The Federal Bureaucracy-Plutocracy

According to an analysis of federal payroll data by USA Today, the federal bureaucracy has flourished during the current recession.

Federal employees making salaries of $100,000 or more jumped from 14% to 19% of civil servants during the recession’s first 18 months—and that’s before overtime pay and bonuses are counted.

Federal workers are enjoying an extraordinary boom time—in pay and hiring—during a recession that has cost 7.3 million jobs in the private sector.

The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.

The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules.

The growth in six-figure salaries has pushed the average federal worker’s pay to $71,206, compared with $40,331 in the private sector.

The report notes that the data analyzed do not include employees of the White House, Congress, the Postal Service, and the intelligence agencies or uniformed members of the armed forces. Adding these employees to the analysis probably would not alter the general outlines of the study’s conclusions.

This development would be remarkable at any time, but it seems even more remarkable when it coincides with a more-than-doubling of the unemployment rate, a 4 percent decline in real GDP, and the evaporation of trillions of dollars of private wealth in the markets for corporate shares, other financial securities, and real estate.

This development also highlights the division of interests at the heart of classical liberal class analysis: the division between those who gain their income from honest production and trade (which Franz Oppenheimer called the “economic means”) and those who gain their income by plundering the producers (which he called the “political means”). Plutocrats are no longer only the Daddy Warbucks types, wearing diamond stickpins and puffing on oversized cigars (although Hank Paulson clearly illustrates that such types have not disappeared). Now they are also the blank-faced bureaucrats, dozing over their desks in nondescript office buildings.

Even Franklin D. Roosevelt made a better showing in this regard, at least at the start of his presidency. Having campaigned against Herbert Hoover’s excessive enlargement of the bureaucracy and his large budget deficits, Roosevelt pushed through the Economy Act of 1933. This statute provided for substantial cuts in federal spending and veterans’ benefits and gave the president authority to eliminate some federal agencies to achieve greater government economy. Subsequent congressional and executive actions overturned most of the act’s provisions, but at least in this regard, Roosevelt’s heart was initially in the right place.

Unfortunately, we cannot say the same for Barack Obama’s heart. From his campaign, to the massive “stimulus” bill enacted in February, to the obscene hypertrophy of the federal bureaucrats’ pay, perks, and power during the past two years, we see all too plainly that while those of us who use the economic means to gain our living are struggling, those who use the political means are enjoying tremendous success in their plunder of the productive class, and that this conjunction has been anything but accidental. Members of the plundering class wanted it, and they have brought it about, owing to the threats of violence that serve as the basis for all of their actions under the state’s banners.

Thus, the current recession cum financial debacle certainly has been a severe misfortune for you and me, but for the federal bureaucracy, it has been a godsend—complete, we might note, with a messiah to lead the way.

Robert Higgs is Senior Fellow in Political Economy at the Independent Institute, author or editor of over fourteen Independent books, and Editor at Large of Independent’s quarterly journal The Independent Review.
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