Job creation is the biggest myth in the economy right now. That is, those jobs “created” by the government. Job creation, when done as direct investment by the government in the government, is no more than a long term unfunded mandate on the local level. Here’s why:
Last night President Obama said, “Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.”
That’s right, jobs created in law enforcement, education and construction (roads & infrastructure). These are government related jobs! Gov. Chet Culver as well has been following the same logic as Leonard Boswell in Iowa and President Obama.
How will the schools pay for these new jobs when their budgets are being cut? How does the police force justify their budgets when the number of officers increased and crime did not? What will construction workers do when their projects are done? All they have done is place financial liabilities that cannot be avoided on state and local governments. There is no way around this burden and now either the greater population suffers because the state and local governments have to find the money to cover it or our state’s lose even more power and are dependent on the welfare of the federal government.
When the government makes a direct investment in jobs that add no economic productivity to the underlying economy it is impossible to turn a job created into more jobs created. When you make a financial investment, your intent is for your money to make you more money. This is the same logic. When the government stimulates job growth it should be creating jobs that will help create more jobs indefinitely.
In Iowa, the government has spent $1.5 billion on 5,336 jobs. These jobs were also in education, law enforcement and infrastructure. The state of Iowa already has had to make a 10% budget cut across the board. Now they’ll either have to find ways of supporting this increase they’ve accrued in annual costs or they will have to cut pay or layoff more to make up for it. And here’s the saddest thing of it all. Even if the state of Iowa or any area were to just lay off the people they hired from the stimulus package they are still stuck paying unemployment benefits. There is no way around this cost burden – this unfunded mandate from the Federal government.
We need to get away from creating jobs for the sake of creating jobs and start pushing private investment in the private sector. This could have been funds managed by private equity and venture capital to grow businesses in high growth industries. It could have been done through private investment tax incentives or simply doing away with capital gains taxes. There were so many ways the government could have created more jobs with that money and they have now borrowed from our children’s and grandchildren’s futures for unsustainable jobs.
The government needs to follow one rule of thumb: The government should NEVER invest money in itself for the sole purpose of growth and job creation. It’s like creating 1,000,000 widgets for a market of 500 people. It’s too much! We cannot let them be stupid with our money anymore. Time to stop the Stupid Spending! Vote these people out!
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