News & Analysis
What is a Government Job?
The Myth of Job Creation ... The headlines from the last presidential debate focused on President Obama challenging Mitt Romney on issue after issue. There was a less noticed, but no less remarkable, moment when Mr. Obama agreed with Mr. Romney on something — and both were entirely wrong. – New York Times
Dominant Social Theme: Government is naturally the most dynamic part of any social entity.
Free-Market Analysis: Can government "create" jobs? Free-market types believe it is impossible for government to generate employment, though politicians claim various kinds of job creation all the time.
The New York Times thinks it can. Most of the time, analysis turns on government printing money and providing tax breaks. This is supposed to benefit the private sector in turn.
The Times's novel idea is that one can dispense with all this economic mumbo-jumbo. Government jobs, we are informed, are created by mandate. They are in front of our collective noses. Here's more from the article:
The exchange began with a question about the offshoring of American jobs. Part of Mr. Obama's answer was that federal investments in education, science and research would help to ensure that companies invest and hire in the United States. Mr. Romney interrupted. "Government does not create jobs," he said. "Government does not create jobs."
It was a decidedly crabbed response to a seemingly uncontroversial observation, and yet Mr. Obama took the bait. He said his political opponents had long harped on "this notion that I think government creates jobs, that that somehow is the answer. That's not what I believe." He went on to praise free enterprise and to say that government's role is to create the conditions for everyone to have a fair shot at success.
So, they agree. Government does not create jobs ... Except that it does, millions of them — including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney's old job) and congressmen (like Paul Ryan).
First, the basics. At last count, government at all levels — federal, state and local — employed 22 million Americans, with the largest segment working in public education. Is that too many? No. Since the late 1980s, the number of public-sector workers has averaged about 7.3 for every 100 people. With the loss of 569,000 government jobs since June 2009, that ratio now stands at about 7 per 100.
You see? "Teachers ... police officers ... firefighters ... " these are all "job" holders. And yet ... Perhaps it is time to define "job." Society cannot function without productive workers to grow food, transport goods and provide useful services. But the other part of a "job" is its capital-raising function.
In a private marketplace, a job pays for itself. If there is no one willing to pay, the "job" won't get done. But government jobs sever the link between utility and reality. Who is to say whether it is better to have more teachers ... or even more firefighters?
The only real way to tell is to see who is willing to pay – voluntarily. This is key. If there is no demand, then the job obviously is one for which there is little or no need.
Of course, large private entities can create jobs for which there is no obvious need but that is a different matter altogether. These are market-responsive entities.
If management deems a job important for which there is no immediate need, so be it. That's a lot different than the public sector merely creating a job based on the desires of various pressure groups, unions, etc.
The article states that, "Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill."
Again, there is confusion here between utility and reality. Jobs such as those dealing with "environmental protection" actually act for the most part as a drag on the economy.
This is because various interest groups have self-interest in defining "environmental protection" in certain ways. Much of today's protection – and jobs – revolve around reducing the amount of carbon dioxide in the air.
But absent government funds, would people really be willing to pay for removal of carbon dioxide? If people were given a choice whether to pay willingly out of their own pockets, the chances are very slim that such jobs would be funded.
Many jobs in government are similarly questionable. The broadest perspective informs us that a power elite is driving the meme of government jobs. This is because the powers-that-be utilize mercantilism to control society and the more invasive and ubiquitous government is, the more control it offers.
It is true, of course, that cutting government jobs would be difficult during a time of economic trouble. But in a sense this is an illogical argument. There are plenty of things in life that seem difficult to do but that doesn't mean they ought not to be done.
Most government jobs would not exist – at least not in their current form – if exposed to the competition of the marketplace. The rest would probably be radically reshaped in terms of goals and outcomes if the discipline of the "Invisible Hand" were brought to bear.
Conclusion: Essentially, the argument that government cannot create jobs is a correct one. Government jobs exposed to the reality of the private sector would look far different than they do now. There would also be far fewer of them. Perhaps none at all.
Posted by Hoss on 10/22/12 11:28 AM
Each government job comes at the cost of two or three real jobs.
Posted by kapie9969 on 10/22/12 01:11 PM
A lot of government jobs pay better than the public sector. I once had a conversation with a guy in California who pointed out that the state and federal government were the biggest employers in his state.You can see that ca. is broke and broken.
Ca. is a good example of all the bad things associated with uncontrolled immigration and out of control spending on social programs.Over zealous environmental thinking and poor choices on energy thinking.
Posted by Porky on 10/22/12 03:59 PM
There seems to be this popular idea that somehow govt can create jobs. Bull. The private market creates jobs! The govt can no more create jobs than humans can live without oxygen. Govt can & does 'hire' people, but I can assure you these are not 'jobs' that would be sustained in a free-market.
Govt's whole approach to unemployment is upside down. Quoting author Robert Ringer: 'To improve the well being of people the emphasis should be on full production, not full employment. If full employment was the horse instead of the cart, govt could just put people to work building pyramids in the Mojave desert. After a few years it could have them torn down and start all over again. Obviously this would accomplish nothing, but you would have full employment. The point is that merely creating jobs does not produce the wealth that people desire. Post WWII communist Russia & China had full employment, but the people had no wealth. Worse, they had no freedom. One thing is certain, the closer you get to full production, the closer you get to full employment'.
Aah Ha. So here we find the key to understanding this crucial issue: 'full production'. Govt employees do not give us full production, not by a longshot. For every dollar spent in the private section, employers & society get the benefit of $1 of production. My rough estimate for govt employees is that for each dollar spent, society probably receives on the order of perhaps 10 cents in production - a miserable pay back.
The bottom line: get a govt job if you want to ride the gravy-train.
Posted by seer on 10/22/12 09:57 PM
This shows how a popularity debate has so many erroneous statements as evidenced by the fact-checking that goes on after the event. Governments can create jobs and often they do so with real tokens collected from the masses and often they borrow tokens and lately the Central Banks have created tokens to reward those who perform these jobs.
Since the USA does not have a "free market" economy and perhaps has not had one since before the first protective tariffs were enacted shortly after independence, the article must not actually apply to the USA.
Austerity measures such as those imposed on Greece do not work as they only shrink the economy more and cause more austerity to be invoked which lessens taxes and it becomes a vicious circle.
Economics is a man made game. The rules are man made, usually by elitists who control the government. The rules tend to change over time and often old ideas become popular again.
The object should not be that of a monopoly game as we saw how ruthless a man such a John D. Rockefeller was in pursuit monopoly. Once he reached a tipping point NOTHING could stop him. Does free market capitalism exist anywhere?
Posted by Danny B on 10/22/12 11:30 PM
"The bottom line: get a govt job if you want to ride the gravy-train."
Click to view link
GOV may not actually be able to create productive jobs but, GOV can bring a measure of prosperity by screwing the rest of the world.
Click to view link
The R.O.W. is starting to catch on. If they can't be easily divided, they may be hard to conquer. The gulf states may be working together;
Click to view link
Should the screwing come to an end, a lot of GOV jobs will to.
Posted by whatevertrevor on 10/23/12 06:33 AM
Mm-mm. Last time I looked it was machines that were doing the "producing", and only a handful of people, unless we go back to the artisanship of the pre-industrial revolution?
How would a true free market and today's machine world look? Probably goods would costs next to nothing but people wouldn't have much either which is OK I guess.
Reply from The Daily Bell
A real free-market would support a larger working population, it seems to us ... It would simply evolve that way. Families would support each other.
Posted by CelticFire69 on 10/23/12 06:37 PM
One of the issues with the mercantilistic model is that many "private" jobs are existing only due to government contracts or regulations. This is a huge burden that is typically not recognized. As far as the "machines" comment, we have no idea where automation would or would not go in free market. We do know that what we have has been directed and subsidized to fit an elite agenda, not market demand. Monopoly fiat money by its nature creates short term one size fits all solutions. I suspect a free market would see a tremendously different technology direction and deployment. Large scale production would have a much more limited application and deployment. Long term repairable goods in many cases would probably again see their advantages return without the market manipulations.Who knows, we may have an opportunity to yet to see that set up.
Posted by whatevertrevor on 10/24/12 07:31 AM
Fair enough. I had to go to an auditor the other day and the only reason was because of a government regulation. I don't know about the USA but auditors where i am are not cheap. If I had had a choice, I wouldn't have gone.
So, I was thinking how an entire industry survives from the laws sgined into agreement by politicians and their bureaucracies.
I suppose a true free market ultimately means personal power. Having 100% power over your own life, which nobody really does anymore (including the elite). In that regard I dare say the machine world would look very different and not necessarily worse.
Food for thought though.