Friday, February 19, 2010

Why Detroit and the Rest of the Nation suffers

I grew up in a suburb of Detroit, Michigan and thought it was a great place to live at the time. We had four seasons, beautiful trees, and it was a wonderful place to be a kid. However, it was also a place in significant economic decline and, by the time we left in the mid 1970s, Detroit was a place on the ropes. Like the many "Michiganders" that flew south to escape the economy of Detroit, we often joked, "would the last person to leave Detroit, please turn off the lights." With many economists indicating that real unemployment in the Motor City is around 50 percent, the day this city dies seems to be drawing near.

Detroit has reached such a dire status that its own demise has become a description for the decline of other economies. The Michigan based Mackinac Center discusses "Detroitification," which is defined as the "hollowing out of the private economy to prop up unsustainable (and often unresponsive) government establishments." That is a perfect explanation of what is going on in our nation's capitol today.

The federal budget is expanding at a breakneck pace, with the deficit growing annually at an amount our entire national debt was just two decades ago. The US already has the second highest tax rates of any industrialized country in the world. Our fiscal policies are going to make the government demand more. Every dollar the government takes is money that would go to an expanding economy and job creation.

What is the government doing with its expanding expenditures? According to USA Today, during the current recession, the number of federal workers earning six-figure salaries has grown at a rapid rate. While Americans struggle with economic decline that is demonstrated in higher unemployment, falling wages, businesses going under and housing foreclosures; federal employees are flourishing at the expense of taxpayers.

USA Today provides an example of this growth in government employment, at the beginning of the recession, the Transportation Department had only one person earning a salary of $170,000 or more. Today there are 1,690 employees with salaries above $170,000. The growth in six-figure salaries has made the average federal worker's pay climb to $71,206, compared with $40,331 in the private sector. Furthermore, government jobs usually include many benefits that are not typical in the private sector, making the public jobs even more expensive. One can easily see how the costly nature of the government and private sector trade off.

Michael Jar of the Mackinac Center rightly notes, "So much for shared sacrifice." The same tragic policies that have economically wiped out the city of Detroit are now being applied on a national level. Such policies keep certain political parties in power, and certain bureaucrats happy, but create ruin for the rest of the population.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN 650). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

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