Monday, July 26, 2010

Corruption in the federal bureaucracy

One of the things that has become clear recently, whether we're talking about regulation of Wall Street, regulation of deep sea oil drilling, regulation of coal mining, or whatever, is that federal regulators are now working for the companies they're regulating, not for We The People.

So why is that? Well, you can blame this on ole' Saint Ronnie Ray-gun again. In 1983, Reagan eliminated the Federal Retirement System for all new federal employees. New employees would pay into Social Security like everybody else, and then pay into a 401(k)-like plan, with the Federal Government providing some matching money.

There were two things that occurred because of this. The first is that the Federal Government had to start paying people more in order to come to work for the government. Much more. Federal employees today are paid salaries typical of private enterprise, whereas before Reagan did this, federal employees accepted less money up front in order to get more money on the back end when they retired with a federal pension.

The second thing is that the new system encourages corruption. Back in the days when you put in your 30 years and then retired with a federal pension for life, there was no percentage for corruption. If you accepted prostitutes and bribes from one of the companies you regulated, you would at the very least be fired, and then you'd be forfeiting your 30 year retirement benefits. But now if you're fired, you still have your Social Security benefits paid in, and you still have your 401(k) contents, and you can go to work for the company that gave you the bribe because you still know other people within the federal bureaucracy who might be bribable.

In short, eliminating the FRS a) made federal employees more expensive, and b) increased the incentive to accept bribes from the industries you regulate, or accept job offers from them in exchange for giving them what they want regulation-wise. Federal employees no longer have a reason to stay with the Federal government for the next 30 years, since there is no longer a pension waiting for them at the end of the line, so if someone offers a Federal employee a cushy job for the next few years if the Federal employee rules in favor of the company... well, there's no monetary reason to *not* do it. You're not giving up your federal pension, after all, because there *isn't* a federal pension...

So anyhow, that is why as the people covered under FRS have retired, and new employees have come in, that corruption in federal regulatory bodies has become rampant. Let that be a lesson to state and local governments planning on slashing their public employees retirement plans: That way leads to runaway corruption and higher personnel expenses overall. 'Nuff said.

-- Badtux the Pensionless Penguin


  1. umm.. I just read an article yesterday that mentioned that government employees make considerably more than those in the private sector.

    Who still gets a pension at all in the private sector? In theory there are pensions, but how many people actually get one? They get gambled away.

  2. Jeeze, Tux. You must not read Mish.

    Govt pensions are evil, and ruinous.


  3. Nunya, the article you read was comparing apples to oranges. The majority of federal jobs require a college degree. If you compare college-degreed Federal employees with college-degreed private employees, the salaries are comparable. I know I've done the comparison myself for IT employees, and the federal salaries offered to someone with my experience are basically the same as what I'm making in private enterprise. The upside is that layoffs happen much less often when you're a federal employee. The downside is you have to put up with all the government BS. All in all, it pretty much all evens out, as you'd expect given that now that the federal government is competing in the marketplace on an equal basis.

    And you are correct, there are no longer any pensions in the private sector. That is one of the things that still makes people want to work for local and state governments despite the lower salary, those are the last places you can get a real bona-fide pension after 30 years. I just checked the State of California jobs website, and I'd have to take a significant reduction in salary to work for the State... as in, a *huge* reduction, roughly 20% less. Should I do that? Well, if I had any belief that the state pension system would still be afloat in 20 years, I might consider it... putting that 20% extra salary into a 401(k) won't have anywhere near the return (based on my past experience) as putting it into a state pension fund by accepting a lower salary...

    - Badtux the Apples-to-apples Penguin

  4. JzB, you're right, government pensions ARE evil and ruinous -- if you're a ruthless corporation who wants to bribe government bureaucrats who are simply trying to put in their 30 years to get their pensions. Why, what could be more ruinous than, like, a government worker who actually does his job because he's looking forward to that pension at the end of his 30 years? The horror, oh the horror! If oil companies aren't allowed to deploy unsafe equipment miles under the ocean... if coal companies aren't allowed to run unsafe mines... if financial companies aren't allowed to defraud investors with bogus "AAA"-rated mortgage-backed securities... why, we might actually have to compete fairly in the free market, rather than via fraud and deception and murder! We can't have that, can we? Hmm?

    - Badtux the Snarky Penguin

  5. Government.

    Fuck how the government is these days and buy yourself a gun if you don't have one.

  6. Channeling my Inner Glibertarian here:

    Bribery is the free market at work! The government does the bidding of the highest bidder! Say a corporation desires to pollute your drinking water, and it's worth THAT much in bribe money to the corpo. But it's only worth a bureaucrat's salary to the lackadaisical members of the citizenry. Then how important to them IS tap water that doesn't cause cancer, anyway? Let the market decide! As long as there are "regulations" against poisoning people, America has never seen a truly free market.

    I'm making that argument up as a jape, but I bet someone made it for real in Mish's comment section. Because that's the sort of commenters he attracts these days. (Yourself excluded, Jazz. You're not "Grafanola" by any chance, are you?) That's one of the reasons I don't read Mish any more.

  7. BadTux,

    I worked for the federal government during Ronnie the Raygun's term, and watched people get hired for jobs through a contractor for two dollars less an hour than the people who just lost their jobs were making. I was a janitor.

    The benefit of the government contracting out is not necessarily the immediate savings (I'm sure once the contractor got his cut those janitors cost more than we did, I was young, and had no health problems), but the cutting loose of any pension liabilities.

    nunya the (IT) apples to (janitorial) oranges, lol

  8. I should have added that I do see your point.


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