Thursday, 12 February 2009

A Real Partnership

Today's topic: public sector pay.

The brilliance of this clip lies its exposition of two mechanisms of political - as opposed to productive - life: firstly, the ignorance of the long term, 'unseen' costs of policy. The beneficiaries here and now are actively incentivised to project their costs onto future generations, resulting is an economically ominous and deeply immoral debt burden. The real-life evidence of this in public sector pensions is astonishing. In 2007, the IEA published a monograph, 'Sir Humphrey's Legacy,' in which the cost of unfunded public sector pensions liabilities was estimated to exceed £1 trillion as a result of special final-salary arrangements, exacerbated in recent years by the growth in public sector salaries. The other mechanism the clip illustrates is the trading of favours that the political process facilitates. The romantic view of disinterested civil servants executing the will of the people embodied in their democratically elected representatives was demolished by James Buchanan et al. But only when personified in the character of Sir Humphrey does the reality of self-interest in the public sector - and the tendency to employ one's power for personal gain - become fixed in the public mind.

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