More Public Spending Only Hastens the Demise

Kicking off Labor Day weekend last Friday was a report by the Labor Department that, on balance, the U.S. economy failed to create a single job in August.  On the bright side, this also means not a single job was lost in August either.  Unfortunately, a zero reading is actually a negative reading…125,000 jobs a month are generally needed just to keep up with population growth.

Somehow the unemployment rate stayed at 9.1 percent.  However, it is really much higher. There are 14 million people that are officially unemployed.  But there are also 11.4 million others that are unofficially unemployed.

The unofficially unemployed, who include part time workers who want full time work and people without a job who had not searched for a job in the last 4 weeks, are not counted as unemployed by the Labor Department.  Throw them into the mix and the unemployment rate jumps from 9.1 percent to over 16 percent.

President Obama paused during the holiday yesterday to tell the people of Detroit, “We’ve got a lot more work to do to recover fully from this recession.”

It is clear to everyone that more jobs are needed to improve the economy.  But from where do jobs come?

From politicians to the general populace, the answers to these questions are muddled and confused.  Here, for fun and for free, we shall labor to bring clarity to the discussion…

Demanding Pretend Jobs

One way to go about trying to create jobs is to demand they be created.  That is what Metro Detroit AFL-CIO president, Saundra Williams, proposed prior to Obama’s speech yesterday.  “What we really want you to do is demand job creation,” Williams said as she welcomed the crowd.

Like demanding a bountiful harvest from the land, job creation, too, can be demanded.  Of course, in an economy, like a harvest, you reap what you sow.  All jobs are not created equal.  There are pretend jobs and there are real jobs.  There are make work jobs and there are productive jobs.

We can’t know for certain, but we think Williams is demanding pretend, make-work, jobs. In other words, she’s demanding the type of jobs created by massive amounts of public spending.

On Thursday President Obama will unveil his latest jobs plan.  We won’t know until then for certain, but we think Obama will also be demanding the pretend, make-work, jobs created through public spending.  At yesterday’s speech he offered a brief example of what his jobs plan entails…

“We’ve got roads and bridges across this country that need rebuilding,” said the President. “There is work to be done and there are workers to do it.”

More Public Spending Only Hastens the Demise

Nonetheless, the President didn’t mention where the money will come from to build all these roads and bridges.  With a public debt that has already reached maximum saturation, more public spending is sowing empty seeds into the economy.  The people’s labors will be utterly unprofitable and vain.

If Williams or the President wanted real – productive – jobs they would encourage business activity and allow private companies to create real jobs.  They would advocate lowering corporate tax rates and simplifying hiring laws.  They would eliminate burdensome regulation, allow for development of natural resources, and remove government-imposed demands that inflate the cost of labor.

But that is not what they want. Instead, they want more unions, more collective bargaining, and more government sponsored jobs.  They want ‘jobs for all’ building pyramids to the sun.

“Every man is a consumer, and ought to be a producer,” said Ralph Waldo Emerson.  “He is by constitution expensive, and needs to be rich.”

Nations, like individuals, can either be consumers or producers.  It is a simple axiom that those that consume more than they produce grow poorer while those that produce more than consume grow richer.

When the government creates unproductive pretend jobs, even if employment increases, the overall GDP decreases, and so does tax revenues.  When the government continues down this road to insolvency they ultimately run out of money to keep hiring more and more people.  In the United States, that happened years ago.  Yet, it still continues…resulting in an explosion of deficit spending.

Piling on more public spending now will not help the economy; rather, it only hastens the demise.

Sincerely,

MN Gordon
for Economic Prism

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