Creating Jobs is a Cost not a Benefit

I\’ve been muttering this to all and sundry for some time now. Of course, I find that someone said it before me, and said it better too:

A certain amount of public spending is necessary to perform essential government functions. A certain amount of public works — of streets and roads and bridges and tunnels, of armories and navy yards, of buildings to house legislatures, police and fire departments—is necessary to supply essential public services. With such public works, necessary for their own sake, and defended on that ground alone, I am not here concerned. I am here concerned with public works considered as a means of “providing employment” or of adding wealth to the community that it would not otherwise have had.

A bridge is built. Ifit is built to meet an insistent public demand, if it solves a traffic problem or a transportation problem otherwise insoluble, if, in short, it is even more necessary to the taxpayers collectively than the things for which they would have individually spent their money had it had not been taxed away from them, there can be no objection. But a bridge built primarily “to provide employment” is a different kind of bridge. When providing employment becomes the end, need becomes a subordinate consideration. “Projects” have to be invented. Instead of thinking only of where bridges must be built the government spenders begin to ask themselves where bridges can be built. Can they think of plausible reasons why an additional bridge should connect Easton and Weston? It soon becomes absolutely essential. Those who doubt the necessity are dismissed as obstructionists and reactionaries.

Two arguments are put forward for the bridge, one of which is mainly heard before it is built, the other of which is mainly heard after it has been completed. The first argument is that it will provide employment. It will provide, say, 500 jobs for a year. The implication is that these are jobs that would not otherwise have come into existence.

This is what is immediately seen. But if we have trained ourselves to look beyond immediate to secondary consequences, and beyond those who are directly benefited by a government project to others who are indirectly affected, a different picture presents itself. It is true that a particular group of bridgeworkers may receive more employment than otherwise. But the bridge has to be paid for out of taxes. For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $10 million the taxpayers will lose $10 million. They will have that much taken away from them which they would otherwise have spent on the things they needed most.

Therefore, for every public job created by the bridge project a private job has been destroyed somewhere else. We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken from the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.

But then we come to the second argument. The bridge exists. It is, let us suppose, a beautiful and not an ugly bridge. It has come into being through the magic of government spending. Where would it have been if the obstructionists and the reactionaries had had their way? There would have been no bridge. The country would have been just that much poorer. Here again the government spenders have the better of the argument with all those who cannot see beyond the immediate range of their physical eyes. They can see the bridge. But if they have taught themselves to look for indirect as well as direct consequences they can once more see in the eye of imagination the possibilities that have never been allowed to come into existence. They can see the unbuilt homes, the unmade cars and washing machines, the unmade dresses and coats, perhaps the ungrown and unsold foodstuffs. To see these uncreated things requires a kind of imagination that not many people have. We can think of these nonexistent objects once, perhaps, but we cannot keep them before our minds as we can the bridge that we pass every working day. What has happened is merely that one thing has been created instead of others.

8 comments on “Creating Jobs is a Cost not a Benefit

  1. “For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $10 million the taxpayers will lose $10 million. They will have that much taken away from them which they would otherwise have spent on the things they needed most.”

    Pshaw! Nonsense!

    Everyone knows the money would otherwise be put under a mattress, or given to bankers who would merely put it in a vault.

    Or even worse, spent on the wrong things, immoral things, like beer, pizza, smokes, ju jubes, chips and..and..I can hardly write it..chemically fertilized vegetables.

    No, no the “the things they needed most.” is the worst part of the quote, the plebs need to have standards of decency enforced on them.

  2. Oh, and I forgot, meat, if they have money, pretty soon the bastards’ll be eating meat, possibly even eeevil Amerikkkan Big Macs.

  3. “pretty soon the bastards’ll be eating meat, possibly even eeevil Amerikkkan Big Macs.”

    Hmmmn, Soylent Green. If only we’d been making Soylent Green a few years back there would have been no NINJA mortgages, so no subprime, so no recession.

  4. http://jim.com/econ/chap24p1.html
    “The Assault on Saving”

    “The classical economists, refuting the fallacies of their own day, showed that the saving policy that was in the best interests of the individual was also in the best interests of the nation. They showed that the rational saver, in ma king provision for his future, was not hurting, but helping, the whole community. But today the ancient virtue of thrift, as well as its defense by the classical economists, is once more under attack, for allegedly new reasons, while the opposite doctrine of spending is in fashion.”

  5. Jobs are a cost just like pollution. Cutting jobs and cutting pollution are things to strive for. Fortunately, there exists a good incentive for cutting jobs – we have to pay workers. Unfortunately, there is less incentive to cut pollution – we don’t always pay those who bear it.

  6. Isn’t this more simply expressed as the Broken Windows fallacy, with added thought that the government is employing people to go round breaking windows.

  7. An excellent economic argument.
    However, what the writer & Tim fail to understand is what they are criticising is not a bug but a feature. To the socialistic, statist mind the whole point of public works projects is to divert resources to where they will do the least good. The ‘ideal’ bridge would lead to a place where no-one wanted to go thus providing the opportunity for another grandiose scheme to encourage bridge usage. (Just follow the arguments for arts funding to see how this works.)
    The rationale behind projects that ‘create jobs’ is that there should be a net decrease in jobs due to their introduction, thus increasing the pool of unemployment & justifying another round of ‘job creating’ projects.
    The whole point of the exercise is to provide rewarding public sector careers for politicians & bureaucrats.

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