21 Dec 2008

Government "Creating Jobs"–Someone Please Make It Stop

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(Ha ha get it? My title has at least two meanings. One of which is mildly amusing.)

My next mises.org piece is going to tackle this whole notion of idle resources and how there is (allegedly) no tradeoff involved when the government directs workers and other resources into public works boondog–I mean investments in infrastructure. But for now, I just loved this confident comment over at Env-Econ where John Whitehead is getting attacked (with the rhetorical equivalent of cardboard tanks) for his claim that “green jobs are bogus”:

Sniff, sniff… yes, that’s it – I do smell reductionism. And packaged in an overly general assertion to boot – my, my!

Let’s apply your point to highway construction. Are you really ready to defend your view that the massive investment the US government made in highways from the 50s onward did not contribute any net jobs to the economy, and that it only shifted the balance of jobs?

Yes yes yes, that IS what John should be saying. (Not sure if John had the courage of his convictions to go that far.) Would the unemployment rate have been 15% up through today, in the absence of federal highway construction? Or, did the construction of federal highways lead Americans to have more unprotected sex? If not, then clearly the federal highway program didn’t contribute net jobs to the economy.

The only real way to create net jobs within the country’s borders is to allow more immigration. Of course, that just destroys jobs in other countries.

So long as wages are allowed to adjust, unemployment will (certainly in the long run) sink to the “natural” level. Government policies can perhaps affect how high that “natural” level is. Other than that, government policies really affect real wages, not job creation per se, if we are talking about the long run. Even massive tariffs don’t (in the long run) “destroy jobs” on net. In an autarkic economy, so long as the labor market is relatively free, everyone can still get a job. The (real) wages will just be a lot lower because of the protectionist barriers.

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