Friedman is right when he said that “It is easy to waste money when it is not your own.” Government tends to waste so much money because public funds are from everyone and thus no one, so why worry about spending money carefully? Government funds become a way that politicians can spread around the “love” and buy votes from special interest groups. One of the biggest special interest groups are public unions, and politicians have found it far too easy to give into public union demands to get their support to win elections, especially in the area of pensions. Yearly compensation of government employees is already too high, but pensions are the real killers. When politicians give away these comfy pension plans, they figure that it will be years before enough public employees retire and it becomes a real problem. By then the politicos will be out of office, and it will be someone else´s problem. That time has come, and government compensation, especially pensions are unsustainable and ruining public finances.
Of course the left has labeled such sensible efforts to reign in public unions with hysteria and hyperbole, declaring such reforms to be a “war on working people”. More like “a war to bring some sanity and fairness to the problem”. The other argument made against reform is that presumably public employees have a right to make out like bandits because bank executives do so even more, as if one wrong justifies another.
Meanwhile in the private sector (the real world) they have been cutting pension and health plans because they generally exist in competitive markets and have to control costs. The government does not mind giving it all away because it is not the politicians money. It is our money.
I have seen the outrageous conditions under which government employees operate here in Spain. Despite generally higher than average salaries, Spanish government employees only work a 26-36 hours week, while normal Spaniards have to work a minimum of 40 hours. Spanish government workers cannot be fired so getting them motivated can be a problem. Absent-ism is 20%. Despite a massive budget crisis, and the government desperately trying to cut expenses everywhere, not a single government worker has been fired, and they have only had a 5% reduction in their salary. Not surprisingly everyone in Spain dreams of working for the government because it is the best deal in town, courtesy of the taxpayers. What Spain should do is fire the least performing 30% of government workers, and then rehire back 10% of bright young workers who cannot get a job. This would move out the non performing deadwood, get the budget in line, and provide work for lots of bright frustrated Spaniards who are now moving abroad, and taking their skills with them. Instead we have a ruinous budget, incompetents with jobs for life, and the best and brightest moving abroad. Why do politicians not make the rational and obvious decision to fire government workers? Because of the all powerful public unions, which work only to enrich themselves and the expense of the rest of society. These public unions hold the country hostage.
Here is a video which explains some of the problems.