Thought of the day

“Government doesn’t create jobs!”

~said no one standing on the Hoover Dam, driving on the Interstate, using most any bridge, or using any other fundamental piece of national infrastructure

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22 Responses

  1. Not to mention posting on the Intertubes.

  2. And of course all the soldiers, sailors and flyboys (flygals, too) are figments of our imagination.

    Of course, when it comes to Republican imagination, those government jobs are just fine.

  3. They don’t “count” as government jobs, you see, because… well, because shut up, that’s why.

  4. It’s not that the government doesn’t create jobs, it’s that government jobs are an unproductive use of capital, generally speaking, resulting in a drain on the economy.

  5. Of course, that’s not to say that all government jobs should be eliminated. Obviously some of those jobs are needed despite the fact that they are a drain on the economy.

  6. I’m not talking about government jobs. I’m talking about job creation in general.

  7. In your original post you seemed to be arguing that government does in fact create jobs, which, technically, you are correct. However, it’s wrong to compare government jobs to private sector jobs. Simply creating jobs is meaningless unless those jobs result in increases in productivity and wealth. If the government hires Frank to dig a hole, then hires Sam to fill it back in, it has effectively “created” two jobs, but the net effect is a drain on the economy.

  8. My grandfather got his start in business with one of the many WPA dam projects in the midwest. He later moved on to be one of the subcontractors on the Hoover Dam.

    By the time he was done at the Hoover Dam, he’d gone from one dumptruck to three and was on the way to becoming a multi-millionaire. Much of that money made during the Interstate Highway construction boom as well as other government road projects from all levels: US Forest Service, National Park Service, state, county, etc.

  9. You know, I’m not really worried about whether a given policy is a drain on ‘the economy’ or unhealthy for ‘the market.’ We’re operating a society for the benefit of citizens, not the abstract maximized-efficiency beliefs of discredited economists.

  10. Well you should be worried. Forced collectivism doesn’t benefit citizens.

  11. Except for all the times when it absolutely and demonstrably has, such as the New Deal and every social democracy on Earth. Face it, the ‘free market’ was never a good idea and now it’s a proven failure.

  12. Hank – What I’m saying is that government actions can and do create jobs. Some of these examples come by way of major infrastructure projects which later stimulate massive economic expansion. For instance, much of the southwest’s success can be attributed to the Hoover Dam.

  13. Zealots like Hank will never admit to any positive government effect on the economy. And yet if we propose to cut defense spending, they’ll complain about how it cuts jobs…

    At worst, it’s a zero-sum game. Take tax money that could have been spent making private-sector jobs through the purchase of goods and services and make government jobs (salaries and employment) AND private-sector jobs through the purchase of goods and services by those working for the government as well as the government.

    In the end, what matters is the mulitplier and government spending has, except for defense, a positive multiplier and meets or exceeds most of the assorted, identified private-sector multipliers.

  14. If you guys need evidence of the folly of heavy government intervention in the economy, just look at the current state of affairs. We don’t have a free market any more, and haven’t had one for a very long time. We’re living in the aftermath of a government and federal reserve induced financial and real estate bubble that popped. To make matters worse, instead of allowing free market forces to correct and liquidate toxic assets, the government under Bush and Obama decided to add fuel to the fire with bailouts and stimulus.
    Sorry, but the new deal did not get us out of the depression, instead it deepened and lengthened it. Much like the real estate crash of2008, the actions (i.e. inflation of the money supply) of the Fed caused the stock market to crash in 1929, then subsequent government interference (i.e. New Deal policies) kept the economy in a sickly state during the 30’s and 40s. It wasn’t until after the end of World War 2 that private sector GDP began to recover, and it wasn’t until the 1950s that the stock market returned to pre-crash levels. There was a similar market crash in the early 1920’s, but you never hear about it because the government kept out and the depression was over in a year.

    The government multiplier is meaningless because the government doesn’t produce anything and, therefore, doesn’t have its own source of wealth. The government can only spend or invest what it takes away from its citizens. It is, at BEST, a zero sum game assuming the government is efficient with money. Of course we all know that’s not true.

  15. I’m not sure how you can say it’s zero sum immediately after using the word “invest”.

    The New Deal policies did help improve the economy. Unemployment remained high, it’s true, but it still fell precipitously through the 30’s. A second crash happened in ’37, and the economy remained in poor condition, but that’s true of most of the world (and at a time when we weren’t the dominant economic force in the world). Of course, the Germans, who saw huge government spending, recovered much more strongly than most (regardless of the red herring fact that they used their economic might for nefarious purposes).

    It simply isn’t true that government intervention got us to 2008. It was consistent deregulation that brought us here. We were doing quite well for 4 or 5 decades before Reagan fouled things up. Since then we keep seeing these breaks in the system that we can’t simply attribute to outside forces. Notably, Canada has heavy regulation of its banking and financial system and has not seen any of what we’ve seen for the better part of the past century.

  16. True Believers in the ‘free market’ are just as impervious to facts and reality as any other religious fanatic, but the facts are clear. Government intervention in the market is both necessary and beneficial; a lack of sufficient oversight and regulation led to the banker-caused recession we now enjoy; and deregulation always works against the working and consuming class, and transfers money from the poor to rich, resulting in greater inequality and instability. These are facts, not opinions–and as such, market-worshipers cannot tolerate them and go into hysterics whenever they’re mentioned.

  17. You’re both flat wrong. Austrian economists predicted the housing bubble years before it happened. The proof is in the pudding. It’s a known fact that when central banks manipulate supply of money and credit, it results in artificial bubbles. The federal reserve kept interest rates artificially low, and the government (through Freddie and Fannie) guaranteed garbage loans that the private sector would have otherwise avoided. The tax payers assumed all the risk, and the bankers got rich. Sure, you can blame the bankers for taking advantage of a situation, but you would be ignoring the root cause of the problem, which is the government and federal reserve being involved in the first place.

  18. And no, deregulation doesn’t work against the working class. If producers can produce a product at a lower cost, they can sell it at a lower price

  19. Strange then that this never happens in Canada.

  20. Not strange when you consider that Canada’s government exercised relative restraint during the time the U.S. government and federal reserve were spending and printing ad-nauseam. Canada’s bubble was nowhere near the size of the U.S.’s. Also, Canada seems to be better at regulating it’s self-inflicted bubbles by tightening lending requirements for government backed mortgages; something the free market would have done in the U.S. had the Fed and the government simply backed off a tad.

  21. “something the free market would have done in the U.S. had the Fed and the government simply backed off a tad.”

    …what? how does this make sense in any way at all? the housing market collapsed because in the absence of government regulation, people tried to make a profit off of bottom feeders who would never be able to pay their mortgages once their interest rates hiked up. what does this have to do with the government..other than the government’s failure to regulate it?

  22. Sri, you need to go through and read my comments.

    The Fed’s easy money policies, coupled with the government guaranteeing of home loans is what inflated the housing bubble. In a free market, there is no profit to be made by lending money to someone who can’t repay it. The only way the banks got away with it is because the government essentially removed the risk from the banks and placed it
    onto you and I the taxpayers.

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