Imagine that you have a series of plumbing problems in your house—clogged sinks, backed up toilets—and decide to hire a plumber. Which of these two incentive structures would you choose?
(A) The plumber only gets paid when the problems are fixed.
(B) The plumber will continue to be paid indefinitely for working on the problem, and will continue to get paid as long as the problem persists
Most of us would choose option A since we are more interested in functional indoor plumbing than we are in providing a paycheck for plumbers. Hard-working plumbers should prefer option A too since it respects their dignity and skills. The vocation of the plumber is to solve plumbing problems, not to latch onto make-work projects.
So if most people would choose option A, why does the government almost always adopt an incentive structure that reflects option B?
As economist Arnold Kling notes, in the private sector workers are often compensated on the basis of performance while in government workers are compensated primarily on the basis of credentials and longevity. Kling recommends replacing the system of automatic step increases with a system of automatic step decreases. He believes it would provide several benefits, including:
1. It would increase turnover at government agencies. It is unhealthy for lifetime service to be standard in government. It leads to a culture in which government workers are permanently detached from the private sector, and where workers in one agency lack familiarity with other agencies. That creates narrow thinking and a lack of empathy for people in business.
[. . .]
4. It would help to create a culture in which working for the government is a public service, not an entitlement. It would attract fewer people looking for a government career and instead attract more people who are motivated by a desire to contribute to public services for a few years.
This is a brillant and sensible idea, which is why it is will never, ever be adopted by the federal government.