http://lewrockwell.com/armentano-d/armentano27.1.html
President Obama's highly touted $300 billion "jobs" bill is a non-starter. It is unlikely to get through the Republican House of Representatives and even if it did, it would not create viable private sector jobs. After three years of sluggish economic growth and meager private sector jobs growth, politicians in Washington D.C. still insist on playing smoke and mirrors with the American people.

Can government spending create jobs? Governments can certainly create jobs in the public sector; they do it all the time and Obama's bill will do more of it. Governments can hire school teachers, social workers, and millions of other bureaucrats to administer its thousands of programs and regulations. Importantly, however, the funds for these jobs must be provided by either taxation or by borrowing from the private sector. Thus as almost all economists recognize, public sector employment comes (in some real sense) at the expense of opportunities for private sector employment.

To see why this is so, assume that $1million dollars is raised by taxation to, say, fund new staffing at the Environmental Protection Agency. No debate; public sector jobs get created. But note that the very same $1million cannot be spent by taxpayers on new washing machines or trips to Las Vegas or newspaper subscriptions. Thus for every job created by government spending there must be a tradeoff of jobs NOT created (or maintained) in the private sector of the economy. In economics, there is no free lunch.

Private sector jobs, on the other hand, are created in an entirely different manner; if they are sustainable, they are self-financing. Private employees are hired with the expectation that their wages will be paid by the additional revenue or value that they generate for the employer. Individuals that work for washing machine retailers or for a travel agency or for a newspaper must generate a stream of benefits for the company that compensates for the wages they are paid (or they will be fired). In short, private firms can hire workers – that is create jobs – if and only if it is profitable for them to do so.

It is now easy to understand why the Bush and Obama stimulus programs of the past did not create jobs and why the current bill, if enacted, will also fail . First, government programs that loan taxpayer money to private firms with poor profit expectations (like Solyndra) are recipes for disaster. The $528 million that was wasted on Solyndra could have been spent by consumers supporting local retailers and their employees. Instead it was pure crony capitalism with money and jobs down the drain.

Second, almost all of the funding for so-called public works programs in the Obama jobs bill is temporary. Even if the taxpayer money is paid to private firms to, say, pave roads or repair bridges, the money is short term and provides no long-run sustainable jobs. When government funding runs out so do the jobs.

Finally, as we have already explained, federal government spending for health-care professionals or for infrastructure improvements must come from either taxation or borrowing (or reductions in other government programs ) and that means that new public sector employment must come at the expense of older public service jobs and/or private sector jobs not created. Thus the notion that government spending can engineer a net increase in employment is dangerous political nonsense.

Private firms create sustainable jobs when management and employees generate profitable benefits for their consumers. Absent the expectation of profit, no firm will hire anyone to do anything; would you? Running a profitable business is already difficult enough (due to competition and changing consumer tastes) but it becomes even more difficult when taxes, regulations, and health care costs create strong disincentives to start a business or hire additional employees.

America doesn't need another political jobs bill but it does need a dramatic change in public policy. We need sound money and a balanced (and far lower) budget; we need a moratorium on any new taxes and business regulation; and we need the Supreme Court to step up and declare Obamacare unconstitutional.

Americans have always survived and prospered despite corrupt political management. We will again if we can get our public affairs in order.

I think it is more complex than explained. For instance, though it is true that 1 million in taxpayer dollars spent on creating jobs is 1 million (in taxpayer dollars) that cant be spent on personal items. That same million in taxpayers money spent ANYWHERE wont be able to be spent on personal items. Instead, that 1 million may create income for enough people that they might spend a DIFFERENT million and then some putting money back into the economy as consumers.


It is also downplaying the significance of the tax breaks millionaires get regularly being passed on to other income brackets by incentives to create jobs and hire workers. AN investment in incentives to use 'clean' energy is no less a potential win(not a guarantee) than an investment in incentives to employ more people. The pay off is not guaranteed in either gamble, but if it happens, it has the potential to balloon down the line into something that saves much more than is spent.

The analysis in the original post is silly.


Huh? don't think that's going to pass the giggle test.



The statement assumes that the people who hold those public sector jobs don't but washing machines or take trips to Las Vegas.



that's not what happened when Government funding for WWII ran out.

If taxation was the fix to all that ails us Italy would be one of the most economically sound countries in the world.

23% for amounts up to $15,000
27% for the next band from $15,000,01 to $28,000
38% for the next band from $28,000,01 to $55,000
41% for amounts between $55,000,01 and $75,000
43% for amounts $75,000.01 and over.

Corporate tax 31%

VAT 21%


http://en.wikipedia.org/wiki/Tax_rates_around_the_world

But Italy falls way behind other countries with much higher taxes that are much more economically sound. (According to your own source). So perhaps a more sophisticated analysis of the impact of taxes is called for. Try again.

Well.. Italy has the 8th highest GDP. Only France and Germany are larger in terms of euro currency countries.

There is a direct correlation between fiscal stability and trade deficits.

Now lets look at the average trade deficit as a percentage of GDP.

Italy is -1.3

Germany is +3.2

France is +.4

Now.. Being that we fall into the negative territory (-5%) in regards to trade deficit as a percentage of GDP.

Which country from the list do we most resemble?

Yes.. Italy.. Which has much higher tax rates than we do.

Therefore.. concluding that higher taxation or as you like to call it "increased revenue" actually means nothing in terms of fiscal or economic stability is very reasonable and factually accurate.

I have posted on several occasions that until the trade deficit is reduced no measure of taxation or spending cuts are going to fix the real problems that we have been facing since the 70s.

That's a good start, at least better than the last analysis. However, it doesn't really address just how you're going to repair that trade deficit thing. Also, it ignores the importance of weak consumer performance domestically. Taxes in Italy are a caricature of the direction US taxes are taking. You still have some work to do.