Government Force or Market Forces? – What’s Better for the Job Market . . .
by Thomas Del BeccaroBy 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.”
Market forces, on the other hand, are far more efficient and are not a zero sum game. When the California businesswoman keeps her money, and responds to actual demands for her product, then she voluntarily hires a worker without the inefficient transfer of money from California to Washington to Alabama – less government carrying charges. Moreover, when market forces dictate the hiring of employees, it is based on sustainable demands, i.e. true consumer demands for large TVs. Government force, on the other hand, arbitrarily commands the production of products or services politicians think people may want – a process which is guess work and not sustainable.
The problem today, of course, is consumer and business demand is low. The Democrats want to “stimulate” demand through a tax and transfer scheme. The correct measure is to “grow” that demand and that can only be done through recognizing what is holding that demand back, i.e. a lack of money brought on by high taxes, high regulations AND the threat of even more in the form of the expiration of the Bush tax cuts, health care mandates, Cap and Trade and income tax surcharges in California (13% of the US economy) and nationally.
It stands to reason that if people are not buying now because they don’t have the money or are worried about the future, threatening with less money in the future (tax increases or higher regulatory costs) will convince them to spend even less now and in the future thereby exacerbating the problem for everyone.
In order to avoid such worse-than-zero-sum games, Democrats should stop enacting new laws and rely on the laws of economics. In other words, they should unleash efficient market forces by cutting taxes and regulations so people have more and have the expectation of more money. Only then will purse strings truly loosen and sustainable job growth occur.
If Democrats insist on government force, then a different type of consumer will exert their force in the market place of ideas – that would be voters in November 2010.
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[...] This post was mentioned on Twitter by Vince Humphreys, Michael Chavez, Big Government, Big Government, Patrick Henry and others. Patrick Henry said: Government Force or Market Forces? – What’s Better for the Job Market . . .: By all accounts, future job growth… http://bit.ly/81QuZQ [...]
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.” Nice.
No lefties it wasn't Ward Churchill.
http://www.cafepress.com/rightwingstuff
Well said. The idealistic plans of the big spending Keynesians cannot work, even when viewed in the light most favorable to their advocates.
The inconvenient truth that big government advocates will not mention is that these ill-fated stimuli are never executed with the textbook efficiency promised by Krugman, et al.
Every time Congress gets its hands on a spending bill, that bill is larded up with pork projects, cronyism, and special interest payoffs.
The debate over the effectiveness of Keynes's theories is entirely moot if Congress cannot implement Keynesian proposals without wasting enormous sums of money in the typical government fashion.
Given Congress's track record, why should it be trusted to take another stab at the Keynesian spending it has never gotten right before?
Every time an advocate of Big Government asks the taxpayer to put his faith in Keynesian economics, that taxpayer should vocally object that first he must be able to put his faith in Congress. If history is any guide, his faith in Congress would be misplaced.
HERE HERE!!!! Perfectly communicated! Couldn't have said it better!!!
But for some reason, I don't think NObama will understand it…
Any government program to "stimulate" the economy or create jobs is by definition temporary. History has show that these temporary measures have very little if any long term impact which means we spend a whole lot of money for nothing and at the end of the day we're left with a larger debt.
The best way to create jobs would be 1.) Announce to business that both the healthcare and cap & trade bills are dead to eliminate the uncertainty surrounding them. 2.) Make the Bush tax cuts permanent. 3.) Provide a short term tax cut for business investment.
Do those three things and the job market will turn around very quickly and it will not be a temporary bump. Of course Obama won't follow this approach because he has too many political payoffs to make.
Join the fight to take back America from an out of control government at http://www.GrassRootsNation.com.
It's amazing that story after story just never gets the fact that there's a private and a public sector.When the government taxes the private sector it's a net positive result for the tax collectors.When you tax the public sector it's a net negative for the tax collector.Government workers who get paid by tax dollars who pay taxes are useless.
Everything coming out of Washington from the 787billion dollar stimu-less to the new 300billion dollar jobs boondoggle is for the public sector.It's the federal government paying off useless taxpayer funded unions and accomplishing nothing for the countries economic mess.
Below is a passage from the Thanks for the Laughs blog entitled "Seven Million Missing Jobs, Thanks to Your Government's expansion."
"In this country today the combined federal, state and local governments spend the equivalent of 37% of GDP. For fiscal 2009 that will be 45% of GDP. The table below demonstrates the negative correlation between GDP growth and government spending comparing three periods over a 100 year span of time. In short, GDP growth rates subside as government spending rises, robbing the individual of the fruits of his or her labor."
Basically, the premise, supported by some very rough statistical snapshots, is that economic growth clearly slows as government spending expands.
But let's not let facts get in the way of our platitudes. It is only three hundred million lives we are toying with…
Lazy Jack
http://thanksforthelaughs.wordpress.com/2009/11/2...
It's all about power, money and control by the government. Jobs are secondary.
I'm not a college graduate, but it really doesn't take a rocket scientist to figure out that this is just another disaster looming on the horizon for this inept administration!! Obama needs to go back to college and take a course in economics 101!!!!
Come on people, this will work, just look at the success of the Soviet Union, oh, wait, it collapsed under it's own bureaucracy . See how successful it has worked in N. Korea, oh, hasn't worked there either, they're one of the poorest countries on the planet.
Creating a false demand for products or temp government jobs will not work.
Better yet go back to junior high. Basic economics should be taught in junior high and high school. But just try to get that one past the teachers union.
hit the nail square on the head!
Churchill was right. To put it more succinctly: you cannot tax your way to prosperity.
The communist island prison of Cuba turned out great. Katie Couric once brayed that every child in Cuba's schools has a pencil and notebook. Well I'm sold.
Seriously, liberals need to be institutionalized.
When President Reasgan gave us free trade, out closed market tax structure was left in place. Due to convenience, we had set up our tax structure on production as the administeringof it was available. Now we find ourselves near the end of our prosperity by taxing it to death through production tax. We need to change to consumptiontax, thus lowering the cost of domestic production and equally taxing all product including imports. FairTax.org
I hate the progressive movement. Americans lost all freedom when they started reporting their incomes to the federal and state governments.Imagine how things would be if people could keep what they earn. The founding fathers understood why they wanted limited government, it was to exactly avoid what we have today.The free market provided things through free choice. Government forces takes what it wants by force of gun and wastes it.Government has no business in the free market. Republicans unfortunately do little to devolve the damages that have done to freedom.