More “Job Creation” Nonsense from the N&O

The N&O today jumps on they Keynesian bandwagon, calling for massive public works projects to "stimulate" the nation's economy, and "put people to work."

"Now is the time to make improvements. Contractors are hungry for the work; costs won't be lower in the future. And federal pump-priming would be a big help to states, including North Carolina, where revenue from gas and car sales taxes is way down, imperiling projects."

Curiously absent from the N&O's analysis is that pesky part of the equation: how will we pay for it?

The money will have to come from somewhere. If it comes from increased tax rates, that means less money in the private sector for real investment and job creation. Remember, every dollar spent to "create" government jobs or finance government projects must first be extracted from the economy. For any jobs "created" by such public works programs, there is necessarily a simliar loss in jobs in the private sector. Government can not create jobs – only shift them from one sector to another. Total employment will not be improved.

Or the government could borrow the money. In the long run, the federal debt increases - forcing an even heavier burden onto our children, with rising taxes being necessary to finance the debt. In the short run, the increased federal borrowing crowds out investment capital available to the private marketplace – once again financing government work at the expense of jobs in the private sector.

Old economic fallacies – such as the Keynesian, deficit-financed "pump-priming" – die hard. Unfortunately, journalists haven't been informed about how thoroughly such thinking has been discredited.