The cost of providing public services

Germany is an outlier in one regard at least: it runs a trade surplus:

Germany’s trade surplus is by far the largest in Europe, reaching 135.8 billion euros ($184.9 billion) in 2009, according to Eurostat, the European Union’s statistics office. Germany’s surplus was more than triple that of the Netherlands, which was in second place.

Thanks to the high-value items that it continues to manufacture and sell all around the world.  Many of these are low-volume catering to a niche demand, like:

Glasbau Hahn is a miniature multinational company, generating more than 60 percent of its sales abroad and dominating its narrow but lucrative niche: the global market for museum display cases. Even King Tut’s mummy lies in a climate-controlled vitrine made in Glasbau Hahn’s workshop, which sits next to a railyard and across the street from a Fiat showroom.
As Glasbau Hahn and thousands of other small German exporters rebound from a dreadful 2009, they give the European Union a much-needed shot of growth.

Here in the US we have been accumulating trade deficits, budget deficits, .... Will it be geographically not appropriate to write in this context "there is something rotten in the state of Denmark" :)

The continuing economic woes at home will, finally, begin to wake us up the various realities.  We have recognized the excess compensation, particularly at companies that are failing.  We don't do anything about that is a different issue of political impotence incompetence.  Perhaps that is because we taxpayers struggle to figure out how much non-shareholders can have a say in the affairs of the private sector.  And now with the Supreme Court affirming the rights of corporations, we might as well bid adieu forever to gaining a shareholder bill of rights!

But, almost all the taxpayers will soon start reacting to cost inefficiencies in the public sector.  And there are plenty of them.  As Matt Welch notes while summarizing Steven Greenhut's essay (yes, they are libertarians) on how public servants became our masters:

public-sector unions are not just growing the pie of government on all levels; they are brazenly gobbling up two, three, and even 20 times the amount that they were taking just a few years ago—on guaranteed contributions to their pension plans alone. Wherever you see a politician or public servant warning about “draconian” cuts to public services, you almost certainly are witnessing an agency whose employees have negotiated a sweetheart pension deal within the last decade. It’s awfully hard to balance a budget, let alone improve public services, when you’re tripling a major line item.

And from another report--this is from California Watch:

Amid a crippling fiscal crisis, managers throughout California's government have routinely allowed their employees to amass unused vacation time, enabling hundreds of workers to end their public-service careers with payouts topping $100,000, a California Watch investigation has found.
One worker combined vacation and compensatory time to walk away with more than $800,000, records show.

Ouch!
The same report also points out the hidden cost of employee furloughs:

Gov. Arnold Schwarzenegger has instituted mandatory furlough days that most state workers must use before their vacation days. The result, according to several large departments, is that workers are banking more time off than ever, offsetting short-term savings with long-term liabilities.

We are doing furloughs in Oregon, too, and sometimes the number of furlough days is as much as the vacation time in the private sector--two weeks.  So, yes, we too are merely postponing the payment date on the costs.

Finally, the cost of the pension obligations that I have blogged about before.

So, back to Germany: how come they are able to pull it off despite significant public sector involvement in the economy?