Rebirth of Reason


Machan's Musings - Politicians Cannot Make Jobs
by Tibor R. Machan

President Bush made one good point, at least, in his acceptance speech at the Republican National Convention in New York City. This was that all he could do to help with job-creation is to remove obstacles to it. As Bush put the point:

"To create more jobs in America, America must be the best
place in the world to do business. To create jobs my plan
will encourage investment and expansion by restraining
federal spending, reducing regulation and making the tax
relief permanent. To create jobs, we will make our country
less dependent on foreign sources of energy. To create
jobs, we will expand trade and level the playing field to
sell American goods and services across the globe. And we
must protect small-business owners and workers from the
explosion of frivolous lawsuits that threaten jobs across
our country."

Of course there is language here that can be misleading but politicians very rarely speak directly, without some obfuscation, some way to promise more than they can deliver. There is, in fact, no way for Bush or his administration to "create jobs," not at least without also destroying them. By his own account all a government can do is reduce obstacles to economic growth, to investment and entrepreneurship.

Government is the maim obstacle to jobs, by way of its taxation and regulation policies, as well as its protectionism. Of course, when taxes are levied, people have less to spend and this means fewer jobs are needed to provide for what they want in the market place. And when regulations are imposed, enormous amounts of money are spent by government no carrying out this regulatory function with huge staffs, massive overhead, and the unrelenting intrusiveness that treats economic agents as if they were guilty without any proof of having done anyone any harm at all. That is dead weight on the economy.

Protectionism appears to some to preserve jobs, but this is a myth. What it does is stifle competition from businesses abroad, thus allowing domestic firms to charge more than what products would fetch in a free market and thereby taking money from customers they could spend on, among other things, creating jobs for people.

It is only be removing these obstacles that a good prospect for more jobs is created not jobs themselves but the prospect for them. There is no guarantee that even if they have additional funds, no obstacles before them and such, people will actually invest. That is a myth of certain economic theories that hold that people are hard-wired to seek out good deals. They clearly are not so hard-wired. Still, the likelihood of people stimulating economic growth is far greater without all the governmental obstructionism than with it. And on that score Bush is dead right.

Now whether Bush actually has any intention delivering on the promise of removing obstacles to free trade is pretty much to be judged by reference to his record, which, sadly, is bad. Sure he cut taxes but he also imposed them indirectly with his incessant spending over the last four years.

It does bear reemphasis that politicians cannot create jobs, though, and when Kerry & Co. make the more brazen promises that they will do just that they have to be identified as out-and-out liars. Jobs are created from people choosing to purchase goods and services, period. Anything else would amount to coercing them to be customers, to buy in the market place, and even the most intrusive government cannot achieve this. Think of it it would involve forcing people to buy things they do not want or robbing them of their resources and using it to engage in artificial purchases, public works and such. And that has never worked, since such purchases literally create unwanted jobs and displace wanted ones.

Job creation, in short, is not a political task. It is the task we are involved in when we go shopping.
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