The Fallacy of Government Job Creation
Mitt Romney keeps reminding us that he knows how to create jobs. Given that we already have an egomaniac in the White House who keeps insisting that his big-government programs will create jobs — even though he’s never created a single private-sector job in his life — Romney’s claim makes me a bit nervous.
If by “creating jobs” Romney means instituting more government policies to “help” small and large businesses succeed, beware. That’s the kind of help that has continued to destroy what is left of the American economy.
On the other hand, if by “creating jobs” Romney means that he’s going to dramatically cut taxes, eliminate as many business regulations as possible, stop printing and borrowing money, and clamp down on unions, then he misspeaks himself. Such actions do not create jobs; they get the government out of the way so companies can create jobs.
The difference isn’t as subtle as it might seem; in fact, it’s huge. The truth be known, one approach is the exact opposite of the other. There are not many things in this world of which we can be certain, but two that we do know for sure are:
- Government has zero ability to create private-sector jobs.
- When not burdened by government taxes and regulations, private industry always creates jobs, even if individual companies end up going broke along the way.
I’m not letting Rick Perry off the hook here, either. I want to hear what he has to say about creating jobs in the upcoming debates. Does he believe Texas is the nation’s number-one job creator because of government’s involvement in the economy or because, as governor, he made a concerted effort to keep government out of the way?
To be sure, it’s a good sign that Perry said, in his speech announcing his candidacy for the Republican nomination, “I’ll work to try to make D.C. as inconsequential in your life as I can.” But the big question is, can he be trusted to hold to that pledge? Unfortunately, we have no way of knowing unless he becomes president.
I should also mention that two of the biggest roadblocks when it comes to job creation are unemployment benefits and minimum-wage laws. If you reward unemployment, you’re going to get more unemployment. If you force employers to pay higher wages, they will simply stop hiring.
Nancy Pelosi and Barack Obama can pretend they don’t understand these two self-evident facts of life, but, trust me, they do. So, why would they continue to push for more unemployment benefits and higher minimum wages? Because both issues are really about redistributing wealth, nothing more and nothing less.
I believe we could have near full employment tomorrow if we just put an end to unemployment benefits and minimum-wage requirements. There are “Help Wanted” signs hanging in store windows all across this country. The problem is that people know they don’t have to take those jobs, because they have a safety net if they just stay home all day and watch old NFL reruns.
But when the safety net runs out, many do lower themselves and sign on to “menial” jobs at much lower wages than they believe they deserve. And when they do so, they immediately declare themselves to be “underemployed.”
As I’ve stated in previous articles, the whole notion of underemployment stems from our entitlement mentality. Anyone who says he is underemployed is implying that he is entitled to a higher-paying job.
In truth, however, he is entitled only to what an employer is willing to pay him in a free market devoid of government coercion. And he is also free not to accept any specific job offer from any specific employer at any specific wage.
Bluntly speaking, America needs a financial enema — and, thankfully, it’s already started to get one, albeit against its will. All the excesses of the past forty-plus years — including and especially artificially high wages — need to be flushed out.
Warren Harding quickly got us out of the “forgotten depression” of 1920-21 by letting the market cleanse itself. Harding cut the government’s budget by nearly 50 percent between 1920 and 1922, slashed tax rates across the board, and reduced the national debt by one-third.
FDR, by contrast, got us into the safety-net business, and not only prolonged the Great Depression by a decade, but set us on our unsustainable path to Entitlement Hell.
If a new Republican president follows the Harding formula, perhaps we can begin to rebuild America in the coming decades. But if he believes it’s the government’s duty to create jobs, look for the economy to continue to get worse and Entitlement Hell to become even more deeply entrenched.
Of course, if Barack Obama is reelected … don’t ask.
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Copyright © 2012 Robert Ringer
ROBERT RINGER is a New York Times #1 bestselling author and host of the highly acclaimed Liberty Education Interview Series, which features interviews with top political, economic, and social leaders. He has appeared on Fox News, Fox Business, The Tonight Show, Today, The Dennis Miller Show, Good Morning America, The Lars Larson Show, ABC Nightline, and The Charlie Rose Show, and has been the subject of feature articles in such major publications as Time, People, The Wall Street Journal, Fortune, Barron's, and The New York Times.
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Two quick points before leaving on a wine country tour:
1) If a person is a politician it’s safe to bet that his or her only plan is to gain more power over the rest of us. The only difference is in ‘how’.
2)The safety-net does not provide safety. It’s simply a tool for capturing slaves.
Gill
gill.Oteen07041776@gmail.com
Another point, as the rest of the group is not quite ready to hit the road:
Mitt is the same klown what justifies his support for massive gum’mint intrusion into his constituents’ lives via romneykare by claiming this a states’ rights issue. I thought that the Civil War settled by force that states do not have the right to violate OUR Constitution, else slavery and segregation might still be legal in some.
Gill
Personally, I don’t have to “wait” until Tricky Perry is elected President to know if he’ll keep his pledge or not; just like, I didn’t have “to wait until it passes to see what’s in it” vis-à-vis “The Health Care Bill” (aka The Death Care Bill).
One can easily extrapolate that which shall transpire under a Tricky Perry administration, just as one can, with the help of a little logic, figure out what will take place under a Ron Paul or Gary Johnson administration.
I know, almost without a doubt, that Ron Paul will do what he says he’ll do, because he has an almost unblemished record. Ron Paul is that ever-so-rare, true believer; Moreover, I can observe the individuals that Ron Paul associates with, e.g. Lew Rockwell( i.e. another true, uncompromising believer).
One look at Tricky Perry’s record in Texas tells me everything I need to know; and one look at whom he associates with–e.g. Dave Carney— and my suspicions are confirmed.
You see, when that quisling, Rick Perry, speaks or works to pass a Texas law, then you have to translate his lies and half-truths into the unabridged truth. On the other hand, when Ron Paul speaks, then what you see is what you get. Ron Paul never pulls a fast one behind the backs of voters.
When Rick Perry tickles your ears with a statement such as “I’ll work to try to make D.C. as inconsequential in your life as I can.” What he really means is “if you vote for me, then I’ll provide you with change that you can believe in.” Ricky Perry—like Obama— will never provide any meaningful “Change,” unless it’s a change for the insider elites.
As far as Mitt Romney goes, how can one even pretend to have an intellectually honest discussion that RINO? If you want to be snookered by Romney’s lies, then why not ask John McCain to run again so we can listen to his croaking?
Speaking of Romney’s croaking lies, did you here what he excreted out of his mouth over the weekend about the Tea Party? —–How he “supports Tea Party Values?” Yes, it appears that he’s now best friends with the Tea Party.
Pssssst. Don’t turn you back to him…..
By extrapolation, “The Fallacy of Government…. “..Anything..” Except for the maintenance of a national defense posture and the maintenance of a fair legal environment, the gubmint has no business sticking its nose into anything that private individuals or companies choose to pursue.
In the “old days,” if the bureaucrat density got to high, the rugged individualist simply moved 5 miles west. There is no-more “West” towards which to move. Pockets of lower coercion exist, but that is just a relative term for comparison. Any coercion is a deal-killer.
Analyze the throwing of a ball straight up into the air. The initial speed is high. As the ball continues upward, gravity begins to slow that speed. Ultimately the ball reaches the apogee and reverses direction. That is precisely what has happened to the American experiment. Just substitute government bureaucracy for gravity.
Tex, gravity is safer and much more predictable. It never changes, never gets any worse.
As soon as a politician mentions creating jobs or improving the economy, they lose my attention and all credibility they may have previously gained. Government has no ability to do either nor any right to even try.
The ONLY thing government can do is get the hell out of the way and let problems like these fix themselves. The free market will always repair itself, given the opportunity.
So far, Ron Paul is the only potential candidate who even comes close, in my opinion, to having a worthwhile platform. He has a proven track record of making sense and not abandoning his ideals for the next new shiny thing he thinks people will vote for.
I like the guy and hope he doesn’t run out of steam this go-around. I was sorely disappointed last time, when it seemed like just when it was time for him to ramp up his campaign, he went silent.
A quote from Winston Churchill: “If you have ten thousand regulations you destroy all respect for the law.” And lose all respect for the goverment. Local, state, and federal regulations are strangling us. Even down to regulating lomonade stands.
All government entities in the name of looking additional revenue to spend on their pet projects are choking off innovation and inventive ideas. If you want to start a business today you have to make sure you comply with the miriad regulations.
As I’ve stated in previous articles, the whole notion of underemployment stems from our entitlement mentality. Anyone who says he is underemployed is implying that he is entitled to a higher-paying job.
Robert, you have been consistently wrong on this point. Allow me to correct your thinking. Underemployment means that a person can only find part-time work when he wants full time employment, or works at a minimum wage job when he has a history of much higher earnigns. No one is suggesting that government pay him the difference, and this is where you are confused.
I recently read of an engineer in Silicon Valley who accepted a job at target making $9 an hour. That’s the only job he could find. I would say that is definitely underemployment. Last tax season I made $8.50 an hour where I used to make $65 to $85 an hour. I do feel quite underemployed, thank you.
Am I entitled to higher pay? No one is suggesting that. The point is, and the point you have utterly missed, is that the Democrat-ruined economy has produced substantially higher unemployment than is reflected in the official tallies, due to the phenomenon of underemployment. Because of it, the “official” unemployment of 11.9% here in California is really more like 23%. You cannot gauge the true unemployment picture without taking this into account.
Underemployment
Happy Serf-day, Stogie:
The term “underemployment” is best understood according to context. I think both you and Mr. Ringer make excellent points.
In fact, so far, all the posts are well written.
Stogie:
I’m going to break “the customer is always right” rule and say, with all due respect, that you are the one who is confused here. Or, looking in the mirror, perhaps I should say that I have again failed to make my point clearly enough.
A person’s history of earnings is irrelevant to what the free market is willing to pay him today. If you are unemployed, you are unemployed – period. If you are working at a lower wage than you used to make, you are making what the market thinks you are worth today – period.
If it makes you feel better to refer to it as “underemployed,” fine. But the fact is that the marketplace rules. I wish I knew a better way to say it, but I’ll work on it.
In any event, thanks for your input. Quite frankly, it is a far more interesting subject to debate than I realized.
RJR
peel another layer or two ; it aint the demms ; libbs ; lefties ;free thinkers; hard right ; libertarins ; it is the incsters ; banksters and broksters ;
1. incs want war ; it profits them
2. banks finance wars
3. the fed profits every time treasury gives them an iou for some cash [ us bonds for dollars the fed prints from nothing but paper and ink]
4. banking and brokering families control the fed and hence the economies of the usa and most of the world ; i can think of 5 countries only that don’t have private central banks as parasites on their respective economies ; read that as their cits …you n me
demand the end of the fed and the end of issuing new us bonds [ debt ; chits ; promises that you will pay with income taxbux ! ]
email 2 sens and 1 rep before you email rj one more time !
Re: Underemployment.
Robert,
First, you are right. I live next door to a family including a couple who are both able bodied adults, one child, and one elderly grandmother. The two able bodied adults are unemployed, but could easily be “underemployed” at a low wage job.
Second, like many conservatives (including myself), you are wrong. Continuing Stogie’s point, the government and the distortion of the economy has created very real “underemployment.”
For example: I took a job as a contract civil engineer for $10/hr. Was I underemployed?
Yes: and the proof is that I trained the quota quack who took that job. Quota quack earned $32/hr plus benefits for her two income household while my family lost its one $10/hr job for a few weeks while I searched for another underemployed position. This is real underemployment caused by government.
Over and over again, I have worked for $7.5, $10, and up to $23 per hour – all clearly “underemployed” because as soon as the right quota quack showed up she/it earned $15, $25-43, or $54.5 for the same work. (Often without experience.)
Your comments regarding “underemployment” while real and legitimate to an extent, fails to address the very real distortion in the economy caused by government.
This is nothing new. My grandfather hated FDR: not just for the starvation, or nearly dying, or losing his teeth. I remember how he complained bitterly of being accused of being lazy and stupid for being unemployed at the height of the depression. While grandpa was a hard core conservative, he held very little hope we would survive the Left precisely because he predicted that those in power would broadbrush everyone in the labor market.
Making that mistake will cost this country more than one old man; ultimately it will destroy the country because people will learn they must either bow to the Left or starve.
In my case, as with my grandfather, all I need is for government to fail, and I will succeed. Thanks to government, however, I have been unemployed and underemployed many more times and for far longer periods than would have happened otherwise without the government’s “help.”
Please think about it….
p.s. According to Obama I am currently over employed, btw. If my taxes were lower I would be living in a safe neighborhood where kids do not play within sight of drug dealers and where street walkers haunt the night. Instead, to pay the taxes, I live in a cheap apartment next door to a family on the dole in a complex that is half Section 8.
Personally, if they came to take me away in a cattle car it would only surprise me if any of my minority neighbors failed to jeer and hurl insults …
Just sayin…
all good points ; secondary to the loss of wealth in the economy by sending all our income taxbux to the fed a private bank cartel [look it up : inc in del. ]
uncle sam borrows all spendy by giving fed us bonds for $
uncle then takes taxbux and tries to pay the us bond debt ; it doesn’t work ; uncle is too loose with the credit card that selling T bonds represents ; you are the patsy ; your taxbux go to the citizens debt ; the national debt ; if uncle printed us dollars instead of us bonds …no f………erocious debt would accumulate to eat up all txbx …..
end the fed buying us bonds : a change we can thrive with
Years ago, during the recession of the early 80′s, I overheard a man say he had a bachelor’s degree–and he was driving a city bus. He didn’t say he was underemployed, but it was certainly implied.
The word “unemployed” is an adjective, a descriptive state of being.
From Webster’s dictionary–1.”employed at a job that does not fully use one’s skills or abilities, 2.employed only part-time when one is available for full-time work,3.not utilized fully, as machinery or facilities.”
Look it up. There’s no “entitlement” implied or expressed.
Employed, unemployed or underempolyed are all stages in life, snapshots in time. The best way I’ve found for someone to prepare for the any of these stages is to read and put into practice, The Richest Man in Babylon – The Success Secrets of the Ancients, by George S. Clason. Publisher – Signet / First published in 1926 / ISBN 0451205367, and The Way of Wealth by Benjamin Franklin. Consider the wisdom of these great works.
This debate on the definition and usage of “underemployed” reminds me of the debate individuals used to have when they first heard or read the phrase “pent up demand.” At the time, it was vehemently argued by some that the phrase “pent up demand” was not even a legitimate economic descriptor. I suppose you could also argue in the same vein that “underemployment” should not be employed as a appropriate term in any given context.
Frankly, the egg-head in me perfectly understands the term “underemployment” as it is applied by other egg-heads when they are discussing the U1, U2, U3, U4, and U5 U.S. employment statistics.
I also understand what Mr. Ringer is getting at when he used the term, and I cannot see any flaws in his logic pertaining to his argument, commentary and opinion.
“Underemployment,” at least as I understand it, is a term that has dual usage in the English language including characteristics that allow the term in question to be used as a means of measurement. Maybe it sounds crazy, but I understand—and appreciate— the well argued positions put forth by everybody thus far.
In fact, as a topic of discussion, employment, unemployment and underemployment is very interesting to me because the lack of employment is going to be the hot button ( aka panic button) issue being pushed in the upcoming debates and Obama’s Presidential address to the nation..
From here on out folks, it’s all going to be about the private and public sector economy, war, bank failures, a volatile stock market, a weakening dollar, inflation and the lack of “well paying” jobs, jobs, jobs, jobs…….
Soon, tempers are going to flare, threats will be made, and people are going to totally lose their composure.
It’s going to get very painful……
Dissecting whether or not someone is underemployed is all well and good, but the bigger issue is how to stop the left from decimating the rest of the economy and the country.
I found this gem that I think many of Robert’s readers will find instructive:
“Confrontational Politics” by H.L “Bill” Richardson, which you can get by visiting the Gun Owners of America site:
http://gunowners.org/store/confrontational-politics
Underemployment CAN be created by government, through increased and excessive taxation, new and excessive regulations, and the creation of waves in an economy (by the manipulation of interest rates, for example.)
Imagine there are 10,000 manufacturing engineers in the U.S., but then the federal government decimates the manufacturing industry (through taxes, reg’s, etc.) and so hundreds of manufacturing engineers are laid off. If a few weeks later some of them can be found working at Macdonald’s, it’s certainly valid to say they are underemployed relative to the value they could be creating (for that society and themselves) if it weren’t for government interference. You’re letting the government off the hook by not counting them as casualties of excessive government.
A country could even be in a condition of “full employment” (with, say, 2% frictional unemployment) and yet be currently under-utilizing the skills of its citizens, perhaps because gov’t is now punishing businesses and high earners. If you are a highly skilled author, and the government won’t allow you to publish, you’re likely to be unemployed — or if you have a GOOD work ethic — just UNDERemployed. Yes, it’s possible you would eventuallu find some other way to create an equal amount of value and thereby earn just as much, but that might take quite a while and/or writing may have been your most valuable skill.
When government suppresses economic freedom, it suppresses employment. But actual UNemployment is usually not the only result, especially not for those citizens with a good work ethic.
Yes, if it weren’t for minimum wage laws and unemployment compensation, we’d have a lower unemployment rate. But if government were non-the-less punishing businessmen and high earners, we’d still have underemployment and less prosperity overall — even if we were at what the government considered “full employment.” This is why “underemployment” is a valid and useful expression, ESPECIALLY for those who believe in economic freedom.
Most “business related” entites the govt touches turns rotten; e.g.: USPS, Fannie and Freddie Mac, Medicare/Medicaid, Amtrak, Soc. Sec. and the taxpayer keeps getting soaked.
When I hear a politician talking about job creation I shake my head in disbelief. The only jobs govt can create has to do with defense spending (bombs and bullets) or infrastructure (road and bridges) with the latter beginning at the end of a shovel – mostly an uneducated workforce and most likely $10-15 per hour to an illegal hispanic. While I regret sounding xenophobic or casting a stereotype, that is the reality we face. Because if a worker is legal, a liklihood exists they are harboring or supporting illegals. I only say this from experience as my profession interacts with the contruction industry and I hear of the loopholes and work arounds of the imperfect eVerify system on a continuing basis.
Alexander Graham Bell and Henry Ford created jobs. Bill Gates and Steve Jobs created jobs. Jeff Bezos (Amazon) and Howard Shultz (Starbucks) created jobs. Ray Kroc (McDonalds) and Sam Walton (WalMart) created jobs. The best thing govt can do is stay out the way of the business of “creating jobs”.
“Because both issues are really about redistributing wealth, nothing more and nothing less.”
Actually, a little more: 1. Increasing financial dependence on government; 2. Decreasing prosperity, because this leads to decreased political independence.