Obama’s Pay Freeze and The Public Choice Theory

In contrast to his previous approach, US President Barack Obama has reportedly made a turnaround and seemingly embraced ‘austerity’.

From the Washington Post, (bold highlights mine)

Bowing to growing budget concerns and months of Republican political pressure on federal pay and benefits, President Obama today announced he would stop pay increases for most of the two million people who work for the federal government.

The freeze applies to all Executive Branch workers -- including civilian employees of the Defense Department, but does not apply to military personnel, government contractors, postal workers, members of Congress, Congressional staffers, or federal court judges and workers.

"Getting this deficit under control is going to require some broad sacrifices and that sacrifice must be shared by the employees of the federal government," Obama said in a speech Monday afternoon explaining the decision. He added, "I did not reach this decision easily, this is not a line item on a federal ledger, these are people's lives."

President Obama’s apparent change of heart mainly reflects on the outcome of the recently concluded national election, where his party got clobbered.

In other words, President Obama’s populist approach merely substituted highhanded interventionism (out of the public’s desperate sentiment which instantaneously emerged out as fallout from the financial crisis which ushered him to office) with government discipline (consequence of the failed government activism).

And this serves as a good example of how politicians pander to the electorate with the view of getting elected rather than the myth where politicians look after the betterment of society.

Like any ‘human being’, politicians exercise self interests over general interests. This is otherwise known as Public Choice.

A wonderful explanation from Professor Steve Horwitz

The Public Choice problem refers to the fact that many arguments for government intervention assume that politicians and bureaucrats are selfless and public-spirited, concerned only with doing what is best. In the real world, though, we know that politicians often act in their self-interest, just like market participants do. Unlike the market, however, political institutions do not channel self-interest into unintended consequences that benefit the public at large. Self-interested political action leads to undesirable unintended consequences. (italics his)

We should learn how to discern between reality and superstitions.