Sunday, April 17, 2011

Removing Uncertainty

One of the arguments that has been made a lot is that it is important to remove sources of uncertainty to make business investments less susceptible to political changes. However, this need to make things less uncertain doesn't appear to apply in the public sector:

Every one of Detroit's public school teachers is receiving a layoff notice -- but that doesn't mean they will all be fired.

The layoff notices were sent to the 5,466 unionized teachers "in anticipation of a workforce reduction to match the district's declining student enrollment," according to a Detroit Public Schools statement. The layoff notices are required as part of the Detroit Teachers Federation collective-bargaining agreement. Non-Renewal notices have also been sent to 248 administrators, and the layoffs would go into effect by July 29.

Even though the risk of an actually losing a job might be low, imagine having to plan around how to pay for a mortgage or a lease if one's job might not be there? How can this possibly be a good way to organize an economy?


  1. One imagines that many of the teachers who can get other teaching jobs will do so, whether or not they would have been laid off.

    Not so good for the district.

  2. Great point by David. Adverse selection is a bitch.