Misleading Stats from the WSJ

Infuriating article here from Steven Moore at the Wall Street Journal.  For your blog-reading pleasure I've decided to break it down.  Here's the whole thing, with my comments in red:

Stephen Moore: We've Become a Nation of Takers, Not Makers - WSJ.com


If you want to understand better why so many states—from New York to Wisconsin to California—are teetering on the brink of bankruptcy, consider this depressing statistic: Today in America there are nearly twice as many people working for the government (22.5 million) than in all of manufacturing (11.5 million). This is an almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.7 million collecting a paycheck from the government. There are fewer people working in manufacturing for many reasons, most of them good. The US manufactures more stuff than it did in 1960, but we're so much more productive and automated that it requires fewer people to do it. And of course lots of manufacturing has moved overseas, because poor countries can pay people pennies an hour, with which we can never compete (thank God)
It gets worse. More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees. Is it any wonder that so many states and cities cannot pay their bills? So this number presumably includes soldiers, police, firemen, teachers, postal workers, child protective service workers, etc etc. And it singles out town and city workers? Our voices are most easily heard in localities- I don't think my town is loaded with extra employees- is yours?

Every state in America today except for two—Indiana and Wisconsin—has more government workers on the payroll than people manufacturing industrial goods. Consider California, which has the highest budget deficit in the history of the states. The not-so Golden State now has an incredible 2.4 million government employees—twice as many as people at work in manufacturing. New Jersey has just under two-and-a-half as many government employees as manufacturers. Florida's ratio is more than 3 to 1. So is New York's. This is completely meaningless- the US is not a manufacturing country any more, most jobs are now in the services and high tech sectors. It's like complaining about how few jobs there are in the newspaper business now- the economy is changing, which doesn't imply that anything bad is happening at all. Jobs have moved from manufacturing to other things, because we're a rich country.
Even Michigan, at one time the auto capital of the world, and Pennsylvania, once the steel capital, have more government bureaucrats than people making things. The leaders in government hiring are Wyoming and New Mexico, which have hired more than six government workers for every manufacturing worker. Again, absolutely pointless statistics. What would be valuable to know is the growth of government workers per citizen compared to the past, or government workers compared to GDP. Instead he's comparing apples to chairs.
Now it is certainly true that many states have not typically been home to traditional manufacturing operations. Iowa and Nebraska are farm states, for example. But in those states, there are at least five times more government workers than farmers. Because farm technology has reduced the number of farmers needed to farm the same amount of land West Virginia is the mining capital of the world, yet it has at least three times more government workers than miners Same thing. New York is the financial capital of the world—at least for now. That sector employs roughly 670,000 New Yorkers. That's less than half of the state's 1.48 million government employees. Oh, that's what we need! More workers on Wall Street!


Don't expect a reversal of this trend anytime soon. Surveys of college graduates are finding that more and more of our top minds want to work for the government. I'd like a source here- I doubt this is true- do you know college students who dream about being bureaucrats? Why? Because in recent years only government agencies have been hiring, and because the offer of near lifetime security is highly valued in these times of economic turbulence. First of all I dispute that grads are dying to work in government. But of course they need jobs somewhere. In 2009 nobody in the private sector was hiring, and government through stimulus was filling the gap. It was government or nothing. When 23-year-olds aren't willing to take career risks, we have a real problem on our hands. Sadly, we could end up with a generation of Americans who want to work at the Department of Motor Vehicles. No, we end up with people taking jobs where they can get them. When the private sector generates jobs, they won't have any trouble finding workers thanks to the huge number of people not working right now. What a ridiculous statement- do you know anyone who wants to work in the DMV?  College grads work where they have to to make ends meet.
The employment trends described here are explained in part by hugely beneficial productivity improvements in such traditional industries as farming, manufacturing, financial services and telecommunications. These produce far more output per worker than in the past. The typical farmer, for example, is today at least three times more productive than in 1950. EXACTLY! That's why all those statistics you just went through are the way they are!
Where are the productivity gains in government? Consider a core function of state and local governments: schools. Over the period 1970-2005, school spending per pupil, adjusted for inflation, doubled, while standardized achievement test scores were flat. Over roughly that same time period, public-school employment doubled per student, according to a study by researchers at the University of Washington. That is what economists call negative productivity.
But education is an industry where we measure performance backwards: We gauge school performance not by outputs, but by inputs. If quality falls, we say we didn't pay teachers enough or we need smaller class sizes or newer schools. If education had undergone the same productivity revolution that manufacturing has, we would have half as many educators, smaller school budgets, and higher graduation rates and test scores. Give me a break! How can you teach kids in a classroom setting in a way that is more productive? You can use technology to increase class sizes I guess, with interactive systems. Anyone think that would be better? Manufacturing is totally different from education, or policing.
The same is true of almost all other government services. Mass transit spends more and more every year and yet a much smaller share of Americans use trains and buses today than in past decades. I don't believe it's true that mass transit spending is higher now than it used to be. No citation here I notice. One way that private companies spur productivity is by firing underperforming employees and rewarding excellence. In government employment, tenure for teachers and near lifetime employment for other civil servants shields workers from this basic system of reward and punishment. It is a system that breeds mediocrity, which is what we've gotten.
Most reasonable steps to restrain public-sector employment costs are smothered by the unions. Study after study has shown that states and cities could shave 20% to 40% off the cost of many services—fire fighting, public transportation, garbage collection, administrative functions, even prison operations—through competitive contracting to private providers. But unions have blocked many of those efforts. Public employees maintain that they are underpaid relative to equally qualified private-sector workers, yet they are deathly afraid of competitive bidding for government services. Well, yeah.  Unions allow workers to bind together to get better wages or working conditions.  Understandably, workers want that.  If they can't unionize then their wages will certainly fall.  Can you blame them? The biggest problem with this is that public employees perform tasks that aren't easily measured. Sure, we could contract out firefighting services, but then we're not sure the fire truck will be there when we need it- what if it's not profitable to keep the local fire station open?

President Obama says we have to retool our economy to "win the future." The only way to do that is to grow the economy that makes things, not the sector that takes things.

But I'm not completely done.  I kept thinking: is it true that government has been growing at some crazy pace?  What about this graph:
 
The graph is inverse of what I want- it shows citizens per government employee, not government employees per citizen, so lower means more government workers.  It looks like state government has grown while federal government has shrunk, for a net wash in rough terms.  I guess government isn't really growing in the US after all.  Of course the agenda of the Right isn't too stop growth, it's to cut to unprecedented levels.