Forum Post: "Government Doesn't Create Jobs"
Posted 12 years ago on Nov. 10, 2011, 2:42 a.m. EST by looselyhuman
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Conservative politicians and pundits love to parrot that patently false statement as many times as they can, despite some of those same politicians getting their paychecks from ... the government. For example, Gov. Rick Perry (R-TX) oversaw 47% of all government jobs created in his own state between 2007 and 2010, while he was in charge. Public employee Rick Scott (R-FL) has handed out 15,000 pink slips to his fellow public employees since he's been governor, with the nerve to lament about Florida's rising unemployment in the same breath. Though in his defense, Rick Scott now says he doesn't have to create any jobs. This is surprising, considering Scott's campaign slogans of "Let's get back to work," and "Jobs, jobs, jobs."
Congressional Republicans (re: public employees) aren't any different. They've shamelessly voted down creating hundreds of thousands of good-paying jobs for their own constituents - like teachers, police officers and firefighters - because of a 0.5% tax surcharge on incomes exceeding $1,000,000. Republicans claim they'll outright refuse raising taxes on anyone during the recession, yet Republicans have come out in favor of raising taxes on Americans lucky enough to even have a job.
So cue Rush Limbaugh, the de facto leader of the Republican Party, taking to the golden EIB microphone to tell his millions of listeners that it's the private sector, not the government, that does all the job creation. Now, he's partially right in that the latest lackluster jobs report showed 104,000 private-sector jobs gained and 24,000 jobs lost in the public sector. Yet his claim that providing public-sector jobs somehow harms the private sector is the epitome of economic illiteracy.
As a small business owner myself, the thing holding me back from creating jobs in this economy isn't taxes or regulation, but slow demand. Whether private or public sector, when more people are out of work in a consumer economy, demand for goods and services inevitably goes down. And with less demand, businesses have no choice but to lay off workers. We need jobs to fully recover, but jobs won't come about until demand picks up. Demand won't pick up until people have money to spend. So why are our leaders hell-bent on cutting public-sector jobs when we need them most?
75 years ago FDR put 8.5 million Americans to work rebuilding our cities with an $11 billion investment, or $1.7 trillion adjusted for inflation. The jobs created through the Works Progress Administration put nearly a quarter of America's unemployed back to work in the middle of a crippling depression. During the WPA's 8-year stint America's unemployment rate decreased from 20% to 4%. We could generate the revenue for a similar jobs program by simply levying a $0.03 tax on speculative Wall Street transactions, something embraced by everyone from the Occupy Wall Street movement to Bill Gates. How's that for public-sector job growth?
With linked citations and the call to Rush:
http://www.readersupportednews.org/opinion2/279-82/8325-qgovernment-doesnt-create-jobsq
the government supports the general welfare
great write up
Agreed
It would be interesting if these guys that claim gov't doesn't create jobs, would follow through in their OWN businesses.
They shouldn't use the commie built interstate high way system
They shouldn't use the marxist postal system
They shouldn't use the socialist public water system
Then they could stand back and watch their business grow IF they were correct.
I'm guessing their wacky ideas wouldn't work so good.
Haha, amen. :)
Not to mention employees educated in the collectivist public school system, or out-of-work consumers purchasing necessities with their statist unemployment checks, or better yet, with their pay from totalitarian government work programs. :)
Boy, didn't think of those.
Hope Rush L. can 'save' us from all these curses
Or better yet that people wise up and see that these guys are plainly Idiots.
And being that many of them are products of private education, I think it backs up the arguement for government services.
All hail Rush!
Nice chatting with you, as always..
Yea, their latest live DVD/CD dropped yesterday. They do the entire "Movong Pictures" album live. awesome
If the government undertakes infrastructure improvement as it did in the New Deal, even if the front line workers are govt employees, there are suppliers who are most likely in the private sector who will be able to create jobs as new govt contracts flow to them. Isn't that right?
The gov can only create government jobs or government sponsored jobs. They can't tell McDonald's to hire 20 more people.
The government will not need to tell McDonalds to hire. The advantage to full employment is that there is then much more expendable income in the hands of consumers. More demand for big Macs means more employees will be hired. The new employees then buy more stuff, creating more demand etc. Get it?
Support the National Emergency Employment Act.
I get that.
http://www.govtrack.us/congress/billtext.xpd?bill=h112-2990
Sorry if I misjudged the gist of your post. So many here, seem to worship "the holy free market" and its' magical, infallible "invisible hand" I tend to expect irrational responses.
You are right. Government does create jobs.
One of the many angles of revisionist attack on FDR and the New Deal is the conjecture that the 8.5M people put to work by government spending were actually not employed. This Salon piece says it well:
"Let us reflect, for a moment, on what the men and women employed by those programs achieved (aside from earning cash to buy food and pay for shelter, of course). In his paper, “Time for a New, New Deal,” Marshall Auerback (pointed to by economist James Galbraith) summarizes:
'The government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown.
It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.'
In other words, millions of men and women earned a living wage and self-respect and contributed mightily to the national infrastructure. But, according to the statistics as interpreted on the Wall Street Journal editorial page, they were unemployed."
http://www.salon.com/2009/02/02/the_new_deal_worked/
It's not a question of whether government can create public-sector jobs. Obviosly it can. It's a question of what side of the economic equation they're on - cost or production. Largely, they represent a net cost and that cost must be paid eventually by tax-payers and the private sector either directly or through effects of increased debt on our currency. It's one thing to use such economic pumps to goose the economy temporarily when you need to and you have some headroom in your debt to do so. It's another when you're already in the hole $15 trillion. At some point, you can't keep digging a hole as the sole solution to getting out of it.
And drop the teachers and firefighters bs. They're among the last groups who actually need help with jobs. They're just "teflon" groups that are used in an attempt to justify the argument and to mask political pay-offs to unions.
The hole was dug by military spending and tax cuts, and so the short-term stimulative deficit spending we badly need is off the table, because of 30-40 years of Reaganite/neoliberal "starving the beast." That is going to bite us in the ass.
The New Deal was not a net cost because a.) the infrastructure it built has paid for itself many times over, and is still valuable today, and b.) the pump-priming aspect of the recovery boosted aggregated demand and has produced huge amounts of wealth, then and since.
Doesn't much matter how we got here other than making yourself feel better by assigning blame. We are where we are.
The New Deal happened in a different time and at a different point in the growth curve of the country (and the world for that matter). There's no way for us to generate the growth necessary to support additional multi-trillion dollar "investments" at this point. Just as in your business, you can't keep drawing down your credit line indefinitely and beyond the level that you can reasonably be expected to produce in revenue in order to be able to service that debt and still effectively operate and grow the business. At some point, debt service overtakes the business. We're already at 40 cents borrowed on every dollar spent and our annual debt service is approaching what we produce. We can't afford to do a "New Deal" or WPA even if we wanted to.
Actually, adjusting for inflation the New Deal cost just over 1 trillion. That could be raised with a 3 cent financial transaction tax.
That's still a net wash. Again, you're just moving money from one side of the equation to the other. You need to generate true national production/wealth; otherwise, there's no net gain.
Unfortunately, at this point there are no quick and easy solutions like that. We've, both as a country and individually, been living beyond our means for the last 30 years. Anything that we do along those lines is simply blowing air into a leaking ballon to try to keep it inflated. It's just going to take time to work off debt and leverage that's been in place. Likely a long time.
You claim to understand the stimulative effect of boosting aggregate demand, then you make statements like "you're just moving money from one side of the equation to the other. "
You don't understand. Money sitting in shareholder accounts and generating even more wealth at the top through investment vehicles that generate no overall value is not the same as money in the pocket of people who will spend it and let it loose into the economy, bottom up. Multiplier effect.
That it's off the table because of the past 30 years is the argument for reversing course on the revenue side right away, therefore providing confidence on the bond market that we're good for some more borrowing now and will be committed to fiscal discipline on the upswing (transition to a budgetary surplus and begin paying down the debt). Now is not the time for austerity, which will only make the long-run problem worse.
Yes, as I said above, it works temporarily and to some extent; however, it's not a strategy that you can employ indefinitely. Depending on your view, we're either long past or very close to the end point for that. So we spend another trillion and get a small bump for another year... big deal. It really won't do much to solve the larger underlying problems.
I don't think that you understand. The financial transaction tax, at least as it's been discussed in most forms to date, is on financial transactions among financial firms. It is not a tax on assets held as investments. Also, it's a pure take from them and give to the government and/or funds to insure against future losses. Any money to the latter is not an effective multiplier. Any money to the former loses a significant amount to overhead and, again, still represents a net wash in the larger scheme of things.
Well, good luck with that plan. While you may be able to convince politicians to take that path, the bond market isn't likely to cooperate and will make us pay dearly as is now the case with some of those in the Euro zone and, previously, in Latin America who continued on that same path. Unless you want to consider default an option for erasing that debt. Possible, but that carries some very serious ramifications.