"It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong." Richard P. Feynman

Friday, March 18, 2011

Dead-weight Ratio - A Metric For Our Times.

The gut feeling you have that things are going wrong in society has never had a better measure than  that described by William Baldwin as the  Deadweight Ratio - the ratio of Government,semi-government employee and welfare recipient  numbers to those in the private sector.  It measures how many mouths each private sector worker has to feed and it is unsurprising that California is near the top of the list!

The structural problem is that government has too many mouths to feed. It’s possible to quantify that problem. The result is a metric that I call the Deadweight Ratio. It tells you how many beneficiaries of government spending there are for every private sector job.
Every state has one set of people contributing to the coffers­—namely, private sector workers—and another drawing from it—namely, government workers and welfare recipients. In healthy states, the contributors outnumber the users. In unhealthy states the reverse is true.

California is in trouble. For every 100 people employed in the private sector it has 113 people drawing benefits. A person working at Disney or Intel or a fast food franchise is carrying his own weight plus that of one other person—a teacher, say, or a Medicaid recipient or a retired prison guard.
Many factors contribute to California’s budget crisis. The state has a big university system, an influx of needy immigrants and an expansive notion of how involved the government should be in people’s lives.
Up to a point, the private sector is willing to carry government employees and welfare moms on its shoulders. Beyond that point, it is not, however worthy the recipients of government largesse are. Employers leave. The jobs go to other states or overseas. That leaves what’s left of the private sector in even worse shape.
Some figures from US states show a wide variance :        
State & local

Contributors
government
Medicaid
Deadweight
workers
recipients
recipients
Ratio
thousands
thousands
thousands
Mississippi
877
222
750
120.7
New Mexico
635
167
501
117.9
California
11918
2137
10511
113
Arkansas
973
199
692
98.9
Louisiana
1566
333
1097
98.6
Arizona
2045
363
1456
96.1
Maine
506
91
350
94.4
New York
7272
1387
4955
93.5
West Virginia
621
130
392
93
Alaska
244
69
121
91.2
Oklahoma
1253
291
719
90
Alabama
1541
329
919
89.7
Vermont
256
50
158
88.1
Tennessee
2257
388
1447
87.5
South Carolina
1509
308
892
86.4
Kentucky
1499
293
834
82.3
Michigan
3311
589
1856
79.6
Washington
2315
475
1163
78.4
Wyoming
216
67
78
77.1
North Carolina
3244
642
1646
77.1
Georgia
3271
570
1685
75.6
Delaware
357
60
185
73.9
Texas
8829
1684
4170
72.7
Idaho
497
108
213
71.7
Hawaii
505
93
217
70.7
Ohio
4365
713
2067
69.1
Massachusetts
2815
398
1403
68.6
Illinois
4890
774
2323
68.5
Missouri
2258
398
1002
68.2
Florida
6256
989
2842
66.6
Rhode Island
410
52
195
65.1
Oregon
1344
273
513
64.9
Indiana
2405
401
1023
64.4
Wisconsin
2348
399
990
64.2
South Dakota
335
68
123
64
Iowa
1241
242
470
63.1
Montana
351
77
111
61.2
Kansas
1092
238
353
61
Maryland
2162
367
753
59.9
Pennsylvania
5019
662
2090
59.4
Connecticut
1406
232
530
59.1
Minnesota
2255
388
786
57.2
Nebraska
795
154
241
55.7
Colorado
1900
344
554
53.3
North Dakota
313
73
69
53.1
Utah
1017
182
291
52.9
Virginia
3108
536
863
52.3
New Jersey
3296
582
954
51.9
New Hampshire
537
93
144
49.1
Nevada
982
138
247
43.5


Graphing these figures over the last few decades would be a real eye-opener!

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