Yes Virginia, the Public Sector is the problem. [micro-updated]

Whenever the so-called Great Recession* is discussed the conversation has a tendency to become binary in nature.  If you read the comment threads on a site, such as Matt Taibbi's excellent blog, the discussion becomes this-

Person A: "The financial industry is to blame."
Person B: "No, the Government is to blame."
Sometimes Person C will butt-in (and rudely turn the discussion into a ternary one) to pin the tail on the lazy donkey, "No, the Idle Masses are to blame!"

As with most any over-generalized caricature there is a modicum of truth to all three, though in this case it is not in equal amounts.

The main problem is that A and B both fail to realize that the government and financial industry are indistinguishable at this point.

There are small pieces of the various governments, such as the public sector unions and populist politicians, who don't view their role as shoveling wealth upon the elite economic interests.  Those pieces are being marginalized and excised with increasing zeal every day by the real powers in government.

In order to understand the role of government in this mess you have to start with the hack politicians.  They are funneled through an electoral apparatus such as the US's Two Party System which requires them to cozy up to the economic elites in order to have a chance of being elected, though typically the politician is one of those elites to begin with.  Once in office the politicians appoint unelected and unaccountable bureaucrats, drawn from the corporate and financial sectors, and it is those bureaucrats who do all of the actual work of governing!


To blame only the public or the private sector, to only blame one or the other, is to miss entirely half of the problem!  They are not competing interests, but rather are one unified power structure which thrives on confusing and dividing the general population.  Just look at how the American Republicans blame the government that they inhabit and the Democrats offer tepid chastisement of everyone while both the Rs and Ds execute political programs that are merely different interpretations of the same economic strategy.  Incidentally, while the differences between different main-stream political parties are very important, in the long run the end results are nearly indistinguishable!

And the "idle masses"?  They, including the non-idle masses, have yet to organize themselves and smash apart the systems of financial, corporate, and government exploitation.

Unfortunately I'll need some more coffee before I'm ready for that.

* I'm sure that the citizens of the Southern Cone were happy to be informed by Serious Economists that the '70s and '80s weren't a time of great economic suffering like they remembered.

[Updated because I forgot a paragraph and also can't spell.  Sorry.]