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  Do you know what career status is? It allows you to re-
  enter federal service without taking the necessary civil 
  service exams, and allows you to apply for internal job 
  openings even if you're not currently working with the 
  government. It doesn't do any of the things you claim it 
  does.
Career status means lifetime tenure. It also means (as you acknowledge) you can work three years at the federal government, leave, and always come back to get a fedguv job without competitive examination, even after 25 years out of the service. This is a bug, not a feature - after decades out of a job, federal law nevertheless stipulates that you must be rehired without a serious interview:

http://www.hhs.gov/careers/jobs/keyterms/index.html

  After serving three years of substantially continuous 
  creditable service, a career conditional employee becomes a 
  career employee and gains career tenure. Employees with 
  career tenure have permanent reinstatement eligibility and 
  may be considered for positions without having to take 
  another competitive civil service examination.
As for the fact of lifetime employment, don't take my word for it; note the distinction here between "at-will" (characteristic of the private sector) and "career" (in the federal government):

http://www.federalhandbooks.com/fedbooks/Personnel.pdf

  As an employer, the Federal government is unique. In the 
  private sector, there are generally two types of 
  “appointments” – the “at will” appointment and the 
  “contract” appointment. The vast majority of private sector 
  employees hired by a company or firm are hired as “at will” 
  employees. ... Appointments within the Federal sector, 
  however, are a little more complex. When hiring a new 
  employee, a Federal department or agency must classify the 
  employee’s appointment as “career,” “career conditional,” 
  “temporary,” or “term.”
And what does "career" mean?

  Permanent employees are generally hired into the Federal 
  government under a career-conditional appointment. A 
  career-conditional employee must complete three years of 
  substantially continuous service before becoming a full 
  career employee. This 3-year period is used to determine 
  whether or not the Government is able to offer the employee 
  a career. 
It means "tenure":

  Service Requirement for Career Tenure 
  An employee must have 3 years of substantially continuous 
  creditable service to become a career employee, i.e. obtain 
  career tenure.
Ever heard of the Douglas Factors, CFR Part 432, or CFR Part 752? These basically make it impossible to fire someone as you need to (a) prepare a "Proposal Notice to Remove", (b) wait 90 days or more for the employee's response, and (c) are subject to having your firing decision "mitigated" by the Douglas Factors (i.e. overturned). This doesn't include (d) the substantial ostracism you yourself will face within the federal government for the capital crime of trying to actually fire a tenured employee.

  Proposal Notice to Remove

  Each agency has a "culture" that defines the amount of 
  information and documentation that will go into a proposal 
  notice. At a minimum, your notice will state which 
  regulation the action is being taken under, specify what 
  critical performance element(s) the employee failed to 
  meet, cite the evidence of unacceptable performance, and 
  discuss the opportunity period (or the lack of one). The 
  notice will also explain to the employee the time allowed 
  for a written and/or oral response. Ask your human 
  resources specialist for some samples of other performance-
  based notices to get a sense of what your agency requires.

  The regulations require that an employee receive a decision 
  in Part 432 actions within 30 days of the expiration of the 
  30-day notice period. This provision automatically gives 
  you a 60-day period of time in which to work. Additionally, 
  the Office of Personnel Management has issued regulations 
  that give agencies the discretion to extend the initial 30-
  day notice period by another 30 days, so you are actually 
  working within a 90-day timeframe. However, there are 
  always those situations where even more time will be 
  needed, perhaps because the employee has asked for a 
  lengthy extension to prepare a response or the deciding 
  official cannot gather and analyze all the information 
  needed within the 90 days allowed. 5 CFR Part 432 lists six 
  reasons that commonly cause delay and allows agencies to 
  extend the notice period if those conditions exist.
Wow, six reasons that "commonly cause delay" and 90 days for the employee to "respond" when you try to terminate them. That response invariably involves mitigation via the Douglas Factors:

  However, reduction in the agency-selected penalty, known as 
  mitigation, is a possibility in any action taken under Part 
  752. Therefore, you will need to explain in any decision 
  notice, and possibly in a proposal notice as well, what 
  factors led you to believe that your chosen action 
  (suspension, demotion, or removal) was the right one. Most 
  supervisors who have taken any kind of adverse action 
  against an employee have been told about the Douglas 
  factors. This is a reference to a decision by the Merit 
  Systems Protection Board that listed 12 factors that might 
  be taken into consideration when deciding on the 
  appropriate penalty in any adverse action. Your human 
  resources office will be able to provide you with a copy of 
  these factors.
And your HR office will also tell you that the Douglas Factors make it essentially impossible to fire someone. So that SEC bureaucrat has lifetime employment while they watch porn.

http://voices.washingtonpost.com/federal-eye/2010/04/new_sec...

  None of the Securities and Exchange Commission employees 
  caught using government computers to view pornographic 
  images has been fired, according to the agency.
I give you the SEC, ladies and gentlemen! Perhaps now you may start to realize that the SEC is just safety theater, that no one can "protect" you from bad investments other than yourself.

  They're real economic concepts and are the reason 
  regulatory states exist. 
The reason regulatory states exist is given by public choice theory. So long as we're talking economists, I give you Nobel Laureates Gordon Tullock, Friedrich Hayek, Milton Friedman, and James Buchanan. Principal/agent problems and misaligned incentives systematically bedevil all public regulation; only private systems (e.g. Google rankings, eBay reputation, Amazon reviews) actually work.

I thought it was important to show that career status does indeed mean tenure, and I don't have time to do this kind of exegesis on all your other statements here, but as for this:

  we all profit from the existence of the regulatory state
No, we don't. The details matter. What fraction of people who think regulations are good in the abstract can name a single federal regulation? How many of them know that regulators can't be fired? How many of them have actually run a business in a regulated industry? Regulatory agencies are solely PR. They are about scaring people into the extraordinarily counterintuitive idea that some guy 3000 miles away in DC who surfs porn at work actually has Warren-Buffett-level judgment about the market, and is protecting you from making bad investments. Think for yourself.


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