Your editorial (“Stupidity of dumping skilled public servants,” November 8) contains the crucial insight that the economy is actually about resources — the people involved and the materials and tools they have at their disposal. John Maynard Keynes put it this way: “Anything we can actually do, we can afford.”
By letting go of competent and experienced public sector employees, the government loses the embedded skills but, crucially, gains no money. The government has the money needed to achieve “anything we can actually do”. It does not require tax revenue to fund any endeavour.
Size of government is primarily an ideological choice. The actual size is determined by the functions we choose for government. Society, at large, should determine what is expected of the government. Its role is to carry out the mandate in the interests of all. If this includes health and education, for instance, society is essentially encouraging people to work in those sectors rather than in the private sector because health is a vital investment in our wellbeing and education is a wise investment in the future. Both are so pivotal that whatever productive capability we thereby forgo is considered worth it.
The remuneration of public employees should not be such that it causes wage inflation in the private sector. Rewards should be in keeping with responsibilities and results, and commensurate with equivalent positions in the private sector.
The government is the monopoly issuer of the currency and is thereby the price setter. A macroeconomic option is for the government to set prices by offering a job guarantee. This becomes, de facto, the minimum wage because any unemployed persons can present themselves at a designated public sector office and be offered a job. The job guarantee is also a price stabiliser.
In our context of huge unemployment, this is an absolute imperative.
Howard Pearce
Rondebosch
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