The Federal Bureaucracy-Plutocracy

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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 u201Ceconomic meansu201D) and those who gain their income by plundering the producers (which he called the u201Cpolitical meansu201D). 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.

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Robert Higgs [send him mail] is senior fellow in political economy at the Independent Institute and editor of The Independent Review. He is also a columnist for LewRockwell.com. His most recent book is Neither Liberty Nor Safety: Fear, Ideology, and the Growth of Government. He is also the author of Depression, War, and Cold War: Studies in Political Economy, Resurgence of the Warfare State: The Crisis Since 9/11 and Against Leviathan: Government Power and a Free Society.

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