Δευτέρα, 6 Σεπτεμβρίου 2010

Jobs by the Government - the Joke's on You!



The communist or communist-tilted parties of Greece have proposed that the government can reduce unemployment by hiring more than 100,000 people in the public sector (Greece has a population of 11,000,000); this was dismissed by everyone here, including other left-wing parties and politicians, as a lame joke, a sign that, while many things are wrong, not all hope is lost yet for our Soviet-style economy to achieve a semblance of a functional, market economy. You can imagine, then, how taken aback I was when I found out that this kind of thinking resonates in the U.S.A. by reading this editorial in the New York Times, and particularly the following passage:

"... states and local governments shed 10,000 more employees in August, for a total of 282,000 lost jobs in the past two years. Rather than supporting the economy in time of trouble, states and localities are a drag on growth" (emphasis added).

So the editorial board of the New York Times considers that economic growth is spurred by the hiring of more civil servants: the government provides more "services", which the market has signaled (via the lack of demand) that it deems unnecessary; it has to increase taxation or borrow: that's a plan for economic growth! And suppose that demand is increased, and not just marginally (although I very much doubt that) and some growth appears to emerge - how will it be sustained? By the constant draining of the economy's financial resources through taxation, in order to keep up a useless bureaucracy?

Real, sustainable growth can only come through private enterprise. If this has not become obvious all through the years, I don't know what, if any, lessons we might have learned from economic history. Curbing entrepreneurship through high taxes or by giving out money, supposedly for jobs, but with the society getting nothing back in return, now that's a real drag on growth.

There are two things this blog will never tire of repeating:
a. Money is best spent by those who earn it, who assess their own needs and show their preference to goods and services offered - not by some wise, benevolent, or whatever, government.
b. It is bordering on the criminal to give people false hopes, particularly on something as crucial for their life and well-being as their jobs. Hiring by the government or with government money going to cover needs, that the market itself has rejected, is not sustainable in the long run. Even if the society, at large, were to decide that it would provide some form of welfare/ assistance to the unemployed or to the otherwise less fortunate of its members, as liberals apparently wish, it could not afford to ill-spend its resources on such glimmers of false hope. 

So, even a liberal or left-oriented approach is completely inconsistent with government hirings just for the sake of reducing unemployment: if you want the government to have money to hand out to those in need (something, which this blog does not subscribe to as a matter of principle, but can accept under some circumstances), then save the money.

And if you want increased tax revenues, then do away with all the counter-incentives to investment - high taxes, over-regulation and the rest. Ronald Reagan put the Laffer curve to the test - and, guess what, it worked - individual income tax revenues almost doubled during his Presidency, rising from $ 244 billion in 1980 to $ 446 billion in 1989!

Δεν υπάρχουν σχόλια:

Δημοσίευση σχολίου