I see your logic, but i want to switch the table around:
Should not the Public sector be cut last, as it is not made to be competitve and are the least section that have done anything wrong? >:
It is probably the private sector, or the right political parties which support that important private sectors like banks should maintain themselves without any goverment interference (both probably), are the side that originally started this mess (at last it is so in the us). What i see is that different goverments around the world have let different private banks and other important sectors/buisnesses can gamble without control, and then mess up. Then all other people, who havent danced with this gambling, are the ones that will pay for almost all of it. The section which have never been responsible for anything in this is the public section.
Public sector is not the lucky or anything like that, it is path that people choose for safety. You can get much more money in the private sector than you ever will in the public sector (with pension included), then i believe it is fair that the public sector is the section that pays the price first.
If you are working in a private sector, then it is your choice to do that. Public sections havent done anything to trigger the crisis or be a part of the private business, why should the public sector pay for what the private sector have done? The only way for the public sector to say this is by protesting/striking, as it is unfair...more unfair than it is for the private sector to pay for it, which are more quilty regarding this mess. The private buisnesses can go bankrupt, which is also a risk you are taking to get more money.
I personally believe that Social-democracy with strong regulations on the important parts of the private sector would be the best. I actually believe that the private sector shouldn't have any mayor power (like banks have) at all. If the public sector fails, then you can regualte it with democratic elections, its not that simple with private buisnesses as its impossible to have them under control once they get to much power (which it looks like they have right now).
Those who eat moldy bread tried to get more than just a cream cake, and never choose the path of safety where you dont gamble away your cream cake to get cream cake with delicious chocolate on.