no third solution

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Can Government Create Jobs?

October 17th, 2008

Someone at mises.org wanted to talk about can government create jobs? They pointed me to an article on Realclearpolitics.com called Government Must Create Jobs. The author, Marie Cocco argues that

Jobs … are the only way out of this crisis.

Cocco rags on tax cuts, because although the benefactors of tax cuts might buy “cheap imports” or even pay down debt, or save money, none of these things have any “immediate benefit when it comes to creating jobs.” She lambastes both presidential candidates’ proposals, McCain’s neo-Keynesianism is “worse than inefficient” because it pads businesses’ bottom-lines. Obama’s plan to give a $3,000 tax credit to any company which increases its head-count, lacks sufficient controls to ensure that the jobs “created” aren’t useless McJobs (I paraphrase her disdain for service sector, entry-level jobs) or to prevent lateral moves from eligibility.

But where are jobs going to come from? People need to spend money in order to create demand for products, which causes businesses to add headcount. The French economist J.B. Say once said something to the effect of “productivity buys productivity.” That is, one can’t consume without first having produced something of value..

Cocco’s proposals are an order of magnitude dumber than her criticisms. The best solution, in her opinion, would be a straight-up cash injection to every state in the Union.

Dumb.

Marie, in case you aren’t aware, the National Debt now stands in excess of $10 Trillion. In Times Square, the national debt clock ran out of digits. I don’t know where you think the money for your cash infusions is going to come from, but I know it would have to come straight off the printing press. Viva la InflaciĆ³n.

National Debt Clock runs out of digits!

The next best solution, according to Cocco, is public works projects. “Direct spending,” says Cocco, “[produces] high wage jobs, the infrastructure improvements pay off later in greater efficiency and productivity for the whole work force.”

Dumber.

Government “created” jobs can come only at the expense of other goods and services that the people would, in their own estimation, prefer. Someone really (and I mean really) needs to be introduced to Bastiat’s Bastiat’s Broken Window Fallacy. We can certainly rob Peter, in order to pay Paul to dig holes in the ground. But that prevents Peter from buying goods produced by John, or saving for his uncertain future. If “greater efficiency” in the future is what people truly wanted, then they would provide for it. What they want, especially right now, is immediate security.

Freedom from oppressive taxation would be a good start. We need to be free to produce, without having all of our productivity wasted by taxes.

Comments

5 Comments

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  • Azrael says on: October 17, 2008 at 2:01 pm

     

    It is amazing how this fallacy is repeated over and over.

  • Azrael says on: October 17, 2008 at 2:02 pm

     

    It is amazing how these fallacies are repeated over and over.

  • Jeff Molby says on: October 17, 2008 at 2:23 pm

     

    It is amazing how these fallacies are repeated over and over.

  • Brad G says on: October 18, 2008 at 8:08 am

     

    The words “Government” and “Create” are like “water and oil.” They just don’t mix. I hope there will be a day in our lifetime when the word “Government” is not used in the first sentence of an answer to solve…anything.

  • Zach S says on: October 19, 2008 at 6:42 pm

     

    I think the overall problem has been that Government has created jobs over and over again to meet the immediate needs of the American people.

    The worst part is, most of these jobs are non-value added to the economy or society in general whether it be the job itself (i.e. construction jobs for the sake of giving jobs, a la the constant fucking construction on Michigan roads) or the fact that we are using tax payer money (and debt) to pay for these non-value added jobs and then this money is again taxed and what is left over is spent on goods. It kind of sounds like double taxation comparable to Shareholders of a corporation, except there is no preferential tax treatment. You get taxed at the full individual rate…TWICE.

    I say let the economy take care of itself. People become increasingly sloth the more government coddles the American person for every little hardship we go through. We constantly expect to be rescued.

    What happens if we didn’t rescue someone? Very few will fall face down; the others will get stronger and pull themselves out. Start thinking long term instead of in the day and we can see some amazing and PERMANENT changes in the world.

no third solution

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