Government is a Taker, Not a Maker

Robert Samuelson has written an insightful article, Flat Earth Economics, wherein he addresses the ideological tug-of-war over whether government creates jobs or not.

He explains that, yes, government creates jobs, but government jobs do not expand the economic pie.  Rather, they are a direct drag on the economy (stick with me, progressives). They don’t create anything. I am not disrespecting teachers and firefighters. We need them, but let’s compare: A coal miner introduces something brand new to an economy that did not exist before. Coal from the ground is a creation of wealth, as is something coming off of an assembly line, or a haircut.

Here is the distinction: A factory hires workers to assemble things on the line and push them out the door. Those workers make money directly for the company. But the factory also has secretaries, payroll personnel, support staff, janitors and others not directly involved in making the product that produces revenue for the company. Those support positions are a net drain, but they are a necessary cost, because manufacturing could not continue without them. The same goes with government jobs. They don’t expand the economy, but they do serve a purpose.

We need firefighters, police and teachers, but we’ve got to keep these government ‘support positions’ as lean as possible, because we are taking money from the private sector to pay for them.

Samuelson wrote the article in response to yet another economically-ignorant missive from the New York Times, where they engage in the fairy tale than government spending is new spending:

What the Times omits is the money to support all these government jobs. It must come from somewhere -- generally, taxes or loans (bonds, bills). But if the people whose money is taken via taxation or borrowing had kept the money, they would have spent most or all of it on something -- and that spending would have boosted employment.

Samuelson continues...

public-sector employment grows only when government claims some private-sector income to pay its workers. Government is not creating jobs. It's substituting public-sector workers for private-sector workers.

If you're one of those lefties who still doesn't get it, ask yourself this question:  Why doesn't Government solve the unemployment problem by hiring everyone who is unemployed?