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I’ll make you a deal. Bump the pay by 50% and cut the employees by 50%. Sound good to you? I’d love to see that. To hear that 6.4% of the GDP is spent on gov p

I’ll make you a deal. Bump the pay by 50% and cut the employees by 50%. Sound good to you? I’d love to see that. To hear that 6.4% of the GDP is spent on gov pensions is shocking to me. That means that we are spending 6.4% of everything on just the pensions of 16.1% of the workers. If we did the same for all workers, we’d be spending 39.8% of the GDP just on pensions. That seems outrageous to me, but I’m not an economist. Why would it be that high?

Evidlo 3y ago
If you cut 50% of employees you should double wages.
- jtbayly 3y ago
  The point was we both get what we want through that compromise: less government spending and less government, but government employees paid better.
onlyrealcuzzo 3y ago
It's conventional wisdom to save ~10% for retirement, on top of being taxed (along with your employer) ~15.3%. That's ~25.3% of personal income going to retirement. This is inline with most advanced economies. Of that ~6.4% - A LOT of that is healthcare related costs. Considering that healthcare in the US is ~18.2% of GDP - and the vast majority of it comes from retirees - I don't know what you're expecting to see here. Essentially, you're shocked that healthcare in the US is ~18.2% of GDP, and ~75% of that comes from retirees... Social Security spending is ~5% of GDP, and Medicare spending is ~4% of GDP... That's for only ~19% of the population. And it doesn't even cover all of their healthcare costs. If you keep the same ratio for government employees, that comes down to ~2.84% of GDP for healthcare & 3.56% for what most people think of as pensions... And you're looking at ~65% of that spending coming from state & local governments, not the Federal government.
- jtbayly 3y ago
  Only around 60% of the GDP is labor, though. 40% of the GDP on pensions doesn’t seem reasonable for a variety of reasons. If pensions are considered part of the labor cost, that would mean not 25% of income going to retirement, but 66%! Or, if pensions are separate from labor, you’ve used up all 100% of the GDP, just between labor and pensions. Neither seems reasonable. Furthermore, the US only spends 7.5% of the GDP on pensions all told.[0] If these numbers are equivalent, that means 85% of pension dollars are going to government workers. [0]: https://data.oecd.org/socialexp/pension-spending.htm https://data.oecd.org/socialexp/pension-spending.htm

Evidlo 3y ago

If you cut 50% of employees you should double wages.

jtbayly 3y ago
The point was we both get what we want through that compromise: less government spending and less government, but government employees paid better.

onlyrealcuzzo 3y ago

It's conventional wisdom to save ~10% for retirement, on top of being taxed (along with your employer) ~15.3%. That's ~25.3% of personal income going to retirement. This is inline with most advanced economies. Of that ~6.4% - A LOT of that is healthcare related costs. Considering that healthcare in the US is ~18.2% of GDP - and the vast majority of it comes from retirees - I don't know what you're expecting to see here. Essentially, you're shocked that healthcare in the US is ~18.2% of GDP, and ~75% of that comes from retirees... Social Security spending is ~5% of GDP, and Medicare spending is ~4% of GDP... That's for only ~19% of the population. And it doesn't even cover all of their healthcare costs. If you keep the same ratio for government employees, that comes down to ~2.84% of GDP for healthcare & 3.56% for what most people think of as pensions... And you're looking at ~65% of that spending coming from state & local governments, not the Federal government.

jtbayly 3y ago
Only around 60% of the GDP is labor, though. 40% of the GDP on pensions doesn’t seem reasonable for a variety of reasons. If pensions are considered part of the labor cost, that would mean not 25% of income going to retirement, but 66%! Or, if pensions are separate from labor, you’ve used up all 100% of the GDP, just between labor and pensions. Neither seems reasonable. Furthermore, the US only spends 7.5% of the GDP on pensions all told.[0] If these numbers are equivalent, that means 85% of pension dollars are going to government workers. [0]: https://data.oecd.org/socialexp/pension-spending.htm https://data.oecd.org/socialexp/pension-spending.htm