At best, it is like putting wet wood on a fire: the wet wood may eventually burn, but it takes as much or more energy from the fire to dry the wood out enough for it to be flammable. In the meantime, it creates a lot of smoke and hissing and fizzing, and you run a real risk of subduing the fire if not stifling it entirely. This is what government job creating programs are like.
Outside of very narrow exceptions government itself does not create jobs. It shifts jobs. That is because outside of its basic purpose of enacting and maintaining laws and providing for the common defense, government does not provide a new good or service that the private sector cannot do better. The chief reason why the private sector does better is that private activity is governed by market mechanisms. People can say no to your good or service if they do not want or like it and go to the business that does a better job. So people who stay in business are under constant pressure to do better in their business, or they eventually see their business decline or even disappear. Government is not subject to such a demanding disciplinarian. If you do not like the process for getting a driver’s license, where else are you going to go?
At least someone wants the driver’s license, and the program of screening out unqualified drivers—however imperfect it may be—is a service that people want. Very often, government job creation programs put people to work doing things that we would be better off not having done.
One of my favorite examples is the Roosevelt Administration’s Depression era jobs program, paying people to plant kudzu all over the South. They did that for years, until they realized that kudzu is an uncontrollable pest plant that grows and spreads and smothers every other plant and tree around it and is very hard to get rid of. It is sort of a metaphor for government jobs programs.
An additional problem with government jobs programs is that the government has to pay for them. Where does the government get its money? It gets it from the people who already have jobs. Those people will no longer have that money to spend at the store or for remodeling the house or going on a vacation or gaining an education or the million other things that people do with their money to put other people to work. You might call all of that private sector spending the people’s jobs programs. To get $50,000 to put people to work on a government jobs program you have to take at least $50,000 away from the people’s jobs programs. In practice, you usually have to take several times more than $50,000 away from the people’s jobs programs, because the government programs are run so inefficiently.
So when the government announces that its new jobs program is “creating” 100,000 new jobs, it does not report the 200,000 jobs that were displaced to pay for those new jobs. When you see those government jobs announcements, remember the wet wood on the fire and ask how much energy is being lost to make that new log burn?
2 comments:
So would you say that the only reason they create these government jobs programs is to look good? Like they're making a difference? Aren't they aware of the thousands of dollars they they're wasting just to make themselves look important?
That is the primary reason, at least in many cases. There are some who sincerely think that they may be doing some good. Many who propose these policies have very little confidence in private initiative and private effort, with little trust in the markets. They think that if they don't have the government fund new jobs they just may not happen. But whether or not they know what they are doing, the effect is the same; they are destroying jobs as they vote for new government funding of jobs, usually significanly more than they try to create. Of course, even when they know what is happening, there are no cameras there to show the jobs being lost.
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