The debate over the economic stimulus package gets dumber and dumber. No one knows how this package will actually “stimulate” the economy. No one even really knows what that means. At least, no one in Congress or in the White House.
And so in their ignorance, they seize on the only direct metric they can dimly see a cause and effect relationship with their votes. Jobs.
(Sorry, GDP. Your day in the spotlight is over. Actual production doesn’t matter.)
The problem is that there are jobs and then there are jobs. Some of them really do stimulate the economy. Others are a drag on it. Our politicians’ inability to tell the difference is not encouraging.
The shorthand reality is this. Government jobs are a drain on the economy, not a boon. It is only private sector jobs which can truly create a healthy economy over the long term.
And just to clarify, if you work for a private contractor which is building something for the government and thus getting paid by the government, it’s a government job.
The government could end unemployment immediately and simply hire every jobless person in the country to do… something. For the cost of the Senate’s version of the Stimulus, we could pay every single unemployed person in the country $36,120.69 a year for two years. Obama could brag about creating 11.6 million new jobs.
That should solve the problem, yes? It worked for the Soviets.
Production, not employment, is the key to a sustained and healthy economy. And the government is profoundly bad at creating anything, or at least creating it efficiently.
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What is a politician’s motivation to be efficient or productive? Once they’re in office, they’re in for their term, and most of them get pensions for life. Their only motivation is ambition, which limits their sight distance to the next election cycle. If they fail, they don’t lose a dime. Not one thin dime. They can afford to experiment. The money is literally not real to them.
And if it’s a government employee? It’s nearly impossible to fire them. Voters can’t oust them. They get paid the same if you’re happy with their service or if you aren’t.
That is not the recipe for productivity. It is exactly the opposite.
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Government is a necessary evil. It is slow and unresponsive to the constantly changing needs of its customers. It produces next to nothing, and anything it does produce has zero value by itself – the only value of government’s products is in what it can do to enhance the value of privately produced products.
When the cost of government’s products outstrips the value of actual products, the economy will collapse. We will be left with anarchy and then totalitarianism.
Or we can start to dismantle the socialist state now, increase our prosperity, and save us all a lot of hassle.
So where do the buildings and projects of the WPA and CCC fit in? I have seen many actual building projects that by themselves have value. Many of them are goverment owned, but they do have value. They could be sold for actual money.
You mention to dismantle the socialist state, but to what end? Where is that line on the socialist-libral-conservative-libratarian spectrum?
The WPA and the CCC helped prolong the Depression, did nothing to lower unemployment, and put the country deeper in debt. There are some projects which had merit, but most were just make-work wastes of time and resources.
If I take out a loan to build a 7-11, I’m counting on some kind of financial return on my investment. I want ANY return, so I first consider if that business at that location is going to serve enough customers to make it profitable. I want to maximize that return, so I want to build the building for as minimal a cost as possible. That means I don’t hire any more people to build the building than I need.
The WPA and CCC took neither of these things into consideration. The jobs themselves were their own consideration, so not only was there not an incentive to minimize cost to the taxpayer, there was a perverse incentive to make things WASTEFUL to the taxpayer, and to LIMIT the return on investment.
And then there is the question of, “what’s the investment?” What’s being returned? Did sculpting a toothless, pregnant-looking T-rex on a hill in Rapid City, SD improve the economy there? Doubtful – but what is certain is that the taxpayers of Rapid City have been on the hook for that thing for decades after the fact.
(It’s not that I’m against parks. I always loved Dinosaur Park, and went there often. They’re an important part of a community. But they are a luxury item you create in flusher times, especially now, where (as was not the case in the 30’s) parks are already plentiful, as are roads connecting even the most remote American communities.)
Government public works projects are a necessary evil. Like any building maintenance, they are a DRAG on business growth and profitability. Because they are less of a drag than letting the building fall apart altogether, it’s worth it, but not if you hire more facilities managers than you need because you want to “create jobs” for the sake of it.
Remember – every government job requires the creation of at least 2 private sector jobs to pay for it. If the public works project doesn’t create the condition (a freer, safer environment for business to flourish) for those private secotr jobs to take root, the only thing accomplished by those public jobs is debt and some final product (building or road) which now costs far more to maintain than the empty land that was there before.
Neither businesses nor government are designed to be charities, and will inevitably fail when they take that on as a primary mission.
For these reasons, Socialist states will inevitably dismantle themselves. Eventually the ability to maintain debt and continued massive spending collapses, and the whole ponzi scheme falls apart.
In defense of the T-Rex, she does have teeth, they are just very small. The jury is still out on if she got into trouble “in the family way”
To be clear, I wasn’t advocating for or against the WPA or CCC, I was just stating that their projects had value. I think you have successfully convienced me that it isn’t a great value, but there is value none the less (and the whole end/prolong the depression thing is an interesting conversation for another time).
I guess the broader point I was trying to get at is this… how do we stop this hemmorage spending? The very simple answer I came up with when I was 6 was “Just stop.” But since then I haven’t seen any progress along those lines. (Yes, I was THAT 6 year old that was worried about the deficit; however I think I might just be in similar company on this site)
So my main question is… What gives? Very smart people from both sides of the aisle haven’t been able to turn this around, so what/who will?
That’s what you get for watching too much Schoolhouse Rock. 🙂
“Just stopping” is a good place to start, actually. I’d like to see the federal government do what the military does, and do a regular audit with an eye towards eliminating unneeded programs and consolidating redundant ones. Obama keeping his “line by line” promise would help. And public employees need to have bennies on par with successful private companies – personnel costs are government’s biggest expense, and it’s unsustainable as the various systems currently are. A return to letting States worry about state issues and keeping the big federal nose out of things would help, too. Every state has its own welfare system – why on earth does that bureaucracy have to be duplicated in DC where it’s TOTALLY unresponsive to any voter?
The problem isn’t that smart people don’t know what do do. It’s that our leadership lacks the will and/or the courage to do it.