What is Seen Vs What is Not Seen

Good blog entry today at Mises.org on how the State's spending on roads creates jobs. Here are a couple snippets:

State projects may create jobs, but the proper question is, do they create wealth? The state could easily reduce Michigan's unemployment to 0% by mandating that every unemployed citizen shovel dirt on some state project without pay. Employment alone is not a good indicator of economic success; overall wealth is. Even if state spending can "create jobs," creating jobs alone does nothing for our state's overall prosperity or standard of living.

Let's say the state spends $1 billion on road projects. It is easy to see all the laborers and machinery employed to complete the $1 billion worth of projects. It seems all those laborers and the manufacture of all that machinery signify new growth in the economy. But where did that $1 billion come from?

It came from taxpayers. What use would that $1 billion have been put to had it not been taken by the state and spent on roads?

One billion dollars divided by the state's population of 10 million people equals $100 per citizen. What would all of those citizens have done with an extra $100? Perhaps some would spend it at the movies, some at the hardware store, some on food, some on clothing, and some may have saved or invested the money. If every citizen had that money to save or spend, then every movie theatre, retailer, grocer, or investment portfolio would have received more revenue and produced more goods — and hired more people to make and sell them. How much more? $1 billion.

Too many times people, especially politicians, forget the money that government spends is the people's money. If they were not seeing a significant piece of the paycheck forfeited to the government, they could spend that surplus on other things (maybe even save some of it). What most of us see are the workers and new roads. What we fail to see is all the things that money could have been spent on to actually create wealth instead of just move it around.