The Sydney Sun-Herald reported on 18th Jan 2009, that the University of Sydney is looking for 330 new staff for the Center for Obesity, Diabetes and Cardiovascular Disease. The Federal government will be contributing $95 million dollars towards the costs with additional funds coming from “the university, other medical institutes, public donations and an anticipated contribution from the NSW government.” As the Sun-Herald's reporter astutely observed, this is a “further sign that the public sector is becoming the last refuge against growing unemployment.” In fact, said the report, these additions at the University of Sydney represent an increase of about 10% over current staff numbers! Similarly, the new $385 million biomedical centre at Royal Prince Alfred Hospital “will house about 100 research groups and accommodate about 5000 researchers and post-graduate researchers.”
Gone are the days when researchers had to justify their incomes by the likelihood of their innovations and discoveries being of value to consumers. Now the idea is to suck up to grant bodies, follow the politically correct line and to generate scares in order to encourage the release of funds to projects that the public would not pay for if directly asked.
Of course, in order to transfer funds to the well-connected those funds must first be taken from other taxpayers. Annoyingly, the deadweight costs of collection, enforcement and redistribution mean that a dollar taken from a taxpayer is very much less than a dollar when it comes back to somebody else. Even more annoyingly, while government claims to use the funds to stimulate the economy it does so in a way that benefits its own constituency. Rather obviously, if those funds were left with the people who actually earned them they would still be used to generate employment opportunities and develop infrastructure – but in areas chosen by taxpayers rather than by government. As a result, in these hard times when private sector jobs are disappearing in considerable numbers (as the most productive are taxed out of the market), public sector jobs are holding up quite well. According to the Sun-Herald, job openings in the education sector were up 4.3% in 2008 while health care jobs were up 7.75% last month (December) alone.
If we disregard the deadweight costs, the short term effects of government attempts to stimulate the economy will simply be ineffective (over and above what taxpayers could achieve if left to their own devices) but will have a more lasting effect on long-term economic growth and employment prospects - since the tendency is for government to take money from the more productive and redistribute it to the less productive. BB
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