Government Doesn't Create Jobs

Word is that the Obama administration is now poll testing its stimulus plan. So far, rather than using the word spend he will use the word invest. It also appears that the term "create jobs" has also polled well. While this maybe a good way to appeal to the masses, mostly those with only rudimentary knowledge of economics, it is also a total distortion to proclaim that Barack Obama will create any jobs. Governments don't create jobs. Here is how Barack Obama has characterized it.

These numbers are a stark reminder that we simply cannot continue on our current path," Obama said in his weekly radio and YouTube broadcast address.

"If nothing is done, economists from across the spectrum tell us that this recession could linger for years and the unemployment rate could reach double digits — and they warn that our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world," he said.

...

It's not too late to change course — but only if we take immediate and dramatic action," Obama said. "Our first job is to put people back to work and get our economy working again."

Governments spend money. Governments even hire people in its employment. Yet, governments don't create any jobs. That's because governments have none of their own money. Governments get money either from taxation or from borrowing. When the government hires someone the endeavor is not for profit. Using someone else's money for a not for profit endeavor doesn't create a job even if you hire people to do it.

In fact, a truly strict constructionist reading of the Constitution would proclaim Obama's assertion unconstitutional. There is nothing in the Constitution that gives the President the power to "put people to work". The President has the power to employ people to carry out his executive responsibilities but none of those responsibilities include putting people to work.

In fact, the notion that Barack Obama will create 3.5 million jobs is ludicrous. Barack Obama is worth a few million dollars. He could create, on his own, ten to fifty jobs. That's it. Everything after that he would create with someone else's money. Yet, if he is using someone else's money then who exactly is creating those jobs? If someone else's money is used, how many jobs are we losing because that money isn't used elsewhere.

I have in my business hired on interns. Those interns helped in marketing, processing my loans, as well as performing other loan administration functions that made my business more efficient. Those interns helped expand my business. That's job creation. I have also hired on and trained new loan officers and helped those loan officers expand their own businesses. That's job creation. Just hiring someone, paying them, even though their job doesn't actually expand business doesn't mean you have created a job.

If Barack Obama raises taxes to pay to "create 3.5 million jobs", then how many jobs are lost by the extra tax burden? If he borrows money, how many jobs are lost by those paying to lend to the government? The reality is that at most, Barack Obama would transfer 3.5 million jobs. Whatever money he uses to "create 3.5 million jobs" are taken from other parts of the economy.

When a business creates a job, hopefully that job expands the business. Then, the extra profit creates more jobs. That is job creation because it is fueled by profit. When a government "creates" a job, that job continues until the project is over. That job continues only as long as the government can afford it. The government can only afford it as long as there is someone to tax or someway to borrow it. That isn't job creation but rather job transfer. It is this ludicrous economic policy that makes me scared about the direction Obama will take this nation economically.