Daily Archives: August 14, 2006

Nice gig if you can get it

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Downsizing the federal government.jpgCato Institute tax director Chris Edwards — author of Downsizing the Federal Government (Cato 2005) — addresses in this Washington Post article the myth that a job in the federal government involves much of a sacrifice of what the “servant” could earn in the private sector:

The Bureau of Economic Analysis released data this month showing that the average compensation for the 1.8 million federal civilian workers in 2005 was $106,579 — exactly twice the average compensation paid in the U.S. private sector: $53,289. If you consider wages without benefits, the average federal civilian worker earned $71,114, [which is] 62 percent more than the average private-sector worker, who made $43,917.
The high level of federal pay is problematic in and of itself, but so is its rapid growth. Since 1990 average compensation for federal workers has increased by 129 percent, the BEA data show, compared with 74 percent for private-sector workers.
Why is federal compensation growing so quickly? For one thing, federal pay schedules increase every year regardless of how well the economy is doing. Thus in recession years, private pay stagnates while government pay continues to rise. Another factor is the steadily increasing “locality” payments given to federal workers in higher-cost cities.
Rapid growth in federal pay also results from regular promotions that move workers into higher salary brackets regardless of performance and from redefining jobs upward into higher pay ranges. [. . .]
According to Bureau of Labor Statistics data, the rate of layoffs and firings in the federal workforce is just one-quarter the rate in the private sector. [. . .]
One sign that federal workers have a sweeter deal than they acknowledge is the rate of voluntary resignation from government positions: just one-quarter the rate in the private sector, the BLS data show. Long job tenure has its pros and cons, but the fact that many federal workers burrow in and never leave suggests that they are doing pretty well for themselves.

And that’s not even considering the enormous cost to businesses and lives resulting from the misguided work of some of those well-paid federal employees.

So, what’s the problem again?

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oil trading.jpgThis Norm Alstar/NY Sunday Times article notes a recent analyst report suggesting that a stampede of institutional investors, mainly pension funds, into the commodities futures markets is actually the chief cause of the rise in oil prices, which the report characterizes as ìa bubble.î Maybe so, but as James Hamilton noted in regard to the contango situation in such markets awhile back, this is a good thing and not an ominous one as the Times article suggests.
If the speculators turn out to be right that prices will be higher in the future, then they will earn a profit and provide a benefit for consumers. By bidding up the price of oil today, oil inventories rise as owners save for the higher future price and consumers conserve so that more oil is available in case there is a shortfall in the future.
However, if the speculators bet wrong, then they will have bought high and sold low. That results in consumers paying more now for oil products than would be necessary if the future price of oil could be predicted with certainty. But consumers’ increased payments for oil products will pale in comparison to the money that the speculators will lose on their bets of higher prices in the future. Consequently, the only reason to be worried about all this is if you are concerned about the speculators losing huge amounts of money when the bubble bursts.
In short, as former Exxon CEO Lee Raymond reminds us about oil prices when he was asked recently whether he thinks that they will continue to go up:

“Maybe. But I’ll bet they’ll be lower at some point.”

Missing the point on Preston Wilson

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Preston Wilson.jpgThe Stros mercifully waived Preston Wilson over the weekend, who has been one of the worst-producing regularly-playing outfielders in the National League this season (Wilson’s .714 OPS was 79th in the National League among regular players). The news would not normally justify even a blog post, except for the fact that Wilson’s exit exposed the vacuous nature of the analysis that the Houston Chronicle serves its readers on almost a daily basis from two of its sportswriters, columnist Richard Justice and Stros beat writer Jose de Jesus Ortiz.
As regular readers of this blog know, I sized up the Stros decision to acquire Wilson accurately when the club picked him up as a free agent in January and questioned de Jesus Ortiz’s fawning praise of the acquisition at the time. Not that such a prediction was particularly difficult. If one took the time to analyze Wilson’s career statistics objectively, then it was easy to conclude that he wasn’t a very good player and was a longshot to help the Stros much. Neither de Jesus Ortiz nor Justice bothered to undertake such an analysis of Wilson.

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