June 30th, 2010

Government “creating” jobs

Yesterday I wrote a post that was about (among other things) Obama’s failure to deal with the unemployment problem. Then I saw this comment from “Ilion:”

This off focus on “jobs” (for “jobs” are not in the bailiwick of government) is one of the primary things which got us into this long-term mess.

Which got me thinking I hadn’t been clear enough. So here’s my effort at more clarity.

The best way for government to help increase employment is to create an economic climate in which business thrives, and has the confidence to hire more people rather than lay them off. This cannot be done by demonizing large corporations and increasing taxes on businesses, or by violating contracts with bondholders (as with the GM takeover), or by increasing spending in unpredictable ways (as with the threatened passage of cap and trade that will probably have the admitted effect of causing utility bills to “skyrocket”)—as the present Congress and administration has done or plans to do.

One of the legacies of the New Deal was the direct government creation of jobs to respond to an unemployment crisis. During the Great Depression, however, a far larger percentage of people were out of work than now, and there was no federal welfare system yet (it was not established until 1935), with its web of vast entitlements. These days there are already enormous governmental programs in place, as well as powerful unions for many types of jobs in the public sector (which form a much greater part of the work force now then during the 1930s). Government is already hugely over-extended.

For these reasons, direct government creation of federally-funded and operated jobs would not appear to be a good idea, and would only lead to an increase in taxes and/or deficits. Taxes are already a large burden on the ordinary citizen and businesses, and a drag on the growth of the economy. Increased deficits threaten the government itself and the future of our monetary system, causing more jitters in the business world and subsequent lack of jobs creation.

One of the many problems is that the Democrats in Congress and this administration are stuck in a “blame business” mentality and are also wedded to the idea that growing federal government is the answer to nearly everything. These thoughts have been supported not just in their rhetoric, but in their actions as well.

How can they turn back from these policies now? These things gave them a winning hand back in the election of 2008, which occurred at the beginning of the financial crisis. And they are ever-popular notions among the liberals whose support (financial and otherwise) was highly instrumental in putting the current crop of legislators (and our president) into power.

Whether Democrats are actually aware that growing jobs would mean they must ally the fears of the small and large business owner—both by words and by deeds—is unclear. But even if they are quite cognizant of that fact, they may be unable to act accordingly, because it would outrage their main supporters and leave them open to charges of “Republicans lite.”

29 Responses to “Government “creating” jobs”

  1. JuliB Says:

    I don’t think the Dems have a clue. I used to wonder about ‘create jobs’ protests in other countries – did they mean the way we do? I doubt that too.

  2. Pablo Says:

    Also Green jobs are a major part BO’s plan for “economic recovery and energy transformation.”

    I saw a stat the other day that there are now about 770,000 green jobs spread out among 68,200 businesses and already approaching the same scale as the traditional energy sector — coal mining, utilities, big oil etc.
    Seems to me that the green sector is not self-sustaining (ie makes enough money to continue business without subsidies) so what we’re actually doing is taking money from industries that work and feeding a bottomless money pit. When you tax profitable sectors into oblivion, who will you tax next year to continue subsidizing green companies?

    The market self-regulates via price. If you screw with prices by taxing some to give to others, you create anomalies in the market that will require further tweaking to fix. Then the government asserts more control to tweak things. And creates more anomalies. Eventually your choices are to have either total government control or none. Wonder which one BO prefers!?

  3. gs Says:

    Back when the late Senator Paul Tsongas (D-MA) said that “you can’t be pro-jobs and anti-business”, here in the People’s Republic it came across as a provocative, thinking-outside-the-box statement.

  4. Mr. Frank Says:

    Obama’s talk about green jobs is a con and a sop to his lefty base. Spain tried that with dismal results. It’s estimated that every green job created with government money cost 2.2 real jobs. Plus, only 10% of the created jobs lasted.

    Not only are Democrat ideas about job creation out of touch with reality, but they have spent us into such a hole that we are limited in using options that might actually work.

  5. J.J. formerly Jimmy J. Says:

    Yep, you got it right, neo.

    For some reason the dems do not understand that the government has no money. It all comes from the private sector. Thus, when the private sector is vibrant and wealthy, the government’s income from taxes is increased. If they understood that they would not believe in strangling the private sector with taxes and regulation. Not understanding how wealth is created, they believe the money just magically appears and whatever they need for their utopian programs they can then take from the taxpayers.

    The Federal government’s primary functions are national defense, law enforcement, foreign diplomacy, and protection of private property rights through the courts. Those functions provide a background of some certainty in which investors and entrepreneurs can create new wealth and provide for the general welfare. Every dollar that is spent by government is a dollar that might have gone to creating new wealth and new jobs. Each dollar spent on government functions should therefore be carefully examined to see if it is, in fact, being spent on those primary functions. Any dollar that is not thus spent is merely recycling dollars through the government and growing the size of government, which detracts from the general welfare.

    Those principles should not be hard to grasp.

  6. Curtis Says:

    Republicans have two allies in teaching Democrats about job creation: Death and hunger.

  7. SteddieH Says:

    This is perhaps a gross oversimplification, but politics is very much a popularity contest with upcoming contenders having to out-prostitute the incumbents. Yes, we do have the occasional gem willing to run a campaign promising to make the hard decisions, and for all appearances, sticks to his or her guns in actually making those decisions and standing accountable to their constituency.

    In large part, at least in my somewhat jaded observations and opinion, votes are not “earned” but rather bought mostly by a litany of promises. Promises of government sponsored perks for the less fortunate and middle fortunate – at the expense of the more fortunate and most fortunate.

    A society that is alive with innovation, free-market fundamentals, and a healthy respect for individual freedom is antithetical to the direction of this administration. Dependency is crucial for this administration to continue its assault on reason. Fostering an environment that suppresses private sector employment while culturing public sector employment growth (with the attending union membership) is a very good start at achieving that dependency and gaining the votes to maintain it.

    Creating (government) jobs does nothing more than take more money from one employment sector (private industry) to pay the salaries of another (levels of government & education)…spreading the wealth I think is how Dr. Utopia stated it.

  8. Assistant Village Idiot Says:

    Liberals have this fascination with the idea that someone can and should create or preserve jobs. They resent corporations for not focusing on job-creation or job-preservation (hence their support of unions even though liberals don’t consider them their class of people), and they think government should make this happen somehow. Somebody should create these jobs! My God, they have to come from somewhere!

    They don’t get that jobs grow naturally or not at all. You can take a lot of wood and some leaves and make it look like a tree for awhile, but it’s not a tree. You can even overharvest the wood and make a lot of tree-like objects that will stand up a long time before rotting and collapsing (we call these government trees), but they won’t bear fruit. Trees come up out of the messy ground, needing adequate sunlight and nutrients or they perish.

  9. Baklava Says:

    Heaven forbid they do what is best for the country!

    Oh wait ! What is best for the country is if they raised the minimum wage to $50 :)

  10. Wolla Dalbo Says:

    Bear with me if I have posted similar material on this issue before, but I believe that it is critical that this information be understood before any attempt at evaluating any proposed economic policy is attempted.

    A key, fundamental, and determinative factor that few reference in any detailed way, and I believe few really appreciate to the extent it needs to be appreciated—for if they did—I don’t think that voters would let members of Congress even propose, much less vote through any of their various ruinous approaches to “getting our economy moving again” –is the “Entitlement system,” how it works, and, particularly, how it affects the Federal Budget, where we stand now, and the dire economic situation we face in the next few years.

    Entitlements are benefits—in cash or in services–given by the Federal government to those who meet some particular specified criteria and are therefore “entitled” to those benefits, so, for example, veterans who have been disabled during their military service and meet the requirements for “entitlement” are entitled—have a guaranteed right to– veteran’s disability benefits.

    Some entitlements like Social Security* have an age threshold for entitlement, some like unemployment benefits are based on employment status, but most entitlements are keyed to economic status i.e. household income, and if you are below the annually determined Federal poverty line—in 2010 pegged at $22,050 for a family of four—then you are “entitled” to various benefits (some varying and determined by each individual State) —not just food stamps, but all sorts of other possible benefits as well—things like housing allowances, free medical care, transportation allowances, free child care, and others.

    The key fact here is that since the U.S. population steadily increases each year, this means that there are more people likely to fall under the “poverty line,” each year, and since that poverty line is also “indexed for inflation” i.e. it generally moves higher each year to keep pace with inflation, that steadily rising poverty line covers even more people each year too; entitlement expenditures are, thus, open ended, and continually increasing. The Entitlement system was deliberately set up this way by members of Congress, so that they would not have to debate and justify entitlement programs, and examine and debate entitlement requirements and payment amounts each year—it’s a “fire it and forget it weapon”).

    The other thing you have to understand is that Federal budget expenditures are functionally divided into two basic categories; “Mandatory” expenditures and “Discretionary” expenditures. In practice, Mandatory expenditures are those for Entitlements–including Social Security, Medicare and Medicaid, Veteran’s benefits and Federal employee retirement annuity payments, and interest on the Federal debt; this portion of the Federal budget that is paid out each year for Entitlements is estimated and “sequestered”—it cannot be touched or used for any other purpose, and right now the percentage of the Federal budget that is Mandatory is more than 60% and that percentage is rapidly and inexorably growing, ratcheting ever higher, while the remainder of the money to be spent, the 30+ % of the Federal budget that is Discretionary—which must pay for all of the other expenditures of the Federal government—National Defense, the cost of running all the agencies and other functions of the Federal government, research and development, diplomacy, etc. is being steadily devoured and decreased as the percentage of Mandatory expenditure increases; leaving the President and Congress with less and less money and less and less maneuver room each year to deal with the emergencies, disasters and threats that inevitably arise.

    In a recession, more and more people qualify for various entitlements like food stamps (a reported 40,000,000 people are now receiving food stamps) and unemployment benefits too, increasing the percentage of Mandatory expenditures. Massive numbers of workers unemployed also means a tremendous drop in the amount of taxes and payroll deductions for Social Security paid into the Federal treasury.

    In a recession more older people will be likely to decide to retire or be forced to, and to collect Social Security benefits earlier than they otherwise might have, and right now, too, demographics comes into play, since enormous numbers of Baby Boomers are just starting to become eligible for Social Security, further increasing expenditures for Social Security and, thus, the percentage of Mandatory expenditures. Compounding the problem, too, is that fact that the number of active workers who are paying into Social Security, paying for those retirees now drawing on it–in essence, a giant Ponzi scheme–is soon to fall below the minimum number required to make the system–as it is now structured–viable. As well, because of this increased number of people entitled to and drawing Social Security benefits, and the decreased amount of Social Security taxes paid into the system because of the millions of workers who are now jobless and not paying into the System, just last month—and years sooner than it had been predicted to happen–for the first time Social Security took in less money than it paid out.

    Bottom line: we are already in a perilous, perilous economic situation, just from runaway entitlement spending alone, and the prospects only get worse as time moves on and Entitlement eligibility and expenditures and their percentage of the Federal budget ratchet ever skyward.

    Thus, the only approaches that will likely stop this catastrophe in the making are:

    1. Drastically reduce entitlement eligibility and benefits and, as well,

    2. Grow the economy as rapidly as prudently possible in order to be able to pay for even those constrained entitlement benefits.

    Anything that results in job losses and economic stagnation, anything that enlarges the government sector and decreases the private sector, anything that increases our deficit and public debt, anything that decreases investor and consumer confidence, that decreases innovation, productivity and job formation, anything that increases the cost and difficulty of starting and running a business, anything that reduces our competitiveness, is the absolutely wrong thing to do and, yet, all of these job and economy killing policies are exactly the ones that Obama & Co. are so eagerly putting into place.

    This is the very definition of “unsustainable,”

    That is why it is increasingly looking like Obama & Co. are pursuing the Cloward-Piven strategy and deliberate economic sabotage, rather than that their policies being pursued out of just plain ignorance.

    * Like other entitlements, Social Security—originally intended as a minimum payment to be made to see to it that the small fraction of the populace who are aged (and the original entitlement age was deliberately set at 62 when most people died before that age) and without family to take care of them or any savings or other resources, have enough to meet their minimum needs for food, clothing and shelter–has radically expanded over the decades, so that we now, in addition to very hefty Social Security payments, also have things like the many hundreds of thousands, and perhaps millions of people getting Social Security Disability payments—check out the plaintiffs and defendants on Judge Judy sometime–Social Security payments to dependents under 21, as well as Social Security payments for the educational expenses of dependents.

  11. Stark Says:

    The business of America used to be business, now it is government. Time to get back to business and earn a buck rather than trying to legislate prosperity. All we need is a free and level playing field. People’s self-interest will motivate them to create jobs and wealth that will raise everyone’s standard of living. Then the politicians can take credit for it.

  12. Mrs Whatsit Says:

    It seems to me that the pillars of liberal economic philosophy go like this:

    1) grow government
    2) pay for growing government by taxing rich people
    3) get rid of rich people.

    Why can’t they see what happens to 1) when 3) succeeds?

  13. Wolla Dalbo Says:

    Here’s a Congressional Budget Office Report just out–that I knew nothing about when I posted above– that says the only way out of our dire economic situation is “austerity” and “economic growth” (http://blogs.reuters.com/james-pethokoukis/2010/06/30/growth-only-way-to-avoid-u-s-economic-collapse/) .

  14. SteveH Says:

    If liberals could wave a magic wand and make everyones standard of living double, they wouldn’t do it. Because there’d still be inequality.

    They can’t solve economic issues or do much of anything else because they’re too busy trying to find relief from their own obssession with envy.

  15. Ilíon Says:

    Ilíon:This off focus on “jobs” (for “jobs” are not in the bailiwick of government) is one of the primary things which got us into this long-term mess.

    I don’t recall now just what I mangled in the commbox to result in “This off …” Sorry about that.

    This post on my blog (and the referenced posts on ‘The Deuce’s’ blog) is directly about the point I was getting at — all government “created” jobs actually destroy societal wealth. Since we have to have government (no-government is worse), some of this effect is unavoidable; but, what we’ve been doing since since at least the New Deal era — “priming the pump” — has made our total society a net consumer, rather than producer, of wealth. This can only end badly.

    This post indirectly touches on the point, in that American society (following the lead of the pundits for the past several generations) has come to expect of the president things the office simply is not designed to accomplish nor have responsibility for — the office of President of the United States is not a king, much less a god-king.

  16. Mr. Frank Says:

    The large increase in the minimum wage two years ago and the extension of unemployment benefits to 99 weeks in some areas have to be factors in the slow growth of jobs. Both are government maindated.

  17. Ilíon Says:

    Neo:The best way for government to help increase employment is to create an economic climate in which business thrives, and has the confidence to hire more people rather than lay them off. …

    That’s not just the best, it’s the only way that government can constructively contribute to job-creation — any other governmental actions end up destoying wealth/capital in the short term and impoverishing the society as a whole in the long-term.

  18. Ilíon Says:

    Wolla Dalbo:(and the original entitlement age was deliberately set at 62 when most people died before that age)

    That’s a statistical misunderstanding; it’s widespread and common, but it’s still incorrect.

    It is *not* true than we live longer now than, say, a century ago. It is true that the average lifespan now is significantly greater than in past generations. The key word here is ‘average,’ and the significant change has to do with a vastly reduced infant mortality rate. There were other factors going into that moving average, of course, suce as the fact that few jobs today as as dangerously lethal as many jobs were a century ago (such as farming); but the main driver was the improvement in infant mortality.

  19. James Drake Says:

    Can anyone explain for me how the contracts protecting the GM and Chrysler bond holders was overturned? I would think that surely would have been appealed to the Supreme Court where the contracts should have been upheld.

    The failure to uphold would explain a lot of the caution that investors have. Who wants to put up capital that can be confiscated, even if it has senior status.

  20. someone Says:

    Thanks Wolla Dalbo for that piece of work which was very insightful and prescient.

    Thank you nnc for doing what you do and doing it so well. It’s not over yet (but don’t tell them cause they need to peer over first i fear. shall we help them to?faster please).

  21. expat Says:

    We should remember that many of these Gov’t jobs are not just nonproductive; they actually decrease the productivity of real workers. Think of all the unneeded regulations they enforce. Think how much employer time must be devoted to complying with diversity police or other sorts of nannies.

    Did you all see PJM’s link to the Daily Mail article on EU changes in how eggs can be sold? Instead of selling by the dozen, they want to have them sold by weight. Anyone who thinks such stuff is needed to protect consumers has far too much time on his hands and far too few worries about job security. Next, they’ll be demanding that cookbooks give precise egg weights in omelette or pancake recipes so we can better watch our cholesterol.

  22. Assistant Village Idiot Says:

    Ilion, I agree that infant and child mortality rates were the main driver of the life expectancy rising from 46 in 1900 to 78 today. However, we are living longer as well. A greater percentage of 60 y/o’s reach 80, 90, and 100, the last by far.

    Expat – and it feeds on itself, too. I work for government, at a state psychiatric hospital. An increasing amount of my time is being spent providing information to other parts of government, attending trainings to comply with new regulations, and the like. And government agencies, of course, tend to believe deeply that these incursions into our time are very important, and not to be shirked. We go full bore.

    At the level of actually performing a function, there is awareness that we have all this wasted time doing less-important stuff. There may even be a growing awareness that it is increasing. People even agree that this can’t go on indefinitely. Yet I do not detect a growing awareness that we should try to shrink government. I think people immediately worry that it would be their job that goes, no matter how well they do it and how useful it is.

    They could be right. If the function of an agency is to provide, say, food, the agency would get yelled at for not providing food, but no one would lose thir job. However, providing food but failing to send your people to mandatory nutrition classes could get you fired. Expand this thinking to what happens to the agency function in other areas: cops, teachers, firemen. It is even worse if you work for the government and are involved in regulation – pollution control, revenue, safety. In those areas the function really gets buried under the regulations the regulators must themselves adhere to.

    But we are far afield here. WD’s summary of the incoming tide of entitlements is the factor that could eventually dwarf all others.

  23. JuliB Says:

    Speaking of regs…. All of those road jobs you see from the stimulus need 2 of the ‘putting America to work’ signs at ~5K each.

    The feds and the state bureaucrats come out to check up on the jobs, making sure billboards are up, every little detail is attended to, etc. It’s a joke, and causes the various projects to slow down. The feds and the state perform the same function as well.

  24. Baklava Says:

    The unemployment rate for young African Americans is between 35% and 45% this last year depending on the month.

    Government representative: let’s see – how do we fix that. Oh. I know – let’s raise the minimum wage some more !

  25. Wolla Dalbo Says:

    Surveying the situation, the deep, deep shit that we are in, I think that, rather than averting our eyes from this catastrophic mess we should, instead, face–full on–the true nature and extent of these critical economic problems, for diagnosis must come before we ever attempt a cure.

    Looking at the economic side, there is hope that we can stave off at least some of the worst effects of this catastrophe, but the only way to do that is, as I said above, to drastically reduce spending generally, and to reduce entitlements by limiting the number of people who can potentially qualify for them, by making it harder for those who are possibly eligible to qualify, by reducing the entitlement benefits people do qualify for to the bare bones, and by limiting the time such benefits are paid out.

    The party is over folks!

    Here are some suggestions for some very simple but effective changes that could be made to Entitlements:

    First, each year Congress should have to justify, debate, and carry out a “roll call” vote on each and every major Entitlement program, their eligibility requirements, and their benefits and benefit levels.

    Next, automatic indexing of any Entitlement program for inflation should be forbidden.

    In the case of Social Security, since we are in general living longer and longer healthier lives, the retirement age should be raised to 70 or even 75.

    High dollar amount Social Security benefits should be reduced.

    Social Security benefits dollar amounts should be fixed, and not increased unless inflation was, say, more than 5% in any one year, in which case a one time increase might be made.

    As a little social experiment, check out Judge Judy for a few weeks or so, and notice how many young and apparently healthy plaintiffs and defendants are not working—have not worked for years–because they receive Social Security Disability Benefits, quite often for vague, hard to definitively diagnose things like “back problems.” If these people are any indication, this program alone is rife with fraud, and I would drastically tighten eligibility requirements, examine each claim and the doctors making them with a fine-toothed comb, and periodically re-check the condition of those receiving benefits to see if they still qualified, and unless someone were pretty much totally and permanently disabled, benefits would only be of short duration, and then people would have to go out and get a job, any job.

    Moreover, I see no reason why the Federal government should pick up the tab for educational expenses of dependents under Social Security. I would eliminate this benefit.

    There is a “structural unemployment rate” estimated to be around something like 5%, that is never going to be reduced, and there are also people who are too physically or mentally handicapped or who for some other reason just do not have the capacity to work, but I suspect that, outside of those who are very seriously handicapped or very unsuited for work, the percentage of people who cannot hold down any kind of job at all is very small.

    Thus, various Welfare benefits should be pared down to minimal, time-limited benefits for food, clothing and shelter and nothing more, with the emphasis on recipients getting off welfare and finding a job; no long term benefits, no excuses allowed.

    Medicare and particularly Medicaid notoriously pay out tens of billions of dollars each year for fraudulent claims—fraudulent claims always talked about as a source of “savings” for our government but never really seriously attacked—I would attack them with a chain saw, and penalties for fraud would be drastically increased.

    It is human nature and fairly common knowledge that those who lose their jobs usually work hard to try to find a new job in the first few weeks immediately after they have lost their job then, as the weeks drag on with not job found, they get discouraged and only start looking seriously again when their unemployment benefits are about to run out, and then they take a job, any job, so that they have some income. Thus, extending unemployment benefits until they stretch for more than a year is not really “helping people,” but it, in fact, discourages people from making every effort to quickly get back into the labor market. So, unemployment benefits should be limited to a set number of months—say 6 or 9–and after that, those without jobs would have to find some kind of job—maybe not their ideal job, maybe not a particularly high paying or satisfactory job, maybe not in an ideal location or setting, but they would have to get back to work.

  26. paul Says:

    BO in any form smells

  27. J.J. formerly Jimmy J. Says:

    Wolla Dalbo said, “As a little social experiment, check out Judge Judy for a few weeks or so, and notice how many young and apparently healthy plaintiffs and defendants are not working—have not worked for years–because they receive Social Security Disability Benefits, quite often for vague, hard to definitively diagnose things like “back problems.”

    Yep. I have a nephew who has a insurance fraud investigation company. He works for insurance companies and nails people with fake disabilities all the time. If Social Security, Medicare, and Medicaid would spend some money on that it might slow some of that down. But the progressives would say we are demeaning these poor people by doubting their word. Arrghh!!

  28. Michael Medved: NOT WHETHER TO CUT SPENDING, BUT WHERE | MorallyRight.org Says:

    [...] neo-neocon » Blog Archive » Government “creating” jobs [...]

  29. Wolla Dalbo Says:

    Obama said today of his economic policies, “we are heading in the right direction,” (http://hotair.com/archives/2010/07/02/obama-were-heading-in-the-right-direction/) and yesterday he said, of our current 9.5% unemployment rate, that if he hadn’t taken the actions he had, unemployment might now be 12% or 13% or even 15% (http://hotair.com/archives/2010/06/30/obama-on-the-stimulus-hey-at-least-unemployments-not-at-15/), Nancy Pelosi said today that the government handing out unemployment checks to jobless workers is the best, most effective, and quickest way to “stimulate our economy,” to create more “demand,” and to “create more jobs,” (http://hotair.com/archives/2010/07/02/pelosi-jobless-benefits-biggest-stimulus-for-economy-evah/), and the other day our numbskull, loudmouth VP Joe Biden, who has bragged about the millions of jobs “saved or created” by the Obama administration, and opined that “things are looking up” on the job front, had to admit that many of the jobs that have been lost “are never going to come back” (http://dailycaller.com/2010/06/26/biden-admits-no-possibility-of-restoring-jobs-lost-during-recession/).

    So, for instance, here is a CNN article, out today, saying that we have lost 7.9 million jobs, “many forever” (http://money.cnn.com/2010/07/02/news/economy/jobs_gone_forever/index.htm) and
    here is a chart comparing the depth and length of our current unemployment situation with similar recessions from 1948 to the present; a chart that I am confident you will never see on TV, referred to, or printed by the MSM (http://nalert.blogspot.com/2010/07/scariest-job-chart-ever-gets-uglier.html) .

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