Posted: Fri Aug 09, 2013 3:48 am
Camaro wrote:QUOTE (Camaro @ Aug 8 2013, 06:50 PM) I agree, the benefits to government jobs are numerous... but pay is definitely not one of them (except for the more entry level jobs like HSharp points out - those tend to pay comparatively well plus have great benefits).
But you get beyond that and government pay quickly starts to pale in comparison to private sector. Made up, in part, by increased compensation in the health benefits department, but still less so overall.
Having a proper pension also reduces stress in a persons life, because not everyone is a risk taker, some people want the safe bet. Stress reduction leads to widespread benefits in everyone's lives up to and including a reduction in medical costs! Which directly impacts everyone's health insurance costs. Not only that but it leads to higher productivity at work. In fact, I've always been a proponent of restructuring Social Security as a proper pension fund with an investment arm so that it can generate greater returns on its investments than the paltry interest rates that .gov currently pays it. Plus it will be investing in the economy, which should help create more jobs (although may lead to inflation).
Pensions would be far easier to predict and fund if interest rates were allowed to float and be dictated by the market (as inflation would be less). I think people tend to forget that even a "low" 3% inflation means that prices double every 23.5 years, which may sound paltry, but that has a devastating effect on long term investments such as retirement.
@TakingArms - There is a reason that economics is a dismal science, there is no right or wrong or any way to actually PROVE anything. To address your earlier question, most of my economic reading came from textbooks while I was in school supplanted by reading articles written by economists. It has also been shaped by looking at the fiscal and monetary policies of various different administrations and coming to my own conclusion about them. I do not subscribe to any particular school of economics as I think it is foolhardy to pigeonhole myself into a school of thought.
When you talk about inflation, you always talk about the negative side but never mention the positive benefits of inflation. Almost any economist will agree with the logic that a little bit of inflation is the sign of a healthy economy. You look at inflation from this static simplistic view wherein investments are negatively affected by their value declining relative to the cost of buying things.
You forget to mention that inflation generally means there is more money in the money supply, and that although 1 dollar sitting in a box somewhere is becoming less valuable, the dollar you owe someone is also becoming less valuable. Also, wages increase over time as well too. Things cost more, but you are getting paid more as well.
Also the thing that you are missing is that investments are not static one-time things. They are made over time through monthly contributions, so the effect of inflation is averaged out what you put in. Over a 30 year period if you invest 300,000 dollars, not every dollar would be subject to the same loss of value, as the newer dollars invested are relative to the higher wages a person is earning. If you properly average out the inflation rate's effect on a long-term monthly contribution, (as in a retirement fund) which you dont do, you see that the interest you are earning outweighs the devaluing effect.
Additionally, if the value of the dollar remained static relative via the cost of items, the increasing population of people using a currency would naturally mean the currency was worth more anyway. Inflation is necessary, imo.