Governments are eating Capitalism.

I sure hope that this growing trend to Cannibalize our most productive means of production - Human Capital - ends soon. Creeping Communism has already advanced too far!

Let’s Start With Definitions

COMMUNISM : a political and economic doctrine that aims to replace private property and a profit-based economy with public ownership and communal control of at least the major means of production and the natural resources of a society.

CAPITALISM is the opposite of Communism. Capitalists seek to apply all factors of production, private and public, to their most productive and profitable uses.

The value of “HUMAN CAPITAL”

The most important factors in the “means of production” are arguably the human inputs. They are collectively referred to as “human capital”.

The proponents of Human Capital Theory omit several key characteristics that contribute to advances in human productivity: creativity, risk tolerance and incentives.

Since most of these proponents are employed by government institutions as social theorists, it is understandable that their ‘lens of understanding’ may be limited by the strong influences of their workplace cultures.

The “understanding gap”

Employees within government institutions are not valued by their employers in the same way that owners of entrepreneurial ‘for profit’ enterprises do. Productivity improvements is where the value gap is greatest.

Innovative businesses outperform staid businesses over time (all other factors being equal). Successful business owners value creativity and reward it with promotions, bonuses and more.

Change brings a degree of risk in ‘for profit’ businesses that operate in competitive markets. Sometimes innovations are very successful and at other times they flop. The entire history of human progress in the West is the story of the trials and errors of creative risk-takers operating under Capitalist incentives.

Governments workplaces offer different incentives.

Risk-taking is not a characteristic that government managers value. The ability to follow processes, procedures and the chain of command are qualities most valued in public sector employees.

To the extent that creativity is useful, it is usually seen as the skill in writing reports. Unfortunately, few reports lead to productivity gains. They rarely result in much more than minuscule changes to internal policies and procedures which produce imperceptible impacts on organizational performance.

Killing the Golden Goose.

Prosperity and Productivity go hand in hand. This risks of employing too many of our most valuable resources - our people - in our least productive workplaces is devastatingly bad policy.

This Fraser Institute article reports that, since early 2022:

growth in public sector employment was 9.4% compared to 0.4% in the private sector.

If this rate continues unabated, it will only be a matter of time before our nation’s Human Capital is 100% under the control of governments.

Is this really the end game that we want as citizens? 

If Freedom of Choice and Increasing Prosperity are our most pressing national goals, does it make sense to expand the size of the public sector disproportionately to the size our sectors of Innovation and Productivity?

I sure hope that this growing trend to Cannibalize Capitalism in order to feed Creeping Communism comes to an end soon.

https://www.fraserinstitute.org/studies/comparing-government-and-private-sector-job-growth-in-the-covid-19-era