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An ongoing discussion about conservatism in New Jersey.
Costs and purposes of public services in NJ
Peter C. Hansen  (December 15, 2009, 7:24 pm)

Excellent points and statistics, Jim! The NJ public salaries and budget statistics you cite are stunning and depressing. (For those into such downers, I recommend some further stats here.) The threat which an out-of-control NJ civil service poses is immense because there is no commercial market force dictating or regulating its growth. It is like an invasive species running wild and threatening the NJ economic ecosystem.

To be fair, there may be some instances where large increases in government spending could be justified in a free market:

  1. To repair gaps in market-facilitating services, such as a temporary effort to repair neglected infrastructure
  2. The new officials are able to clear the market's path, so that their pay is a fraction of the growth they induce
  3. To meet unforeseen challenges that threaten the market, such as a massive outbreak of crime
  4. To socialize market-facilitating processes done less efficiently by private sector, so costs go down for same service

If on January 1, 2010, we could look out over a gleaming network of new infrastructure and a liberated, dynamic NJ marketplace, we might think that the decade's explosion in government growth was well-directed, and ready now to subside to a maintenance level. Instead, we observe an ever-heavier dead hand of government lying on the NJ marketplace, reducing profit outlooks and commercial predictability. This is government-as-parasite, not government-as-helper. This sort of government chases business and investors out of NJ. It chokes the life out of its economic host.

Let us assume that if the government diminishes the market's productivity, as in NJ, it does so for some economically unproductive form of social equity or justice. This is not necessarily a bad thing, since we are not mere widgets. Such a course would mean, however, that the public views the market not as the exclusive metric of social value, but merely as a tool for realizing some other social value. The questions would then be simple ones: (1) what is the social metric of value; and (2) is the state efficiently providing this value?

Whatever the social metric of value might be, it has to measure value to society as a whole, not just to the state apparatus. The NJ civil service and public unions are wrong to equate themselves with society as a whole. (See Carla Katz's recent, lengthy article advising Christie in this vein.) The civil service and public unions are not society, but instead live off of NJ society. If they provide a net economic or social benefit to their host (as they should), then they are doing their job. Otherwise, they are simply parasitical and should be removed to this extent.

The question then turns to whether the state is efficiently providing social value. The applicable test is simple: can any other means or institution more efficiently provide value than the one currently offered by the state? Let us take as an example one identified social benefit, a "thorough and efficient system of free public schools." (NJ Const., Sect. IV.1.) What social-value metrics does this provision introduce? The school system must be open to all students, at no cost to them or their parents. These are no doubt worthy social conditions, whatever their link to improving the marketplace.

So what is the best way to create such a "thorough and efficient" school system? Either debate abstract system models in a vaccuum, or let a competitive market of schools lead to winning models and an evolution to quality. Of the two courses, having competing schools is doubtlessly more efficient because it allows a comparison of real-world implementations. Even if an abstract model's implementation is not catastrophically flawed, its merits cannot be compared to competing real-world alternatives. Consequently, it can never be shown to be the maximally efficient model.

If the NJ civil service actually cared about maximizing value, it would facilitate and manage a real-world competition between schools, using vouchers to facilitate public choice between alternatives. The NJ civil service does not want such a competition, however, because it is already heavily invested in one product, namely traditional "public school" institutions. The NJ civil service and public unions have thus sought to shut down any competition and maintain their comfortable monopoly over NJ schools. (The Washington, DC example is a shameful prospect for NJ to consider.)

Until such conflicts of interest are removed, the state can never efficiently provide value, whatever the social metric.

So what is to be done? Here are a few ideas:

  1. End the ability of NJ public-sector unions to take part in state or local political activity and thereby negatively affect efficiency-maximizing competition
  2. Establish a high-level government service directed to conduct a permanent competition among independent service-providers to maximize efficiency in providing identified social goods
  3. Implement a metric for all government processes which (above a certain minimal dollar level) attempts to: (a) quantify the process's net economic impact on the private sector (starting with civil-service salaries); and (b) identify and measure other quantifiable social goods which are affected by the process

If these reforms could be instituted in New Jersey, the impact would be enormous. In all events, it has to be hoped that the Christie Administration has a principled approach to reform rather than a piecemeal one. For New Jersey to be allowed to heal, it has to have some guiding ideas which the public can rally around and hold to over the long haul.