It is only through productive investment in the private sector will real job growth occur. The government does not know what industries will be successful. If they did I am sure synfuels and ethanol would be huge today. Instead, they are both colossal failures.
Here are some highlights from Bloomberg:
If putting people to work is the goal, we could get rid of all the heavy earth-moving equipment and go back to digging ditches with shovels.
Why stop there? If it takes one man two days to dig a trench three feet deep and 30 feet long with a shovel, how long would it take 100 men using spoons?
You get the point. We can always create jobs by replacing capital with labor, by going backward. The entire history of civilization has been characterized by an effort to move in the opposite direction and become more productive, which is another way of saying produce more with less.
All Aboard
Automation and technological innovation have had the effect of replacing humans with machines. Yet the unemployment rate isn’t perpetually rising. As countries develop, they create new and better jobs, not more of the same old ones. The goal is to raise the standard of living, something that (all economists agree) can only be achieved through higher productivity growth.
That’s something the government can’t provide. It doesn’t “sell” its goods and services to discerning buyers. It isn’t driven by the prospective return on its investment.
Instead, the government requires us to pay taxes in exchange for goods and services -- transportation, education, homeland security -- that may or may not be worth the “cost.”
There’s nothing like a crisis to play on the public’s insecurity and expand the reach of government. There’s nothing like a serious financial crisis to get economists of all persuasions on board.
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