12.06.2006

Don't Be a Commodity

Otis White's column on the Governing.com commented today on a recent
study that finds that government workers actually aren't as underpaid
as people think. The stereotype most people have is that government
doesn't pay well, but that's compensated by more job security, more
vacation days, and more benefits. So based on this study, working for
the government does pay well, and you get Flag Day off and your health
care paid for for life. Not a bad deal.

White surmises that the prevailing stereotype comes from the fact that
a generation ago, government work was in fact lower paying than
private sector work, but that thanks to well-negotiated contracts,
government salaries have risen. Meanwhile, private sector salaries
have grown more slowly, because of increasing competition in the form
of technology enabling new entrants as well as globalization enabling
non-US entrants.

When asked about this, union leaders didn't deny the accuracy of the
study, but merely wondered if the problem wasn't that government
workers were paid too much but that non-government workers were paid
too little. In other words, when it comes to wages, why should
government "race to the bottom" like the private sector has?

Some people complain that this is the problem with capitalism, that
it's always a race to the bottom, and that things like protecting
certain types of workers -- whether supporting good pay for government
workers, decent pay raises for policemen and firefighters, or even
higher minimum wage for low-skill laborers – are needed to combat
that.

Call me Darwinian, but a race to the bottom is a good thing. As
consumers, we don't want the price of our cable service or our
tomatoes or our houses to be artificially propped up. What we want is
innovation and competition, people and firms fighting over the chance
to provide us with the products and services we want to consume.

In that sense, we are all consumers of government. And to the extent
that personnel costs are unnecessarily high, that's a net bad for us
all.

What's happened in the private sector is that competition has forced
firms to get better and get cheaper or get left behind. And as a
result, we consumers have benefited. Why shouldn't governments – or
churches or universities or social service agencies, for that matter –
be subject to the same pressures to innovate and to deliver?

Furthermore, competition doesn't always lead to a "race to the
bottom." Downward pressure on prices happens most often when products
become commoditized; that is, no matter who produces the product, it's
about the same, so the only thing you can compete on is price.

This is true no matter whether the product you're talking about is a
ton of steel, a computer, or a job. In other words, how you as a
worker should command higher and higher wages isn't that you live one
more year and "earn" your inflation-indexed adjustment, but that you
distinguish yourself in some way as to command that raise.

This gets at the core of my political and philosophical frame of
reference. Equality by fiat is inferior to equality of opportunity in
terms of arriving at the kind of society I want to be a part of.
Unnecessary government interventions to level the final score rather
than leveling the playing field just don't strike me as the wise way
to go.

So instead of being a commodity and then arguing for artificial
protection from the inevitable ravages of competition, workers – and
governments and churches and universities and social service agencies
– should strive to "uncommoditize" themselves. There are a number of
ways to distinguish yourself to potential employers that cost nothing
but sweat equity. The same is true for governments and their current
and potential constituents, churches and their current and potential
congregants, universities and their current and potential students,
and social service agencies and their current and potential users.
Let's encourage that, instead of discouraging competition and propping
up prices.

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