Questions and answers about both politics AND crap!!

Wednesday, December 14, 2011

Doesn't government spending create other kinds of jobs? Don't these workers buy more cars and other things?

All government spending follows this formula - all of it - no exceptions - anywhere - ever:
1) It removes capital from the economy.
2) It substitutes the judgement of a few for the judgement of "everyone" regarding how that capital should be used therefore guaranteeing less aggregate value is yielded.
3) It competes against the economy for remaining capital and labor resources.

Government spending eliminates other jobs in preference for politically chosen ones - always with overall less productive use. Therefore in net, it reduces total jobs/productivity. Fewer cars are bought because our car budget is reduced in favor of the government plan. Government spending can give a very short-term and/or targeted boost but always at the expense of the economy overall. Government jobs inefficiently replace jobs in the private sector. Thus fewer workers have paychecks they can spend on groceries, clothing, furniture, cars, houses, utilities, entertainment, appliances, restaurants, vacations, and all sorts of things. Further, available resources to apply in those industries is likewise reduced, driving prices up while employment and productivity falls. Those companies and employees end-up with less capital with which to produce so they generate less revenue and pay less in taxes so government gets less stuff built, fixed and done. See? everybody loses except for the few politically selected beneficiaries.

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