Sorry I missed this one – originally hit the ‘net on December 2nd, and got quite a bit of commentary from December 7th on. My excuse: I have been busy! From e21 commenting on a San Francisco Federal Reserve study on the affects of the American Recovery and Reinvestment Act:
The study uses this resulting variation in state-level stimulus funding to determine what impact ARRA funding had on employment — including both the direct impact of workers hired to complete planned projects, as well as any broader spillover effects resulting from greater government spending. Administration economists have repeatedly emphasized the importance of this indirect employment growth in driving economic recovery.
The results suggest that though the program did result in 2 million jobs “created or saved” by March 2010, net job creation was statistically indistinguishable from zero by August of this year. Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker. Even if the stimulus had in fact generated this level of employment as a durable outcome, it would still have been an extremely expensive way to generate employment…(emphasis added)
It likely didn’t work, at all, and even if you still want to massage the numbers to make it “work”, you’re still going to come out with a program vastly more expensive than just leaving the money in the private sector.
Once again – the government can’t create jobs. If the government spends money to “create” a job, it means that it has to take the money from somewhere else in the economy (either in the form of taking money directly today, or taking it from tomorrow by borrowing). This means there is less money for private sector job creation. While government action can temporarily give you a bloom of health, the long term effects are bad.
People should note the fact that after each major war in American history – ie, after each time when there was a massive increase in government spending which “created” jobs to serve the war effort – there was a recession (recessions following wars – 1815-21; 1865-67; 1918-21; 1945/48-49; 1953-54; 1973-75). You spend a lot of money via government, you get a short-term boom but then, at the end of it, the piper has to be paid and the various economic activities which are merely government-based prove themselves incapable of self-sustaining growth.
There is only one way to economic growth – hard work, savings and careful investment. And there is also the necessity that the hard work involve genuine wealth creation – making, mining or growing things. If you’re not doing that, you’re just wasting time and resources, in an economic sense. Government can foster these activities, but it cannot force them through – even if you want to create a government farm to produce more food (in itself, a good thing), the fact that government is doing the spending means that some other private activity is now curtailed because of lack of funds. Government’s role in the economy must be limited to ensuring fair play for all people entering the market – fight against monopolies, fraud and other actions which tend to distort the natural allocation of labor, capital and resources.
The economic model we’ve lived under since the New Deal has failed – it is time to rip it out, root and branch, and start to build a new American economy.
HAT TIP: Gay Patriot
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