Several years ago when the news of the exploding debt and crashing financial markets was making the headlines son James ask what this would mean. I told him I didn’t really know because I had never seen anything like it before and to a large extent we don’t have any real history of this sort of thing before. In the depression of the 1930’s the government debt wasn’t huge to start out with and there was a completely different situation with the banks and lack of insured deposits. This is different.
The one thing I suggested might eventually happen is that governments would have to start laying off people and that many laws and regulations would essentially be ignored because there would not be enough people to enforce them. His response was something along the lines of, “So this is a good thing then.” Of course it isn’t and wasn’t that simple. There can be a lot of bad to go with the good. For example there may not be enough people to enforce the morass of all the millions of regulations but there probably will always be enough thugs to enforce the confiscatory tax rates, nationalization of health care, communications, food, and energy production and distribution.
The worst of the possibilities have not happened yet but a glimmer of the good has started to shine through:
In April the household survey showed that that there were 442,000 fewer people working in government than in March. The household survey has a much smaller sample size than the establishment survey, and so is prone to volatility, but the magnitude of the drop is striking: It marks the largest decline on both an absolute and a percentage basis on record going back to 1948. Moreover, the household survey has consistently showed bigger drops in government employment than the establishment survey has.
But of course it’s but a drop in the bucket. According to the article there are about 20.3 million people in the U.S. engaged in government work. I would be happier if there were 19 million fewer than that with most of those being in the military.