Government and Job Creation

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Government and Job Creation  
      
As the current economic downturn shows no signs of lifting, we hear quite a 
lot of rhetoric from current and potential office-holders about what 
government can and will do to create more jobs.  This is especially 
disconcerting to those who understand that the best thing government can do 
for job creation is to simply get out of the way.  

Jobs are properly created by businesses.  Government-created jobs are either 
fueled by fiat money and manipulated market conditions or directly funded by 
taxes paid by businesses and individuals who then have less to hire people 
for real wealth creation.  Government-created jobs destroy wealth and sap 
potential from the economy.  The several stimulus bills passed by Congress 
have done much to expand government but not much to keep money in the hands 
of real job creators – the entrepreneurs.  

Keynesian economists don’t see things this way.  They see government spending 
as a stop gap measure that tides us over through rough economic patches.  But 
is this really the case?

Far from it.  The reality is instead of sustaining us until the economy can 
catch up, government spending perpetuates the problems the bureaucrats and 
the politicians created.   Maintaining a high level of employment is one of 
the main objectives of the Federal Reserve, which is just one reason it is 
ill-conceived at its very core: it legitimizes economic intervention which is 
always destructive.  When unemployment rises after the bust of a Fed-created 
bubble, you can be sure Congress will attempt to rescue the economy through 
various policies that will always prolong the agony and expand the downturn.

In the late 90’s, it was thought that encouraging home ownership would have a 
stimulative effect that would ripple throughout the rest of the economy and 
create jobs.  Various government policies favorable to home ownership were 
enacted and the Fed kept interest rates artificially low so everyone would be 
able to buy a home, whether or not they could really afford it.   For awhile, 
it worked.  The housing boom increased demand for realtors, mortgage lenders, 
and construction workers.  However, as reality sank in, not only are we back 
to where we were when the bubble began, but we are actually worse off.  For 
example, not only have we lost all of the one million extra construction jobs 
the bubble created, but we lost another one million on top of that!  So not 
only did the artificial wealth evaporate, but real wealth has been destroyed 
as well.

Even more sinister are jobs created by war.  Recent reports highlight the 
increasing dependence on contractors to support our war efforts in 
Afghanistan.  Massive corruption is endemic to these highly lucrative 
positions.  Almost half of the contracting companies we use are Afghan owned 
and include such business models as recruiting away the very same Afghan 
police force we are training at great expense to the American taxpayer.  
Meanwhile we have pledged not to leave until the police force reaches a 
certain level.  We also bribe many Afghans to simply not attack us.  We are 
in a proverbial hole in Afghanistan.  Our leaders need to just stop digging.

Neither a Keynesian big spending program, nor the military-industrial complex 
can create long-lasting employment or economic prosperity for our country.  
The only way to restore both peace and prosperity is to draw down our 
overseas commitments, along with unconstitutional spending at home and return 
to the founders’ vision of a limited republic that neither straddles the 
globe, nor micromanages the domestic economy.

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