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Our Government Jobs Addiction

The debate about the nation’s declining economy took an interesting turn this past week as liberals have begun arguing that cuts in public sector jobs are sinking any hopes of a recovery. That was the conceit of yesterday’s front-page story in the New York Times that claimed public worker layoffs are hurting the economy. This is an assertion that seems to contradict the focus of most public policy discussions in the past two years — especially during the debt ceiling crisis in 2011 — when most Democrats and Republicans agreed that government expenditures had to be cut and only differed over how much the size of the public payroll needed to be reduced. But with the Republican presidential candidate getting some traction by speaking out on the need to continue cutting back on the size of government, some liberals are pushing back and speaking not only about the cost to the public of cuts in services but also about the role of public sector jobs in inflating the country’s economic balloon.

In a limited sense, they are right, as the wages of government employees are part of the economy and when they disappear, it creates some unemployment as well as a decline in economic activity, not to mention pain for the families involved. But laments about these job cuts should not confuse us about the role the public sector plays in expanding the economy. Genuine growth, the sort of wealth creation that makes all the boats rise, comes from the private sector jobs, not government sinecures. Moreover, if the public schools and other government services are now to be merely seen as jobs programs, then the problems of our education system go a lot deeper than budget shortfalls.

The argument about how much role government spending plays in keeping the economy afloat dates back to the Depression and the heyday of Keynesianism. However, the idea that the creation of such public sector jobs creates permanent or sustainable growth is the sort of belief system that sustains bankrupt banana republics, not the United States.

We can reasonably debate just how big government needs to be, and there are cogent arguments to be made that assert the necessity of public services and the problems created when they are axed. But to speak of the schools or other departments as entitlements or as places to shift the unemployed is to take us down a road in which the government is assuming an outsized role in both our lives and the economy and where the private sector is bound to be negatively affected. A society that depends on the government not to just provide for vital services but for employing an increasingly large percentage of adults is one unlikely to be capable of ever digging itself out of an economic hole.

Just as important, dependence on government employment growth means an ever expanding budget deficit that sinks the nation in debt and makes the investment and savings that generate private sector growth and wealth creation less likely. That statist pattern is what we expect to see in Third World countries, where corrupt elites keep unemployment artificially low with vast government jobs programs that are a dual purpose form of stimulus/corruption. Such thinking is not only bad economics it degrades the entire idea of government and ensures that public services will be badly implemented. We are currently a long way from that, but the day our leaders start looking to public sector jobs as a way of solving our unemployment problems, we will have taken the first step toward an addiction to a form of spending that is difficult to break.

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3 Responses to “Our Government Jobs Addiction”

  1. joeo23 says:

    Is this not old fashion patronage which the NYT decried?

  2. pjcaper says:

    The jobs bill before Congress is about contracting private construction firms to repair roads and bridges. These firms do not volunteer their services. Generally, they expect to be paid. Perhaps Jonathan Tobin is planning on forming a crew of Associate Editors to repair stretches of Interstate Highway, gratis.

  3. RNFolsom says:

    Mr. Tobin's article includes the following statement: n"The argument about how much role government spending plays in keeping the economy afloat dates back to the Depression and the heyday of Keynesianism. However, the idea that the creation of such public sector jobs creates permanent or sustainable growth is the sort of belief system that sustains bankrupt banana republics, not the United States." nApparently Mr. Tobin has never read Keynes' "General Theory," or the later clarifications and extensions by Franco Modigliani and many other economists. n(Mr. Tobin is not alone in his misuse of "Keynesianism." "Keynesian" is widely misused, including by the WSJ's opinion pages.) nAs responses to the Great Depression, Keynes was appalled by Hoover's and FDR's tax increases and anti-business legislation. (Those errors may sound familiar.) nKeynes did say that if government couldn't figure out good ways to spend money, it should hire one group of people to dig holes and another group to fill them up again. But he was being sarcastic. Useful projects always are available. nKeynes favored government spending that was USEFUL, because it would facilitate economic growth initially, AND in the longer run. nCurrent example: In Spring 2011, very heavy rains overwhelmed the Mississippi river and flooded adjacent land, and threatened to flood more. To prevent or at least alleviate damage to towns, the Army Corps of Engineers opened some levees and flooded farmland in order to save some downstream towns. As a short run action, that made sense because the towns were more valuable than the farmland. nBut since then, as mentioned in a Wall Street Journal story (unfortunately I can't recall either the title or even the approximate date), the ACE has been restoring levees — to heights LOWER than they were previously, Meanwhile, our country is full of unemployed construction workers and construction equipment. nSpending on levees to make them higher and stronger than previously would protect precious farmland and towns. And the Mississippi is a major transportation route for many commodities and products, in both directions, so it may need dredging also. Restoring and improving it would be useful, initially AND in the long run. n nRoger Folsom

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