also the author of Who Needs the Fed? and Popular Economics. He can be reached at jtamny@realclearmarkets.com.  

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