The profit motive is what incentivizes businesses. In order to survive, a business must provide goods or services the market wants, producing and delivering those goods or services at a cost to the business that's lower than the price the customer is willing to pay. That difference between cost and price is the profit. Without a profit, the business goes out of business.
A federal bureaucracy does not have a profit motive. It normally gets established to achieve an objective, not a profit. Without a profit motive, we have seen our federal bureaucracies grow, at substantial costs to the taxpayers, without achieving the objectives for which they were started.
The Heritage foundation did a study comparing pay in the federal government and in the private sector. The study showed that the federal government paid employees basic wages that are 57 percent higher than wages paid in the private sector for the same types of functions. Even more outrageous is the fact that when the costs of the benefit packages are included, Federal workers receive wages and benefits that are 85 percent higher than comparable job skills in the private sector. Private sector wages and benefits amount to $60,078 while federal employee wages and benefits total $111,015. Staggering! Is it any wonder that federal workers are eight times less likely to quit their jobs than are private sector workers?
The Heritage report estimates that the federal government would save $47 billion annually if federal wages were reduced to private sector rates. However, that savings does not include the savings from increases in productivity and the reduction in staff that would ensue if the bureaucratic functions were privatized.
Over the last few years, we have also witnessed the spending excesses of the various federal agencies, and have read of federal employees who spend six or seven hours a day on their computers looking at pornographic web sites. In a normal business environment, the employer would not put day to day work on hold to take employees to a five star hotel to learn "line dancing" or to sip champagne in a hot tub with other workers. The cost to do so would directly affect the cost of the goods or services being marketed, and diminish or eliminate any profits. Nor would the employer tolerate the employee spending the better part of a work day looking at pornographic materials . . . once discovered, the employee would be fired on the spot. However, the boss in the federal bureaucracy cannot fire the employee as it isn't permitted under the contract the government has with the union. The "worst" that can happen is that the offending federal worker can be suspended for a few weeks or months, and be given full wages and benefits during that time. In other words, the worse the employee is, the more likely he or she is to be given an extended paid vacation, at your expense. Does Lois Lerner ring a bell?
We now spend $77 billion a year for our Federal Department of Education, which was started in 1977. Even though our per pupil cost is the highest in the world, our results, in comparison to other countries, continue to drop and our national high school graduation rates hover at around 70 percent, and in the 50 percent range in many urban areas. How much of that $77 billion would be saved if the objectives of this department were specified and set out for bid in the private sector, with a time line for achieving a successful completion? Where the company contracted to achieve results would either achieve those results or lose their contract?
The Department of Energy was also started in 1977, with the objective being to bring this country to energy independence. While countries like France receive about 75 percent of their electricity through nuclear energy, in this country we only receive 17 percent . . . and, we have basically blocked any new nuclear plants from being built in the last 30 years. We have the largest "clean coal" supply in the world. President Clinton unilaterally turned that reserve into a "National Monument" which forever prohibits that coal from being mined. Indonesia, which has the next largest clean coal reserve, became the beneficiary of that decision.
President Obama put a target on the back of the coal industry, killing many coal mining jobs, driving workers into poverty and companies out of business. He has also stifled oil exploration on federal lands. Private enterprise developed "fracking" technologies and oil exploration using that technology has been done on privately owned lands. That private sector success has been largely responsible for bringing us to near energy independence, as it has been estimated that we now have the largest oil reserves in the world. Fracking has also resulted in the oil producing nations dramatically dropping their per barrel price of oil . . . as they try to destroy our fracking industries by pricing their oil below what it currently costs to produce oil through fracking.
We need to transition from bloated, costly, unregulated, unaccountable, and never ending bureaucracies at the Federal level, by contracting necessary functions/objectives to the private sector. A huge improvement in achieving results in a timely manner while dramatically lowering costs to the taxpayers awaits.
(Bob Meade is a Laconia resident.)
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