By all accounts, future job growth is going to be sluggish at best and we can expect double digit unemployment at least through next year.  The Democrats’ response is a $300 billion jobs program.  Many Republicans would rather rely on the private sector to fuel the recovery and job growth.  So what’s better, Government Force or Market Forces?

The use of the phrase Government Force is based on the nature of government programs.  The vast majority of the people would prefer to pay little or no taxes.  They are literally forced by government to pay those taxes.  As it relates to a jobs bill, the Democrats will tax one set of people or businesses (taxpayers) and/or borrow money (a delayed tax) and then transfer a portion of those collected/borrowed funds to other people or businesses.  In that manner, the Democrats believe they have created a job – or in today’s vernacular, saved a job.  But have they?

In the process of taxing some and transferring to others, the government force has taken money away from a business/taxpayer in California and perhaps given it to someone in Alabama.  That means the business in California cannot hire someone (or save a job) with the money transferred to Alabama – a type of zero sum game.  Actually, it is worse than a zero sum game because government always manages to waste money in the transfer and so Alabama is never helped so much as California is hurt.

Put another way, in an effort to fill Alabama’s bucket, the government forces the emptying of California’s bucket through tax and spend transfers.  Perhaps that is why Churchill famously said “We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

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Well, it’s hard to choose these days. The resurgence of Keynesian economics shows how fragile and insecure economists are in general. They are, of course, important exceptions. But while I have a special dark place in my economist heart for the New York Times‘ columnist Paul Krugman, I think today the prize should to economist Mark Zandi, of Moody’s Economy.com.

Zandi is constantly quoted in the media as the go-to-person on what do for the economy to recover. For instance, how many stories have we read in the Washington Post saying “nearly all economists support the stimulus,” with for only evidence a Zandi quote. Many. Who cares that Zandi’s model shows that the stimulus is working because the answer is built into the equations of Keynesian models. Here is a job for an economist: Take apart and demolish these reality-defying macro models once and for all.

The media loves him and as a result there are countless quotes of him out there about how we need more government intervention into the economy to jump start the economy, how passing the $800 billion stimulus bill would create jobs, how more spending programs are yet still needed.

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