I was sad when I learned of your retirement from the NYT, as I regularly read your NYT pieces for the last 23 years to help make sense of current events. But I am so glad you are continuing with this newsletter, and I love your plans for it, including your plans for wonkier entries. Thanks so much for continuing to write!
I'm thrilled that he left. His column was almost the only thing at the NYT worth paying for. If they had been smart, they would have unbundled it ages ago.
Same here. As NY Times' election coverage became weirdly biased, I couldn't keep paying them. I was sad to lose access to Prof Krugman's articles. Happy to see him here.
There is an equivalent in municipal government ( am on the finance committee in my town). When you ask property tax payers for an tax increase in my town, opposition will suggest that we live within our means. When we tell them that the alternative is a set of cuts they ask why we are threatening to cut public schools, public safety and public works. When we tell them its because those services represent more than 80% of the budget they ask why we can't cut pension and healthcare costs. Then we tell them the only way to cut those costs is to lay people off and 90% of our employees are in public schools, public safety and public works. Then they get very quiet.
Exactly. Thank you for your service. I spent a lot of my sixteen years on our City Council teaching constituents municipal math. When they realize that only 17% of their property tax goes to the city, with the rest going to the schools, parks, and county social services, they get really quiet. Since we only have employment tax and not income tax, if they’re retired that’s all they pay for city services, and almost all get a homestead discount on their property taxes to begin with. When it came out that the ~$700 the city gets from them annually basically covers picking up their garbage, and people with jobs paying income taxes were making up the difference, so they were getting everything else – police, fire, EMTs, snowplowing, leaf pickup, street maintenance, etc. – basically for free, they would go silent. They’d ask why we couldn’t bring in more revenue, and we’d explain that we did that by allowing Walmart (which they profess to hate) to build a store, hire people who pay income taxes, and pay gigantic property taxes. The kicker was when I explained that none of the churches, of which we have many, pay property taxes. Then they couldn’t shut up fast enough.
When I look at my school districts budget I see a lot of bloat. We spend $300,000 per teacher, but the teachers only get paid $72,000 a year. Yes there is capital and other costs, but per student spending is way up not because they hired or paid more teachers. It’s non teacher expense that has gone up.
This is the same story where I grew up in the northeast. School budgets are incredibly bloated and property taxes are very high. It’s $35,000 per pupil in New York.
A lot of these costs don’t even include realistic future pension costs.
So yeah there are a lot of places where “cut the school budget” is actually a good answer to high property taxes without directly going after your kids teacher. Too many blue areas work for the Eds and meds racket rather than the other way around.
I could better respond to your comment if I knew what community you live in and could look at the budget which I assume is on line? I am happy to take a look and compare it to the Arlington MA budget. Per teacher costs is not a good way to look at a school budget. Custodians, counselors, teaching assistants, principals and administrators are not teachers. MAYBE head count would make sense but the only real way to know is to look at how many of these positions there are vs teachers and what they are paid. Here in my town we know the exact salary of every employee because that is public information. Per pupil costs run about 13k per pupil - higher at the voc school. I don't think we include capital costs in that. The devil is in the details.
Labor Overhead and Materials is what I would examine in manufacturing. What adds value to the product? Direct Labor. In this case it would be teachers. The rest are a part Overhead. Materials would be your structural costs, books, etc.
If you break it out in such a fashion, you begin to see what costs truly are and perhaps determine how some can be minimize.
Have you ever had a kid in school? Teachers are not the only labor that directly benefits students. Schools are not factories. I can provide a detailed analysis of the Arlington Public schools budget if that would help you understand the difference.
You have construed what I said with your leap. What I suggested is not a threat to schools, teachers, or students. Schools being a generalization.
It is a way of understanding how things are done or made, and the process involved in doing either, and completing the manufacture or in this case the education of a student. If you do not understand the process and the elements involved than how can you critique it or understand it?
And yes I have three children all of which hold college degrees. Myself, I have several plus mutule certs in LSS, CPM, CPIM, etc. I have been a VP on Township Planning Commissions and have worked with Counties too.
What I suggested is very adaptable to any environment.
I was being a bit sarcastic there so apologies for that. I wasn't questioning your credentials. I was and will continue to question two things in your original post. 1. The idea that minimizing costs as opposed to maximizing student achievement is a good approach to a school budget. 2. That a methodology that works in one field applies to all.
All of my training - including my training in budgeting - I received at the Yale School of Drama. I was taught that set should be designed without regard to budget and then redesigned to meet the budget. That way the designer won't edit out good ideas in order to meet the budget. Its the moral equivalent of zero based budgeting. Obviously not practical to apply to say the public works budget every year.
As for my disagreement with your suggested approach based on manufacturing see my response to Maxwell re administrative bloat below.
School budgets are and should be based on what student achievement data tells you - not minimizing costs.
Hey Annie – I appreciate you sharing this detailed breakdown, and I think you sound like you come from a very fair and reasonable perspective.
I just wanted to step in and make the point that real spending per pupil in K-12 education in the US has increased by a significant amount over the past 50 years, and most of this growth has come in the form of increasing administrative compensation. When I personally think of bloat in education, this is the issue that comes to mind. I’m curious why you think this has been such a widespread phenomenon, and whether you believe it to be reversible?
Merry Xmas back at you. Are you sure you are not confusing administrative bloat in public HIGHER education with K-12? I have not heard that this is the case at the k-12 level. I can tell you where the growth in admin has come in Arlington public schools. First of all for many years all 7 of our elementary schools operated with a Principal and a secretary. We recently added an assistant principal at each school. These were badly needed positions. We added some HR positions a few years ago when a disastrous HR failure resulted in an expensive lawsuit. We added SPED coordinators because of a state assessment that showed we were badly failing many SPED students and out of compliance with state law. It was also clear that adding SPED services in house was cheaper and more effective than outplacements. We added more social workers and counselors because of the obvious mental health crisis among our students. We added a center for family engagement when a strategic plan and community survey showed that many lower income students and METCO students were doing poorly on state tests in part due to a need for family support. Do you see a pattern here? We continually assess how our student body is doing academically, socially and emotionally and use the latest understanding of the barriers to success to determine what supports and interventions might work. Then we assess those interventions and adjust based on data. Teachers are there to teach but that is not all that students need. With 22 to 30 kids in a class teachers cannot ALSO be social workers, provide individual tutoring or be each students counselor. This work needs to be done by other professionals who are inevitable listed as "administration" on the website. If you want to understand the issue dig into your local school system's budget and evaluation data. ( happy to find the links and send them to you if you can tell me where you live). Public school systems are funded for the most part at the local level. I should also point out that in MA we have a limit on the rate at which property taxes can increase without a vote of the public. Our budget is tight, revenue driven, and without an ounce of fat - including in the schools.
I reckon that the purpose of DOGE is not to strut around feeling self-important, but to *create* waste, fraud and abuse. The right kind of fraud, that is, the kind that ends up in the oligarch's pockets. None of your organic artisanal fraud, hippy!
In particular even though it is small potatoes, I'd expect that NASA's unmanned exploration budget and especially their climate change budget will be gutted to fund Elon's Mars fantasies and the rural broadband initiative budget will go entirely to Starlink.
Can we talk about how “waste, fraud and abuse” relates to the health care industry and wage theft? New York State has recently handed over its entire Medicaid-funded home caregiver program (CDPAP) to a private company that has already been investigated for wage theft in other states. All because of the idea that “people are running wild defrauding Medicaid taking money for babysitting Grandma.” I have to keep receipts for every scrap of food that I buy for my disabled loved one out of fear that she won’t be approved for Medicaid home care - which reminds me of how in Nazi occupied France, everyone had to carry around stacks of documentation or fall under suspicion. Criminalization of the people needs to stop.
I’m a bureaucrat in a Canadian health system, and we’ve been dealing with exactly this kind of review. (To paraphrase Fight Club: “which system?” “A major one.”) The share of our spending that goes to administration is well under 3%. We’re “efficient” to the point of being seriously under-managed, with clients of mine responsible for high eight figure budgets and, e.g., no dedicated accounting staff supporting them. We have multiple independent reports (which, incidentally, each also cost eight figures) from major accounting firms proving this. And yet our conservative government flatly refuses to believe there aren’t vast hordes of “managers managing managers” hidden away somewhere. They do this even in private meetings, so it’s not just public grandstanding. “Government is bloated and inefficient” is better understood as an article of religious faith than as a testable proposition for politicians on the right these days.
The workforce has remained flat but the number of contractors has gone up dramatically. Which is a false ‘saving’ as they generally cost more than hiring a person directly.
Actually, they usually do, in form of private health insurance, 401k retirement plans, etc. Also, higher compensation. They are much easier to fire, but they often find their way back through another company.
I'd you are talking about federal government employees, since the early 1980's federal employees fall under FERS, not the former CSRS pension system. Under FERS federal employees have 401(k) style plans(Thrift Savings Plan accounts) to which employees contribute. Their contributions are matched by the federal government.
I was involved in monitoring government finances for decades and concur that after medical/social assistance, education, defense and transportation, there are very few pennies left to spend.
However: you missed something, that is that the military in the US is also a HUGE social assistance program. NOBODY talks about that.
Thank you very much for your work. Always a good read.
Is there any private employer that can beat the number of employees that work for the US DOD? Then, of course, there are the multitudes of contractors that also supply workforces for the DOD.
Dr. Krugman I started working for Social Security in 1978. I retired from the agency last June and I still remember what then Commissioner Dorcas Hardy did to the Agency after the Grace Report came out. She took a meat ax to staffing and closing offices. The Agency never recovered from those staffing losses and closed offices. She made a sweetheart deal with MCI to establish the national 800#. MCI was absolutely incompetent in running it. Took years to get the 800# limping and it's still way understaffed.
And now Trump has nominated someone even worse than Saul who dismantled the teleworking system before the pandemic hit. His new nominee is already saying the agency is overstaffed and has too many offices. The last thing Social Security needs is a return to the days of Meat Ax Hardy. But that's what's coming...
The Republicans have wanted to get rid of Social Security ever since it was created. Meanwhile, businesses have done everything they can to reduce the benefits they provide their employees (hiring more part timers, hiring contractors who do full time work indistinguishable from full time employees, eliminating pension plans) so people truly rely on Social Security. And in recent years the Republicans think privatization is the answer to everything from prisons to health care. And it never works.
Yet, the bankers and investors salivate at the prospect of “privatizing” Social Security. Yes, in boom times the equities markets look like they might return more, but it’s the bust times that Social Security was built for.
The entire argument that equities markets would return more is bogus from the start. It assumes that you, or the government, takes the money put into SS, invests it in the market for 40 years or so, and viola! Huge nest egg. However, Social Security never worked that way in the first place. It takes the money from current workers, and gives it to current retirees. There is no "investment" at all except for the surplus built up when the boomers were working. The system was designed to provide benefits almost from the inception, not 40 years later.
Yes, but MAGA/GOP will continue forever to declare privatization will work and does work. Of course, never without proof. You know, just like they declare Trump is a great man, the greatest American who ever lived. No proof. Just a childish, cultish belief system.
PS Agree. Expect more movers' and shakers' MAGA/GOP attacks on their hated Social Security. They truly want it gone. Until, of course, they retire.
Love it! Please do not shy away from the political punditry though. Your insights with that coupled with your economic wisdom has been invaluable. We'll need it now more than ever if we are going to get through the next 4 years. Maybe we'll get lucky and Musk & Ramaswamy will subscribe and we'll avoid the worst of what looks to be coming.
I adore it when you get snarky. Muskaswamy is the most perfect moniker for this ridiculous enterprise. I hear they are starting by eliminating daylight saving time changes. lol.
“Thomas Paine, Hard-drinking, self-educated, cranky, restless, Paine had accomplished little during the previous 37 years of his checkered life….Pain had lost his job as an excise tax collector in England in 1734, the same year that his marriage crumbled.” (Alan Taylor, American Revolutions.” Paine came to America for a fresh start, “Dr. Benjamin Rush …recruited Paine to publish pamphlets against reconciliation.” (Alan Taylor).
No, Paine was not rich. He was truculent, irascible, a poor businessman, and a great writer of political ideas for the largely uneducated. Was he very influential? Yes. Was he rich? No. But the very rich certainly influenced, and benefited from, the American Revolution and the subsequent sale of western territories.
I just finished reading Alan Taylor’s excellent book, “American Revolutions: A Continental History, 1750-1804.” It clearly supports your viewpoint: “Same as it ever was.”
This post was not wonky at all. I am just left wondering if this kind of piece was becoming increasingly difficult to write at the Times. Given some of the other opinion writers lack of facts in their opinion pieces (Douthat and Brooks come to mind) I have to think that Mr Krugmans use of actual facts and data that he can defend was becoming problematic.
I hope that, as a prominent pundit whose opinion actually matters to people, you're more apt to advocate for good policy now than politically expedient policy. Obama punking out on healthcare may have created a system that was better than nothing, but it clearly entrenched the worst things about how the US does healthcare, and there's still an absurd number of people with political power and influence in the US who think this was somehow optimal policy. It is crazy to me that the Adult Voices in the Room *still* contend that it would be disaster for the US to adopt a policy that every other developed country on earth has
I am a Canadian. I tend to think that the long waiting list is not a problem of the universal health care system. In the first place, there is not enough doctors, especially specialists and rural doctors. Governments, especially conservative provincial governments, in the name of small government and sound government financial management, tends to cut spending on education and hospital funding. For instance, let's say knee surgery, one specialist can only have one afternoon/morning per week for operation (emergency is an exception). This resource issue will occur with or without health care. One solution is to have a two tier system: private and public. If you can afford it, you can use your money to visit a private institute. For example, I can have a MRI done very likely the next day if I pay about Cdn $500.00 out of my own pocket. My friend went to Mexico to have a hip surgery by paying about $15000, not include airfare etc. In Hong Kong, it has a two-tier system. Public hospitals have a long waiting list and private hospital has a short list but are expensive. My father's stay in a private hospital cost him HK$10,000.00 a day in the 90's. Who can afford it?
Furthermore, I have a cancer surgery. I got to see the specialist in about a week and have the operation in another week. To me that is not bad. At least I am still alive today. I also had two knee surgeries. I have some special circumstances and so my waits were about the same. The great part is I only have to pay the ambulance fees because after checking out from the hospital and gone home, I had to get an ambulance to take me back to emergency. But of course, you will not be so lucky if you have a back pain and do not want to pay.
I fear that other countries are prepared to ration health care in ways that the US is not (eg, wait lists for elective surgery; cap physician salaries; CBA for expensive drugs), which means that under a single-payer structure, US health care costs are likely to increase dramatically. And, by the way, what's so terrible with increasing health care as a service consumption good?
What the "run government like a business" people never admit is that if a CEO parachuted into a money-losing company and his (always his) first act was to slash revenue, the board would fire him before the close of business. I understand that business people don't like to pay taxes (who does)...but that does not mean that wanton tax cuts are akin to running the government like a business. The opposite, in fact.
Georgist land-value tax is practically immune to fraud or evasion, since the thing it's taxing - that is, exclusive access rights to particular plots of land - only exists at all by virtue of government enforcement. Protection against foreign invasion or banditry, plus commerce and transit regulation which make urban areas so valuable, are arguably the core service any state provides, so it's a perfectly aligned case of getting beneficiaries to pay what the service is worth.
The only people who'd be hurt by such a policy are real-estate speculators who create nothing of value themselves, so of course Trump would fight to the last breath against it.
As a, now retired, economist, I loved reading your NYT columns, and I am sure I will love reading this substack. The pieces of economic insight and empirics in your columns individually often were familiar to me, but it was because of the way you combined them that the puzzle was completed and became an always insightful commentary on current events. It was only on European unification that I regularly disagreed with your analyses: as a European, I believed they tended to neglect the political imperative of this project, and the economic costs that is worth.
I was sad when I learned of your retirement from the NYT, as I regularly read your NYT pieces for the last 23 years to help make sense of current events. But I am so glad you are continuing with this newsletter, and I love your plans for it, including your plans for wonkier entries. Thanks so much for continuing to write!
Not too wonky though. His greatest talent is explaining complex issues to ordinary people.
I wasn't sad when I heard you were leaving NYT. I left it several months ago when they started "saying the quiet thing, out loud.".
I'm thrilled that he left. His column was almost the only thing at the NYT worth paying for. If they had been smart, they would have unbundled it ages ago.
Same here. As NY Times' election coverage became weirdly biased, I couldn't keep paying them. I was sad to lose access to Prof Krugman's articles. Happy to see him here.
Ditto!
There is an equivalent in municipal government ( am on the finance committee in my town). When you ask property tax payers for an tax increase in my town, opposition will suggest that we live within our means. When we tell them that the alternative is a set of cuts they ask why we are threatening to cut public schools, public safety and public works. When we tell them its because those services represent more than 80% of the budget they ask why we can't cut pension and healthcare costs. Then we tell them the only way to cut those costs is to lay people off and 90% of our employees are in public schools, public safety and public works. Then they get very quiet.
Exactly. Thank you for your service. I spent a lot of my sixteen years on our City Council teaching constituents municipal math. When they realize that only 17% of their property tax goes to the city, with the rest going to the schools, parks, and county social services, they get really quiet. Since we only have employment tax and not income tax, if they’re retired that’s all they pay for city services, and almost all get a homestead discount on their property taxes to begin with. When it came out that the ~$700 the city gets from them annually basically covers picking up their garbage, and people with jobs paying income taxes were making up the difference, so they were getting everything else – police, fire, EMTs, snowplowing, leaf pickup, street maintenance, etc. – basically for free, they would go silent. They’d ask why we couldn’t bring in more revenue, and we’d explain that we did that by allowing Walmart (which they profess to hate) to build a store, hire people who pay income taxes, and pay gigantic property taxes. The kicker was when I explained that none of the churches, of which we have many, pay property taxes. Then they couldn’t shut up fast enough.
"Pay for the services you want" always produces a round of magical thoughts why we don't have to do that.
BTW, this pattern also holds for HOAs. ;-)
When I look at my school districts budget I see a lot of bloat. We spend $300,000 per teacher, but the teachers only get paid $72,000 a year. Yes there is capital and other costs, but per student spending is way up not because they hired or paid more teachers. It’s non teacher expense that has gone up.
This is the same story where I grew up in the northeast. School budgets are incredibly bloated and property taxes are very high. It’s $35,000 per pupil in New York.
A lot of these costs don’t even include realistic future pension costs.
So yeah there are a lot of places where “cut the school budget” is actually a good answer to high property taxes without directly going after your kids teacher. Too many blue areas work for the Eds and meds racket rather than the other way around.
I could better respond to your comment if I knew what community you live in and could look at the budget which I assume is on line? I am happy to take a look and compare it to the Arlington MA budget. Per teacher costs is not a good way to look at a school budget. Custodians, counselors, teaching assistants, principals and administrators are not teachers. MAYBE head count would make sense but the only real way to know is to look at how many of these positions there are vs teachers and what they are paid. Here in my town we know the exact salary of every employee because that is public information. Per pupil costs run about 13k per pupil - higher at the voc school. I don't think we include capital costs in that. The devil is in the details.
Annie:
Labor Overhead and Materials is what I would examine in manufacturing. What adds value to the product? Direct Labor. In this case it would be teachers. The rest are a part Overhead. Materials would be your structural costs, books, etc.
If you break it out in such a fashion, you begin to see what costs truly are and perhaps determine how some can be minimize.
Have you ever had a kid in school? Teachers are not the only labor that directly benefits students. Schools are not factories. I can provide a detailed analysis of the Arlington Public schools budget if that would help you understand the difference.
Annie:
You have construed what I said with your leap. What I suggested is not a threat to schools, teachers, or students. Schools being a generalization.
It is a way of understanding how things are done or made, and the process involved in doing either, and completing the manufacture or in this case the education of a student. If you do not understand the process and the elements involved than how can you critique it or understand it?
And yes I have three children all of which hold college degrees. Myself, I have several plus mutule certs in LSS, CPM, CPIM, etc. I have been a VP on Township Planning Commissions and have worked with Counties too.
What I suggested is very adaptable to any environment.
I was being a bit sarcastic there so apologies for that. I wasn't questioning your credentials. I was and will continue to question two things in your original post. 1. The idea that minimizing costs as opposed to maximizing student achievement is a good approach to a school budget. 2. That a methodology that works in one field applies to all.
All of my training - including my training in budgeting - I received at the Yale School of Drama. I was taught that set should be designed without regard to budget and then redesigned to meet the budget. That way the designer won't edit out good ideas in order to meet the budget. Its the moral equivalent of zero based budgeting. Obviously not practical to apply to say the public works budget every year.
As for my disagreement with your suggested approach based on manufacturing see my response to Maxwell re administrative bloat below.
School budgets are and should be based on what student achievement data tells you - not minimizing costs.
Hey Annie – I appreciate you sharing this detailed breakdown, and I think you sound like you come from a very fair and reasonable perspective.
I just wanted to step in and make the point that real spending per pupil in K-12 education in the US has increased by a significant amount over the past 50 years, and most of this growth has come in the form of increasing administrative compensation. When I personally think of bloat in education, this is the issue that comes to mind. I’m curious why you think this has been such a widespread phenomenon, and whether you believe it to be reversible?
Merry Christmas, by the way!
Merry Xmas back at you. Are you sure you are not confusing administrative bloat in public HIGHER education with K-12? I have not heard that this is the case at the k-12 level. I can tell you where the growth in admin has come in Arlington public schools. First of all for many years all 7 of our elementary schools operated with a Principal and a secretary. We recently added an assistant principal at each school. These were badly needed positions. We added some HR positions a few years ago when a disastrous HR failure resulted in an expensive lawsuit. We added SPED coordinators because of a state assessment that showed we were badly failing many SPED students and out of compliance with state law. It was also clear that adding SPED services in house was cheaper and more effective than outplacements. We added more social workers and counselors because of the obvious mental health crisis among our students. We added a center for family engagement when a strategic plan and community survey showed that many lower income students and METCO students were doing poorly on state tests in part due to a need for family support. Do you see a pattern here? We continually assess how our student body is doing academically, socially and emotionally and use the latest understanding of the barriers to success to determine what supports and interventions might work. Then we assess those interventions and adjust based on data. Teachers are there to teach but that is not all that students need. With 22 to 30 kids in a class teachers cannot ALSO be social workers, provide individual tutoring or be each students counselor. This work needs to be done by other professionals who are inevitable listed as "administration" on the website. If you want to understand the issue dig into your local school system's budget and evaluation data. ( happy to find the links and send them to you if you can tell me where you live). Public school systems are funded for the most part at the local level. I should also point out that in MA we have a limit on the rate at which property taxes can increase without a vote of the public. Our budget is tight, revenue driven, and without an ounce of fat - including in the schools.
Just so everyone understands where I am coming from my husband got me a tee-shirt for Xmas that says "Without data its just an opinion"
https://4.files.edl.io/26bd/10/25/24/134328-3f7d5cea-8042-4af3-aed4-d685c14f9675.pdf
Tell them that the only cut to make are extracurricular activities.
No Friday night football makes the point.
I reckon that the purpose of DOGE is not to strut around feeling self-important, but to *create* waste, fraud and abuse. The right kind of fraud, that is, the kind that ends up in the oligarch's pockets. None of your organic artisanal fraud, hippy!
In particular even though it is small potatoes, I'd expect that NASA's unmanned exploration budget and especially their climate change budget will be gutted to fund Elon's Mars fantasies and the rural broadband initiative budget will go entirely to Starlink.
Yes. It is notable that Musk pushed very hard for Trump's nominee to head NASA because that will be a straight funnel of money.
Can we talk about how “waste, fraud and abuse” relates to the health care industry and wage theft? New York State has recently handed over its entire Medicaid-funded home caregiver program (CDPAP) to a private company that has already been investigated for wage theft in other states. All because of the idea that “people are running wild defrauding Medicaid taking money for babysitting Grandma.” I have to keep receipts for every scrap of food that I buy for my disabled loved one out of fear that she won’t be approved for Medicaid home care - which reminds me of how in Nazi occupied France, everyone had to carry around stacks of documentation or fall under suspicion. Criminalization of the people needs to stop.
I’m a bureaucrat in a Canadian health system, and we’ve been dealing with exactly this kind of review. (To paraphrase Fight Club: “which system?” “A major one.”) The share of our spending that goes to administration is well under 3%. We’re “efficient” to the point of being seriously under-managed, with clients of mine responsible for high eight figure budgets and, e.g., no dedicated accounting staff supporting them. We have multiple independent reports (which, incidentally, each also cost eight figures) from major accounting firms proving this. And yet our conservative government flatly refuses to believe there aren’t vast hordes of “managers managing managers” hidden away somewhere. They do this even in private meetings, so it’s not just public grandstanding. “Government is bloated and inefficient” is better understood as an article of religious faith than as a testable proposition for politicians on the right these days.
The workforce has remained flat but the number of contractors has gone up dramatically. Which is a false ‘saving’ as they generally cost more than hiring a person directly.
The top contracts are defense-related and are mainly with companies rather than individual contractors.
Read Marianna Mazzucato's 'The Big Con'. She exposes the grift of these third party consultants.
but they most certainly do not get pensions and all the bennies associated with being gov't employees. The govt is NOT an efficient hirer.
Uh, do you know what federal pensions are these days? They're not the problem here.
Actually, they usually do, in form of private health insurance, 401k retirement plans, etc. Also, higher compensation. They are much easier to fire, but they often find their way back through another company.
I'd you are talking about federal government employees, since the early 1980's federal employees fall under FERS, not the former CSRS pension system. Under FERS federal employees have 401(k) style plans(Thrift Savings Plan accounts) to which employees contribute. Their contributions are matched by the federal government.
I was involved in monitoring government finances for decades and concur that after medical/social assistance, education, defense and transportation, there are very few pennies left to spend.
However: you missed something, that is that the military in the US is also a HUGE social assistance program. NOBODY talks about that.
Thank you very much for your work. Always a good read.
He kinda did. He said the us gov is basically an insurance company with an army.
Kinda
Perhaps it goes something like this… The government is basically an insurance company with an army that also runs its own insurance company.
Is there any private employer that can beat the number of employees that work for the US DOD? Then, of course, there are the multitudes of contractors that also supply workforces for the DOD.
Dr. Krugman I started working for Social Security in 1978. I retired from the agency last June and I still remember what then Commissioner Dorcas Hardy did to the Agency after the Grace Report came out. She took a meat ax to staffing and closing offices. The Agency never recovered from those staffing losses and closed offices. She made a sweetheart deal with MCI to establish the national 800#. MCI was absolutely incompetent in running it. Took years to get the 800# limping and it's still way understaffed.
And now Trump has nominated someone even worse than Saul who dismantled the teleworking system before the pandemic hit. His new nominee is already saying the agency is overstaffed and has too many offices. The last thing Social Security needs is a return to the days of Meat Ax Hardy. But that's what's coming...
The Republicans have wanted to get rid of Social Security ever since it was created. Meanwhile, businesses have done everything they can to reduce the benefits they provide their employees (hiring more part timers, hiring contractors who do full time work indistinguishable from full time employees, eliminating pension plans) so people truly rely on Social Security. And in recent years the Republicans think privatization is the answer to everything from prisons to health care. And it never works.
Yet, the bankers and investors salivate at the prospect of “privatizing” Social Security. Yes, in boom times the equities markets look like they might return more, but it’s the bust times that Social Security was built for.
The entire argument that equities markets would return more is bogus from the start. It assumes that you, or the government, takes the money put into SS, invests it in the market for 40 years or so, and viola! Huge nest egg. However, Social Security never worked that way in the first place. It takes the money from current workers, and gives it to current retirees. There is no "investment" at all except for the surplus built up when the boomers were working. The system was designed to provide benefits almost from the inception, not 40 years later.
Yes, but MAGA/GOP will continue forever to declare privatization will work and does work. Of course, never without proof. You know, just like they declare Trump is a great man, the greatest American who ever lived. No proof. Just a childish, cultish belief system.
PS Agree. Expect more movers' and shakers' MAGA/GOP attacks on their hated Social Security. They truly want it gone. Until, of course, they retire.
Love it! Please do not shy away from the political punditry though. Your insights with that coupled with your economic wisdom has been invaluable. We'll need it now more than ever if we are going to get through the next 4 years. Maybe we'll get lucky and Musk & Ramaswamy will subscribe and we'll avoid the worst of what looks to be coming.
I adore it when you get snarky. Muskaswamy is the most perfect moniker for this ridiculous enterprise. I hear they are starting by eliminating daylight saving time changes. lol.
We live in a country founded by rich men who didn't want to pay taxes. Same as it ever was.
Tom Paine was not rich.
John Hancock and Robert Morris were very wealthy. A few were flat broke. Most of them were land-rich but cash-poor.
“Thomas Paine, Hard-drinking, self-educated, cranky, restless, Paine had accomplished little during the previous 37 years of his checkered life….Pain had lost his job as an excise tax collector in England in 1734, the same year that his marriage crumbled.” (Alan Taylor, American Revolutions.” Paine came to America for a fresh start, “Dr. Benjamin Rush …recruited Paine to publish pamphlets against reconciliation.” (Alan Taylor).
No, Paine was not rich. He was truculent, irascible, a poor businessman, and a great writer of political ideas for the largely uneducated. Was he very influential? Yes. Was he rich? No. But the very rich certainly influenced, and benefited from, the American Revolution and the subsequent sale of western territories.
I highly recommend Taylor’s books.
I just finished reading Alan Taylor’s excellent book, “American Revolutions: A Continental History, 1750-1804.” It clearly supports your viewpoint: “Same as it ever was.”
This post was not wonky at all. I am just left wondering if this kind of piece was becoming increasingly difficult to write at the Times. Given some of the other opinion writers lack of facts in their opinion pieces (Douthat and Brooks come to mind) I have to think that Mr Krugmans use of actual facts and data that he can defend was becoming problematic.
I hope that, as a prominent pundit whose opinion actually matters to people, you're more apt to advocate for good policy now than politically expedient policy. Obama punking out on healthcare may have created a system that was better than nothing, but it clearly entrenched the worst things about how the US does healthcare, and there's still an absurd number of people with political power and influence in the US who think this was somehow optimal policy. It is crazy to me that the Adult Voices in the Room *still* contend that it would be disaster for the US to adopt a policy that every other developed country on earth has
I am a Canadian. I tend to think that the long waiting list is not a problem of the universal health care system. In the first place, there is not enough doctors, especially specialists and rural doctors. Governments, especially conservative provincial governments, in the name of small government and sound government financial management, tends to cut spending on education and hospital funding. For instance, let's say knee surgery, one specialist can only have one afternoon/morning per week for operation (emergency is an exception). This resource issue will occur with or without health care. One solution is to have a two tier system: private and public. If you can afford it, you can use your money to visit a private institute. For example, I can have a MRI done very likely the next day if I pay about Cdn $500.00 out of my own pocket. My friend went to Mexico to have a hip surgery by paying about $15000, not include airfare etc. In Hong Kong, it has a two-tier system. Public hospitals have a long waiting list and private hospital has a short list but are expensive. My father's stay in a private hospital cost him HK$10,000.00 a day in the 90's. Who can afford it?
Furthermore, I have a cancer surgery. I got to see the specialist in about a week and have the operation in another week. To me that is not bad. At least I am still alive today. I also had two knee surgeries. I have some special circumstances and so my waits were about the same. The great part is I only have to pay the ambulance fees because after checking out from the hospital and gone home, I had to get an ambulance to take me back to emergency. But of course, you will not be so lucky if you have a back pain and do not want to pay.
I fear that other countries are prepared to ration health care in ways that the US is not (eg, wait lists for elective surgery; cap physician salaries; CBA for expensive drugs), which means that under a single-payer structure, US health care costs are likely to increase dramatically. And, by the way, what's so terrible with increasing health care as a service consumption good?
What the "run government like a business" people never admit is that if a CEO parachuted into a money-losing company and his (always his) first act was to slash revenue, the board would fire him before the close of business. I understand that business people don't like to pay taxes (who does)...but that does not mean that wanton tax cuts are akin to running the government like a business. The opposite, in fact.
Georgist land-value tax is practically immune to fraud or evasion, since the thing it's taxing - that is, exclusive access rights to particular plots of land - only exists at all by virtue of government enforcement. Protection against foreign invasion or banditry, plus commerce and transit regulation which make urban areas so valuable, are arguably the core service any state provides, so it's a perfectly aligned case of getting beneficiaries to pay what the service is worth.
The only people who'd be hurt by such a policy are real-estate speculators who create nothing of value themselves, so of course Trump would fight to the last breath against it.
As a, now retired, economist, I loved reading your NYT columns, and I am sure I will love reading this substack. The pieces of economic insight and empirics in your columns individually often were familiar to me, but it was because of the way you combined them that the puzzle was completed and became an always insightful commentary on current events. It was only on European unification that I regularly disagreed with your analyses: as a European, I believed they tended to neglect the political imperative of this project, and the economic costs that is worth.