What’s driving Britain’s public sector strikes: it’s all about risk

There’s not much argument about the figures any more. Median public sector pay+benefits: £619/week. Median private sector: £479/wk. Average public sector retirement income: £5,600/yr. Average private sector retirement income: £1,115/yr. These are official statistics not tainted by bias; indeed, since they’re from a civil service source the only bias could be towards the public sector.

Yet hordes of people with a claim on the public purse are coming out on the streets tomorrow. Waving placards about how unfair it is that, in straitened economic times, they might actually have to contribute a bit more to get benefits averaging 4.5x more than the average private sector worker receives. (That 4.5 figure is the one that really matters. To put it into perspective, the total NPV-adjusted pay and benefits bill for the 6m people in Britain’s public sector is more than the bill for the entire 23m-strong private sector. 6m people cost as much as 23m private ones. And these people have the gall to call themselves hard-done-by.)

So for any private sector worker, the principal question is: why? Why? Why? As a self-employed person for whom Risk is a middle name, I’d like to think the answer is “greedy bastards”, or “ungrateful wankers”. But it’s a bit deeper than that.

The reason public sector workers are striking tomorrow is due to their total lack of understanding of risk.

Risk in its most basic form: the understanding that things can happen that are outside your control, and you can manage for it, but not eliminate it. People in the public sector don’t “get” this. Ensconced in a nannying culture that protects its workers from the real world, they don’t quite connect the realities of macroeconomics with what arrives in their pay packet.

Why? Maybe because it’s just too big, the numbers too vast to comprehend. (After all, a single public sector organisation – the NHS – is the world’s third-largest employer, all on its own.) But this is the problem. Without an understanding of risk, you can’t function effectively as a society. It leads to bad decisionmaking. Inefficient resource allocation. Outcomes that improve lives for a cossetted minority, at the expense of bankrupting the economy.

(And yes, I know what this sounds like. But the banking crisis was a result of the same thinking: the risk-reducing nature of an implicit government guarantee allowed banks to borrow at unrealistically low rates. Once again, well-meaning public policy was responsible for a bad outcome.)

Being an effective human being means understanding that sometimes bad things happen, and you’ve got to deal with them. (It might not be your fault. But it is your responsibility.) Public sector workers bleat repeatedly about how the economic crisis “wasn’t their fault”; well, whether that’s true or not, you can’t suspend reality because of it. Public sector spending as a share of GDP has been rising for years – and under the last Labour government went wild. There are areas of the UK where the public sector is three-quarters of the economy.

And this can’t be sustained, because the public sector doesn’t create the wealth that’d sustain it. Any more than taking out £200 on your Visa card makes you £200 richer.

Not getting to grips with risk is why we stop our kids climbing trees (because they might fall), prevent our policemen saving a drowning pensioner (because they might get cold), and wrap simple decisions in layers of law (because people might not understand what they’re doing.) At the heart of all these well-meant rules & regs is a fallacy: that there’s a way, somehow, of eliminating risk from our lives. There isn’t.

We should not protect people from their own decisions, because doing so stops them understanding the consequences.

This is why the public sector today is such an obstinate beast – throwing up its hands in horror at being asked to make or take a couple of percentage points in cuts. Public sector: would contributing an extra 3p in the pound to your own pensions (tomorrow’s basic gripe) really be such a hardship? If you believe it would, ask any self-employed person if they’d like a guaranteed £5,600 a year on retirement, rising with inflation, every year, for the rest of their lives… for about £48 a month. They’d jump at the chance.

But because private sector workers have a better understanding of risk, their next question will be, “How can the country afford it?”

We can’t. And it’s stupid to pretend we can.

So the government’s threat to withdraw the existing (generous) offer is the right game to play. It’ll teach public sector workers that actions have consequences; with any luck, tomorrow’s strikes will backfire on them – badly. (As the transport strikes did last summer; notice how quiet Bob Crow’s been recently?) And they’ll end up with a worse deal than they could’ve got by not striking.

Fingers crossed. Make no mistake, Nov 30 is a showdown. And it’s all over a basic concept: risk.

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