OUR WONDERFUL GOVERNMENT OFFICIALS

Government cannot create private sector jobs

The Obama administration and the Occupy Wall Street crowd have at least one thing in common: Both, apparently, have bought into the progressive fantasy that corporate profits are evil and that only increased government spending will create jobs.

Now it's true that governments can create jobs in the public sector; they do it all the time and President Barack Obama's recently rejected $400 billion "jobs bill" would have done more of it. Governments can hire consultants, school teachers, social workers, and millions of bureaucrats to administer its thousands of programs and enforce its myriad of regulations.

Importantly, however, the funds for these public jobs must be provided by either taxation or by money borrowed from the private sector. Thus as almost all economists recognize, any increase in public sector employment must come — in some real sense — at the expense of lost opportunities for private sector employment.

To see why this is so, assume that $1 million is raised by taxation to, say, fund new staffing at the Environmental Protection Agency. No debate; public sector jobs get created. But note that the very same $1 million cannot now be spent by taxpayer/consumers on new washing machines or trips to Las Vegas or newspaper subscriptions. Thus for every job created by government spending there must be a trade-off of jobs not created (or maintained) in the private sector.

Private sector jobs are created by an entirely different process; if they are sustainable, they are self-financing. Private employees are hired with the expectation that their wages will be paid by the additional profit that they generate for some employer. Individuals that work for a washing machine retailer or for a travel agency or for a newspaper must generate a stream of benefits for the company that more than compensate for the wages they are paid — or they will be fired. In short, private firms create jobs if and only if it is profitable for them to do so.

We can now see why the Bush and Obama jobs programs of the past all failed to create private sector jobs; simply put, hard-earned tax money was not invested profitably. The most notorious programs involved channeling your tax money and mine to politically well-connected private firms in so-called green industries. Predictably, bureaucrats are notoriously poor at selecting "winners" and many of these firms went belly up. The $528 million that was wasted on the solar panel company Solyndra (only the tip of the iceberg) could have been spent by consumers supporting local retailers and their employees. Instead, it was classic crony capitalism debacle with money and jobs down the drain.

http://www.tcpalm.com/news/2011/oct/24/dom-armentano-occupy-wall-street-protestors-dont/