Just saw this on Zero Hedge.
You can view it in just a few minutes, but here’s the gist.
- Government is great at creating ‘make-work’ (jobs which are a net economic loss).
- Government is terrible at creating real jobs (jobs which are a net economic gain).
- People need to understand that having a free enterprise system, which eliminates jobs by economizing on human labor, and which then creates new jobs (if allowed to) in unforeseen new areas, is what raises a country’s living standards.
I often hear left-wingers argue that it doesn’t matter if government ‘jobs’ are unproductive, because the recipients will spend the money on something else which is more productive. So let’s even pay people to do nothing at all: benefits for the unemployed, for street addicts, adult babies, nepotism/graft, etc.
Their argument is deeply wrong. It’s a recipe for a society where corruption, laziness and incompetence are rewarded, and a recipe also for a de-valued currency, leading over time to hyperinflation. Were it otherwise, then government spending would lead inexorably to prosperity, and Zimbabwe would be the wealthiest of nations. Neither is so.
( A subset of government jobs are, of course, necessary – and thus ‘real’ – even though they are ‘overhead’ to the rest of the economy. Example: police, courts, military.)
From the comments: A pingback from Religio-Political Talk puts us onto this video, wherein Prof. Lee Ohanian explains how FDR worsened the Great Depression:
Here, the point is not about FDR’s make-work policies (which also inhibited recovery), but about his efforts to fix prices and wages at artificially high levels (which prolonged the high unemployment).