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Source link: http://archive.mises.org/8411/government-projects-do-not-create-jobs/

Government Projects do not “Create Jobs”

August 19, 2008 by

State projects may create jobs, writes Isaac Morehouse, but the proper question is, do they create wealth? The state could easily reduce Michigan’s unemployment to 0% by mandating that every unemployed citizen shovel dirt on some state project without pay. Employment alone is not a good indicator of economic success; overall wealth is. Even if state spending can “create jobs,” creating jobs alone does nothing for our state’s overall prosperity or standard of living. FULL ARTICLE

{ 39 comments }

Serious Bummer August 19, 2008 at 9:12 am

Serious Bummer Dude!!!!
I thought the 5 million jobs to be created by BarakJohn McObama in alternative fuels would lift us out of the current non-recession, non-panic, non-depression.

robpo August 19, 2008 at 11:00 am

And in the end we would still have crappy roads.

If we kept that $1 billion in private hands, would every citizen be willing to “donate” $100 to maintain the roads? The roads do need to be maintained. I don’t think most people would be willing to give $100 for this purpose.

Another thought while reading this: I hear from right-wingers constantly that giving more tax breaks to wealthy people is good because they are the ones who create jobs, thus create wealth. Why is that much different than the government creating jobs to fix the roads? In essence, creating wealth?

I think its different in the sense that I would rather have the money stay in private hands, just on principle, but creating jobs is creating jobs. And the roads need to be maintained, I think this is more important than trying to argue government jobs aren’t as valuable, simply based on principle or ideology.

A job is a job, it creates wealth because a person is getting paid and so is able to pay their bills and buy stuff and carry on their life. Low paying jobs exist in private and government empolyment. Frankly, I wouldn’t be surprised if government pays more than a private enterprise for the same job.

Book 'em Danno August 19, 2008 at 12:19 pm

robpo,

A government mandated job is one created out of a system that is most likely to act economically irrational since it is removed from the price system: the process in which prices and exchange evolve out of property. Economic calculation is only possible in the market. It follows that communication of the approximate desires of individuals and rational economic coordination are exclusively market features. Whatever you might think of a high paying government job there is in its nature a social disconnect. How do you know whether the job should exist and what form should it take? This is what the market answers.

Eric August 19, 2008 at 2:16 pm

In the government sector, many definitions are twisted to justify actions or shift blame. To the government, a job is when a worker collects a paycheck on a regular basis and the employer pays payroll taxes.

But can a labor transaction be called a job if there is force involved? As the author points out, slave labor would not be considered a job. But what of other forms of force. What if I hold you prisoner and make you pay someone to do a task you don’t want done? What if I force you to pay for a product you don’t want? Are you still an employer who has created a job?

Since the government uses force to acquire the resources that it uses to create jobs, then I would maintain that this is not a very useful definition of a job.

As with all libertarian ideas, the guiding principle is force. Therefore the term government job could be used in the same sense as a stickup job or a bank job. Of these two, I would say that the IRS and the FED are prime examples.

Dick Fox August 19, 2008 at 5:19 pm

We must never lose sight of the fact that the government is simply another actor in the economy. If the people of a community believe that they should poll their funds to improve roads and select the mayor to manage the work is that any violation of rights or economics?

Rather than approach this as a question of fixing roads or going to a movie we must insist that the government compete in the open market just like other economic actors. Government should not be allowed to use its coercive powers except as authorized by the people. Government creates problems when it acts contrary to the will of the people.

So the bottom line in this discussion as in most such discussions is freedom and liberty, personal freedom and economic freedom, free citizens and free markets.

robpo August 19, 2008 at 5:26 pm

Good comment Danno. I had to digest that a while.

My sticking point is the concept of rational vs. irrational. I agree with what you’re saying, except I don’t have trust that a market always acts rationally, in particular labor markets. My first thought is that a market must act rationally because its an organic process… but a factor like illegal aliens makes that seem erroneous. A person can’t live on $2 an hour, no American would take that job, so market forces should dictate that wage be increased to find a worker. Well, an illegal will take that job and be happy with it – I think thats a warping of “normal” market process. Thats one example. Another, I think more common example, is the fact that the employer-employee is not a “normal” exchange of free will between market players. The employer clearly has the power and more control in that relationship. We have things like a minimum wage and labor unions in response to unfair market practices by management, history is full of examples where companies take advantage of workers. It is not a free exchange, so I don’t see how normal market rules can be applied.

“How do you know whether the job should exist and what form should it take? This is what the market answers.”

Indeed, the market says roads need to be repaired. Government is the one tasked to do the repairs. I agree government isn’t under the same “economic calculation” as the market, but the job needs to be done. I consider that more important than concern for “social disconnect”. The connection still exists to an extent because government does pay somewhat accordingly with common market wages. They could pay a ditch digger $40 an hour if they want, they don’t because its not a prevailing wage for that type of work – government still has a social connection, though not controlled by normal market forces.

A job is a job Eric. Slave labor, prisoners, forcing one to buy something – are not jobs, they are not a person collecting a regular paycheck.

I disagree that taxes are a way of using force to take our money. Taxes are our membership dues to live in this great country. It can be debated how much tax is too much or too little, but I think the meme that taxes are a form of government “force” or stealing our money is nothing more than a political talking point- hollow and only meant to stir emotions.

Nate J August 19, 2008 at 5:43 pm

Dick Fox:

“The will of the people.”? Seriously?

What if I’m not on of the people who wills it?

Marcello August 19, 2008 at 6:10 pm

@robpo

Your presumption that people will donate to private roads are ridiculous. It is a service much like railroads and airlines.

How dare ‘illegal’ immigrants come and try to take every opportunity to better their lives. That $2/hour was worth a lot more before unions and minimum wage laws helped to inflate the real price of labor.

YerMawm August 19, 2008 at 7:36 pm

Forget maintainance for a second. How would these things get built in the first place without the government there to dictate what gets built, and where. How would the market act to ensure that services requiring some type of physical transport medium get built where, and when they are required? How would it deal with the limitations of the quantity of these media that can exist in a given place/time? Could it?

I’m talking about roads, rails, plumbing/sewers, phone lines, power lines, and other service type items that are necessary for present day society to function.

There really isn’t much competition in such services, unless we build roads or rails everywhere, bring multiple sewers, power or phone lines into every home.

Utlimately someone owns these mediums of transport, and communication. My phone company has a monopoly on the wires to my house. How would competition, and market forces be enabled in this type on environment without running another phone companies’ wires to your house? Wireless is not the answer, since somebody owns the cell tower you are talking through.

Who would ensure the Interstate in California connects to the Interstate in Arizona, and the roads from the sleepy little berg in the hills connects to the highways that connect to the interstate?

There may be multiple railroad companies, but only a certain number of rails on which trains can travel. The owner of the tracks has a monopoly on that particular route. Are we to run tracks, roads, phone lines, sewers and freeways everywhere to promote competition, and enable market forces? Should the government be involved? If so how much?

Not taking a side here, just looking for some insight, and maybe some articles that might delve into this a bit deeper.

Thanks

Michael Arko August 19, 2008 at 8:32 pm

I think everybody is missing something here, including the article’s author. The fact remains, when the government spends money, it creates no wealth — it merely reallocates the wealth of others. No amount of logic will get around that basic truism.

However, the presence of roads, utilities, or other infrastructure, whether built by government or by the private sector, grants access to entrepreneurial objectives that might not otherwise ever have come to the fore. A libertarian purist may argue therefore they never should have. But an impartial reviewer cannot realistically ignore the fact that the road gave the retailer, the farmer, the artisan, or the producer of other goods or services access to potential buyers that otherwise could not have been reached. With no road, there would be no commerce as we understand it today. Therefore, while the government did not create any wealth, it DID make wealth-creation a greater possibility. That alone might be a worthy reason for the government’s occasional intervention in the economy.

darjen August 19, 2008 at 9:26 pm

Why does everyone always come up with the “roads” objection when it comes to the need of government? The government does a terrible job of maintaining roads and infrastructure. I see no reason why government is the only institution that is capable of building a road.

Brent August 19, 2008 at 10:14 pm

“A job is a job, it creates wealth because a person is getting paid and so is able to pay their bills and buy stuff and carry on their life.” – robpo

The above statement is completely false. Wealth is created by creating productive output. The problem with government jobs is that it takes away productive output from the private sector (taxes) in order to pay government employees. Government employees, in turn, often produce nothing of value or even negative valued output. This process destroys wealth.

You can argue that in the case of roads that government employees are creating productive output, but it doesn’t follow that only government can or should be producing roads. If the private sector were allowed to produce roads, the production of roads would very likely be much more efficient and thus we’d live in a wealthier society.

Brent August 19, 2008 at 10:37 pm

“Therefore, while the government did not create any wealth, it DID make wealth-creation a greater possibility. That alone might be a worthy reason for the government’s occasional intervention in the economy.” -Michael Arko

If we are using economic jargon, when the government produces roads, this is actually consumption since the roads produce no further sales after they are built. Even the Keynesians got this much correct (note the calculation of GDP usually splits the consumption portion into two parts – private consumption and government spending/consumption).

Again it must be asked, how does it follow from the fact that roads are positively valued that government should monopolize the production decisions? Instead of viewing government as having created opportunities for private commerce to create wealth, it should be understood that government has, on net, reduced opportunities for wealth to be created via cost overruns, building roads in remote places, not building enough roads where they are more desired, etc. etc. etc..

Not getting as much bang for your buck as you could have is the very definition of an economic loss.

P.M.Lawrence August 20, 2008 at 4:43 am

Robpo, what has “I disagree that taxes are a way of using force to take our money” got to do with “Taxes are our membership dues to live in this great country”? If anything, the latter is itself a meme, one that distracts you from what happens to get taxes by making you look at what taxers claim they do with the money once they’ve got it. Even if it were true that taxes were used that way, which is far from established, it still wouldn’t mean they weren’t obtained by force – they are, directly or indirectly (try opting out if you want to test this). It’s like claiming that Robin Hood’s giving to the poor somehow meant that he wasn’t robbing in the first place.

Book 'em Danno August 20, 2008 at 9:13 am

robpo,

True, rational and irrational can throw curves in usage. More simply put, the price system is rational. Economic calculation is impossible without it. Whether or not humans make the right choices, i.e. to fix roads properly, is an immeasurable subjective valuation secondary to this fact.

The price system is analogous to a compass for sailing.

Government, by its nature, is anti-price system and, therefore, irrational in the economic sense. This categorizes the nature of government, not what is done with government as means.

Government sails without a compass.

When it seems like a mass of employers are oppressive and government beneficent it is important to notice just how far from the price system and voluntary relations society has gone.

Without a compass any vessel is doomed.

Isacce August 20, 2008 at 10:29 am

Yesterday, a post I wrote about government projects doing nothing to increase wealth ran over at Mises.org. I received several emails on the article, and one question kept reoccurring; why can’t government spending stimulate the economy more than private spending?

Some said it could because government spending offers and immediate injection whereas private individuals may save their money vs. spending it. This is basically the argument made by economist John Maynard Keynes; that savings is a drain on the economy while spending is a boon. Governments love this argument, because it means they get to encourage more spending by taxing to get at our savings, borrowing money, printing money, or all three. This idea overlooks a major part of economic progress – investment. Productivity gains come when we learn to do the same thing with fewer resources. However, there is almost always a substantial cost to trying and implementing new production methods long before the savings they bring are realized. Where does the up-front money to pursue these innovations come from? Savings. Whether in a low-interest savings account or a high-interest high-risk stock, deferring our present consumption in attempts to get our principal plus interest in the future is a crucial element of economic progress. Capital is the lifeblood of a growing economy, and capital is accumulated when people save.

Others made the argument that government projects would grow the economy because only government can undertake massive projects that have big societal benefits that lead to further wealth creation. One email in particular made this argument and said that empirical data was needed to decide if this was true or if I was right that government projects do not grow the economy. Being a proponent of Austrian Economics, it was no trouble for me to dismiss his desire for empirical data. Not because data is bad or useless, but because he was asking for data to do something it could not do.

Empirical data is meaningless without a theoretical framework through which to interpret it. The emailer and I almost certainly have different theoretical frameworks. We could both take a set of data and draw different, even opposing, conclusions. For this reason, I responded to him in a dataless manner, focusing instead on two fundamental principles: 1) the subjectivity of value, and 2) the limits of human knowledge.

The subjectivity of value is a fairly intuitive concept generally accepted by economists and laypeople alike. Its truth can be demonstrated quite simply; how much is a cheese pizza worth in dollars? Depends on how hungry you are, whether or not you hate cheese, how much money you have at the time, etc. A cheese pizza does not have an objective price, it is worth whatever you are willing to forgo at the time to get it.

If value is subjective, who can say whether a dollar spent by you or a dollar spent by government makes you better off? If you somehow demonstrate that GDP increases more with government spending than private spending, you have not proven anything about an increase in actual wealth. Wealth is not accurately measured in dollars, but in the amount of happiness we can obtain. Think of it this way, are you wealthier if you have $1,000 cash to do with what you like or if I have $1,000 that I will spend on your behalf for things I think you should have? Freedom and control over your own resources is itself a form of wealth.

When government takes your money and spends it on things of their choosing they have reduced your wealth. You have a subjective ranking of uses you would put your money to, and you will spend it on the highest valued use first. If what the government wanted to do with your money was your highest valued use, they would not need to use force to take it from you, but you would spend it that way yourself. As it is, they use force to take your money via taxes and spend it on things of lower value to you than what you would buy yourself. You are less wealthy as a result.

The ramifications go further. When you put your money to your highest valued use, signals are sent through the market telling others to produce more and better of what you are demanding. This will increase competition in the markets for the things you value most, and spur innovation. When government takes your money and puts it to a use that is of lower value to you, signals are sent indicating more demand in the low-value markets, and innovation will occur there. The first example results in a market where the things people value the most are being produced and improved the most. The second results in a market where things people value less and politicians value more are being produced and improved the most.

Now the second principle I mentioned; that no human has limitless knowledge. It could be said that even though value is subjective, a government planner may know of better uses for your money than you. They may have special knowledge of uses for your money that benefit you more than the uses you would choose for yourself. But how can it be proved? Even if you don’t know what use of your money will bring you the most benefit, which is entirely possible, how is anyone else to know? If the person closest to you, yourself, doesn’t know what you value most, who else can know better? It’s difficult to imagine anyone perfectly knowing the subjective values of just on person, but what about millions of taxpayers? How can any government planner know the preferences of millions of taxpayers better than those taxpayers know it themselves? Are we simply to trust them?

Wealth is more than dollars and sense or GDP. Whenever someone takes your money by force to spend as they see fit, you are worse off than if you had the freedom to spend it as you wished. If people really believe that government projects make them better off, I suggest a system where they voluntarily contribute to those projects, and peacefully persuade others to do the same.

Dick Fox August 20, 2008 at 12:17 pm

Nate J
Dick Fox:

“The will of the people.”? Seriously?

What if I’m not on of the people who wills it?

Depends on whether you want to be a hermit or part of an active society?

Michael A. Clem August 20, 2008 at 12:52 pm

“The will of the people.”? Seriously?

What if I’m not on of the people who wills it?

Depends on whether you want to be a hermit or part of an active society
When is “the will of the people” ever unanimous? You’re not gonna go all “majority rule” on us, are you? If the private sector marketplace has shown us anything, it’s that people can still get much of what they want even when they’re not in the majority. Government coercion, on the other hand, is terrible about providing variety and options, which is one reason (but not the only one) why we should want government to do as little as possible in the economy.

U.N. Owen August 20, 2008 at 1:00 pm

There’s a lot of really foggy thinking and outright BS in this string, but let’s reduce it to its essence: If government could actually create wealth, government could easily make us all fabulously wealthy! Has it ever worked that way? All government can do is use force to transfer existing wealth from the productive sector to the non-productive sector.

Face it, a good portion of that $ billion for roads would find its way into the pockets of government employees via their very generous wages. (Just compare them to the wages of workers in the private non-profits which government often replaces.) Many of these thieving leeches will retire at age 55, or younger, with pensions larger than their final wages (check out Oregon PERS), all ultimately funded by taxpayers. In other words, the $ billion spent on government roads will eventually result in the theft of even larger amounts from future taxpayers, none of which can be viewed as productive in the usual sense.

And as regards “illegal” aliens: what possible sense does it make for public employee unions — not to mention trade unions — to maintain the fiction that there is anything rare or unique about human labor that makes it particularly valuable. With well over six billion people in the world, it seems to me that human labor is by far the most common commodity in existence — how in the world could it have any significant value? Having lived in a very poor country (Nepal) I can attest that human labor is essentially worthless, lacking the use of force and violence by government.

Eric August 20, 2008 at 1:20 pm

Robpo: A job is a job. Well, that certainly doesn’t say a whole lot about what exactly is meant by the word job.

If slave labor is not a job because there is no paycheck, well, all that needs to be done is to provide a paycheck. Then we have a job by definition. But hold on, before you go cash that paycheck, suppose we have a gun here pointing at you which says you have to fork over 50%. Shouldn’t that be considered 50% slave labor? And you might say, well, you don’t have to work. Sure you don’t, just like you don’t have to eat either. However you look at it, the key is “show me the force” and I’ll show you the slavery.

If you want to really talk about some idea, you have to define what it is you’re talking about. The government uses common words in ways that are not what the person on the street sees as the meaning.

And I guess my point is that if one were to define a job as a free market transaction where no force is used, then a government job is not a job – by this definition. If you don’t like that definition, then fine, but at least we would know what we are talking about, provided you say more than just a job is a job. And this is not merely playing with words, since force is the most important variable in any economic law. And in politics, it’s the only thing that even counts, since nothing else matters in politics if there’s no force involved.

So just to clarify, when we are talking about a job, are we talking about a free market job or something else. And if we can’t answer that, then we are probably not going to learn anything.

magnus August 20, 2008 at 3:35 pm

“The will of the people.”

There is no such thing. The phrase “the will of the people” is a very powerful semantic sleight-of-hand, a self-contained propaganda term.

By calling it “the will,” it is implied that there is a single, uniform will or desire. Likewise, by calling it “the people,” it is implied that there is a single, undifferentiated thing known as a “people.”

Only individual persons have wills. This fictional entity known as “the people” does not do anything, want anything, intend anything, say anything or act in any way. Only individuals can do these things.

flix August 21, 2008 at 12:22 am

I see a lot of new faces around!
Still, sad day when we still get the “who will build the roads?” argument on mises.org, even worse…. the “taxes are the price you pay for society, if you don’t agree you can be a hermit” meme…

Let me try to answer briefly, to the first: Roads, airports, streets, railroads… have all being built privately, in fact were mainly built privately, until very recent history. Ignorance of this is easily solved with a little study, I suggest that you start by reading “The voluntary city”. Or study the history of 19th century turnpikes.

flix August 21, 2008 at 12:28 am

to the second: Taxes are extortion, pure and simple. The racketeers just have very good PR. (It helps that they control schools)

The price that you pay for living in society is peacefull cooperation and respect for property rights.

The use of force to impose the will of the rulers in fact undermines both property rights and peacefull cooperation and pits citizens against each other for control of the taxing/spending power apparatus.

flix August 21, 2008 at 12:28 am

to the second: Taxes are extortion, pure and simple. The racketeers just have very good PR. (It helps that they control schools)

The price that you pay for living in society is peacefull cooperation and respect for property rights.

The use of force to impose the will of the rulers in fact undermines both property rights and peacefull cooperation and pits citizens against each other for control of the taxing/spending power apparatus.

flix August 21, 2008 at 12:36 am

“the meme that taxes are a form of government “force” or stealing our money is nothing more than a political talking point- hollow and only meant to stir emotions.”

I think that it is fairly easy to disprove this assertion both logically and empirically… just try not paying and you’ll find out if “force” is a metaphor.

“Membership dues” are usually voluntary.

Kapitalist August 21, 2008 at 12:38 am

People have had private enterprise since G-d gave Eve to Adam. The private sector is always a subsidy of the social union (Government). We are always in the social, therefore the wage-slave of the government is equal to the wage-slave of a corporation. The government worker makes roads the same as a private sector worker, in the end the worker is only as good as his wage, the more you pay someone the better they do the job (Its social science). Sure the private market forces could build roads, but there would be big fish and little fish, with the big fish swollen at the expense of many of the little fish. Just think of government as the biggest fish in our wonderful capitalist experiment.
The supposed market economy utopia would rely on the same workers and the same social spectrum.
Bill Gates is just a man, but he creates a lot of wealth, is it fair, just, ethical to deny the workers a say? its not his money to give away (But it is i know).
How does an economy work where every single person is an Entrepreneur? It doesn’t workers are the sole important commodity in every economy any where.

U.N. Owen how can a person who has lived in Nepal negate the importance of workers? They lack a western consumerist life (to some degree). But they are still toiling the fields, climbing mountains and taking westerns on their backs up to mount Everest.

The government provides a tip semi-tip of the balance to workers but the power is always with those that control the market, the 10 percent of people who control 85 percent of the wealth will always eat the little fish in any situation, the government might sway the scale a minute amount but I am willing to defend it for that. (Even though I know it is the sole thing that keeps the giant corporations floating).

andy August 21, 2008 at 5:17 am

“Kapitalist”
You must be very naive to think that govt. is on the side of the workers…

If in the market 10% can control 85% of resources, with political power (or military power) it is more like 1% to 95%

magnus August 21, 2008 at 8:41 am

People who talk about how the government is this beneficial, benevolent master have no idea what really goes on.

For the moment, let’s disregard the mafia-style wars that governments start (both internecine and imperialist — just go read Smedley Butler and you’ll see how long this has been going on). And let’s disregard the pernicious, veiled tax known as “inflation,” engendered by our central bank and its fraudulent currency.

Even when we focus strictly on the various forms of domestic economic regulation at the local level, there is a VAST web of control by the State that 99.9% of people never see or even think about.

The roads are a perfect example. Governments (from local to federal) control the placement and location of all of the roads. This means that the State controls where EVERYONE lives and works.

The State controls the location of all buildings, both business and residential. Zoning is only one small part of that control mechanism. There are things called “comprehensive development plans,” mandated at the state level, and implemented at the county and local level.

These plans, obviously, are affected to a large extent by the placement and construction of various kinds of government roads. Just ask a “Land Use attorney” about what he does all day and you’ll get an inkling of how much control governments have over our lives.

The ordinary person sees the strip mall, the freeway and the quickie-mart going up on the corner, and doesn’t give it another thought. People never think about all the other possible economic uses that this land could have been used for — the businesses that will never be started because they will never be built there.

Consider the money that we all spend on cars to travel around these government-designed cities. Think of all the things that are NOT bought because this money is spent on cars and tires and gas and repairs and insurance, etc. The oil, car and tire industries bought off local governments a long time ago to destroy light rail service and build ever-larger roads, and ever-expanding cities. We are now 100% dependent on cars, and therefore dependent on the oil, car and tire industries as well.

Government has such a pervasive control over our physical space that most people don’t even see it. Most people alive today grew up in a time when all there was were subdivisions, and you went to your suburban schools, drove your cars on your artery 8-lane highways to get to your megaplax grocery store and thought that this way of life is perfectly normal.

It’s not normal. It’s by design. There is a whole other way of living — ways of living that people would build voluntarily, if they could.

How is it remotely possible to claim that government creates wealth through its various forms of control, subsidies and land use regulation? To do so, you would have to account for what is UNSEEN — the things that never exist because government decreed that they wouldn’t exist.

Michael A. Clem August 21, 2008 at 9:45 am

Considering that it’s an election year, a thought occurred to me: why do people raise and spend millions of dollars to win a job that only pays $200,000/year? Does anybody really think that Obama and McCain just want to “serve” the American people?

Just Bob August 21, 2008 at 12:21 pm

I drive by a road construction crew everyday on the way to work. If government doesn’t steal wealth, how do you explain one guy working with 5 guys watching? I can guarantee that a private employer would only have 1 (maybe 2, if the second was a supervisor) worker doing the job.

Here’s another example from the same construction crew. They placed a concrete island in the middle of a side road for a street light. Within a week, they had torn up the center of the island (that they just laid) so that they could put in handicap access walkways. By the way, there is no sidewalk on this road. You can be sure that a private employer would not be in business for very long if they continued with that business model.

Perhaps, government is the reason that roads are as bad as they are. I have also seen a road paved one week, then literally torn up the next week so that they could lay a pipe of some sort.

Bruce Koerber August 21, 2008 at 6:53 pm

Dear YerMawm,

What comes to your mind if I mention the following words: forced development?

Sure, things are coordinated but from what source? Is the plan of one ego-driven interventionist better than another. Which ego-driven interventionist prevails? All of the sudden it is a power grab to be the one who makes the plans as if the people affected by such intervention all wholeheartedly accept how the intervention affects their lives. The power grab inevitably invites corruption into the process and this corruption is combined with the ego-driven intervention resulting a nasty form of materialism.

How can this possibly be a good thing?

Well, economics is the study of the means to attain the ends. One means is forced development. An alternative means is the natural process that simply takes place in a classical liberalism society.

Determining the ends is also significant. When the end is a classical liberalism society then respect and trustworthiness do not get thrown out the window. When the ends is the vain imagining of the ego-driven interventionist then ‘whatever it takes’ is the name of the game.

Ultimately the ‘forced development’ creates massive conflict as powerful ego-driven interventionists find themselves up against other ego-driven interventionists, for example in the United States the rhetoric of the plunders known as Republicans versus the rhetoric of the plunderers known as Democrats.

When development occurs naturally and in accordance with the principles of classical liberalism there is a free flow of information that serves to create an ever-advancing civilization without the scourge of the ego-driven.

nicholas gray August 21, 2008 at 8:27 pm

I saw a great show on one of our Australian channels, from Britain, about the rebirth of roads. The Romans built great roads, but these had been allowed to disappear in the Dark Ages. In the 1700s in Britain, private companies made new roads, ideal for all sorts of people- you could even reach speeds of 10 miles per hour, if you wanted to live dangerously! Ordinary people didn’t like paying the fees charged by the private companies, and tried to destroy the tollbooths, so the companies hired their own ruffians to guard their investments. These were exciting times. Governments now own the roads, but this shows that it wasn’t always so, and major highways still have tolls on them, despite having access to the public purse.

josh m August 21, 2008 at 10:22 pm

Great post, magnus. In my city it is technically illegal to bicycle on the sidewalk, yet the roadway is often a lethal environment for a cyclist. So if you want to utilize one of the most efficient transportation options available, government essentially criminalizes you for not putting your life at risk.

That reminds me, we’ve had debunkings of the Sweden myth on these pages–can someone here debunk the Portland ‘smart growth’ myth please?

rks November 26, 2008 at 6:24 pm

Said another way….

Traditional government can’t create jobs because new jobs can only be fueled by new wealth (added value).

Government axiomatically cannot add value, based on the most fundamental feature distinguishing it from every other institution – It exists coercively. A coercively-supported (subsidized) process or institution is unaccountable for survival / profitability which would otherwise require that the value of what it provides exceed the value of its consumption.

Without accountability for profit, things (people, institutions) follow a path of lesser effort – A “lazy” process cannot elevate things to a higher value; entropy cannot elevate value, work must be input to the system, driven by survival / competitive pressures. Competition, however, can only exist in a volitional environment which of course is discordant with government.

An exceptional case involves small groups, say a team of government scientists passionately working to develop a new technology (especially if they can profit from its commercialization). Because of their efforts, the process can be highly value-additive, albeit not measurably, however they’d still be under the umbrella of a parasitical institution.

Unlike a volitionally-supported market entity, a subsidized process doesn’t have to provide anything of value in excess of its consumption to make a profit to survive. No value addition = no wealth creation = nothing to support new jobs.

More generally, and worse, no value addition = value subtraction = liquidation of wealth = societal impoverishment.

rks November 26, 2008 at 6:27 pm

Re coercion, I get weary hearing claims that the evil of coercion is just a “talking point” contrived by libertarians or anyone else…..

Coercion is antithetical to choice.
Choice is made possible by consciousness.
Consciousness enables self-recognition, distinguishing humans from all other living entities.

Per above, coercion negates that which defines a human, making coercion the epistemological equivalent of murder; if you can’t recognize yourself, you are nothing.

Prohibiting initiated coercion is not simply a practical point, but the most fundamental moral point of all; the concept was recognized by libertarians, not invented by them.

Matthew Pearson November 27, 2008 at 1:51 am

Rks – what wonderful turn of phrase

I agree with you, but if coercion is the epistemological equivalent of murder, does persuasion equate to the enslavement of will? Or does coercion make those coerced the equivalent of herded beasts, and persuasion tames them?

To look at the people, one might ask what they would do with free will. They must have a measure of power to determine their lives in accordance with their will. Freedom without the ability to be free is just a word. I am inclined to think that most people will enslave themselves one way or another by default. After all, the majority have allowed themselves to be persuaded to the point that now they are trapped only by threat of coercion. We were not brought into this situation at gunpoint; we were told sweet nothings that most of us believed.

So now, in seeking our own agenda of freedom, the people regard us as dangerously trying to destroy their sacred priviledges. Is it wrong to seek the influence of one’s own will – for this is the only route to power – through persuasion?

Out of my unstructured rambling, my question is: what defines the freedom of will, and how do we equip the people to use such an alien thing if we were free from coercion? For evil will seek power; if good men lack conviction surely we will be slaves to evil.

Matthew Pearson November 27, 2008 at 2:19 am

Government jobs, like welfare and minimum wage, sever the people from any hope of freedom by taking away personal responsibility. I believe the popular idea of freedom to be warped by the over-reliance on rights in society. No one may hand freedom to another person – freedom is the highest reward for personal responsibility. Those who try to gift liberty misunderstand the concept and bar the way to attaining freedom, just like the wealthy that gift great wealth to their children bar their children from understanding the route to and meaning of wealth.
The true blessings of human existence are attained through hardship. All art from pain; all life from death. Removing the responsibility to suffer painful consequences of our choices also removes the right to enjoy the fruits of overcoming our difficulties. We become drones hopped up on soma; we feel nothing real.

Kevin December 8, 2008 at 3:26 pm

I see this is a somewhat old post, so hopefully it’s still getting some traffic. On the subject of roads, I agree that most (if not all) projects can be best handled by free market (the efficiencies, competition, market signals, innovation, etc). However, our roads are not handled by the market now (though they should have been).

Hazlet said in “Economics in one lesson” (I’m paraphrasing greatly), “if the collective benefits of a public project outweigh the benefits of keeping the money in the private market, then the public project is better for the society.”

To determine the benefits of a public project (roads) versus keeping the money in the private market (to be used for groceries, pants, and picture frames) is difficult to do, as you can’t see latter. You can only see the former; the workers and machinery building the roads. To maintain this infrastructure, we’ll need to keep our roads. The public project seems then to outweigh the private gains.

So, to simply end subsidies for roads would create a massive (though not permanent) disruption in society. I want to get back to core argument of this article. No, government jobs don’t create wealth…but when government owns the industry, isn’t government spending then necessary?

Can’t it be argued that because we have become so dependent on our road infrastructure that maintaining the roads (publicly) outweighs the benefits of keeping the money in the private market?

I think it can be agreed upon that without government intervention in transportation this country would look VERY different. That being said, it is what it is and we need roads now.

So I see part of this 2.5 million job creation proposal from Obama includes plans to improve our roads and bridges. Isn’t this appropriate then, at least partly? Don’t we need our crumbling bridges fixed? Our over-capacity freeways widened? Pot holes filled? Because we are now so dependent on these things for our transportation (our livelihood) doesn’t this public project outweigh the benefit of keeping the money in private markets?

I am very new to Austrian economics and find myself not understanding parts of it. A topic like this, for example, I have trouble getting my head around. So if I could also answer my own question…I think partly, yes…part of the spending is necessary. Public projects can be very wasteful (e.g. the inefficiencies in public projects). But more specifically any “make work” aspect of it. If Obama is creating the jobs simply to CREATE jobs then there is no benefit, period. And any jobs created beyond the NECESSARY infrastructure maintenance/upgrades will also have a negative impact. But up to a point, at some level of this, isn’t it necessary?

Kevin December 8, 2008 at 3:29 pm

Excuse me, that’s Hazlitt not Hazlet.

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