Bidenomics in Action
President Joe Biden recently released this jobs report:
Our economy added more than 200,000 jobs last month—for a total of 13.2 million jobs since I took office. That’s more jobs added in two and a half years than any president has ever created in a four-year term. The unemployment rate has now remained below 4 percent for 17 months in a row... The share of working-age Americans who have jobs is at the highest level in over 20 years... That’s Bidenomics—growing the economy by creating jobs ...
Did Biden personally hire all these people, paying their salaries out of his own pocket? He seems to imply it. I think he means that his governmental policies led to this job growth. Ok then - what specific acts or policies did this? Was it all that spending, deficits, and inflation? Was it all the regulations and additional bureaucracy he has promoted, such as the antitrust department harassing businesses? How exactly do these policies “create” jobs?
If the President or any government entity’s purpose was to "create" jobs, then all they would have to do is hire a million people to dig holes, and then another million people to fill up the holes. Presto! You've just "created" two million new jobs!
Ludicrous? Not at all, because hiring hole-diggers and hole-fillers is not significantly different from creating agencies and bureaus and departments and filling them with bureaucrats and other employees with tax-supported incomes who write rules requiring paperwork, or who fill out the afore-mentioned paperwork, or some other worthless activity.
But wait, you say - government is more than just paper-shuffling bureaucrats. Government provides things like roads, schools, utilities, retirement insurance, air traffic control, and so on. That is true. But - because government need not earn a "profit", there is no practical way to determine if the value of these services exceeds the cost. When the cost does exceed the value, you have "waste", and no private business can survive perpetual waste. So how do we know if government is wasting money or not? Well, the politicians told us that they eliminated all the waste!
The usual justification for government providing such services is something like: the market is unwilling or unable to do it. Right off the bat, I question that assumption; if people truly need or want something, then some enterprising entrepreneur will figure out a way to provide it. It never ceases to amaze me what the free market can do, even if producing it requires raising a monstrous amount of money, or complying with government’s never-ending constraints, barriers, and impediments. They always figure out a way.
What if there were no government obstacles (unlikely, but let’s assume so for the sake of conversation), yet there was still some good or service that the market could not provide? The most likely reason would be that the costs exceed revenues - your classic case of waste. The government promoters are basically saying then that the purpose of the state is to waste money - not exactly a formula for national prosperity.
Another justification is that "the poor" could not afford these services if they were sold on the market. What these advocates fail to mention, however, is that you, taxpayer-citizen, pay for all that waste that gets flushed down the toilet. The waste victims include the poor and all the other special-interest groups who are supposed to be the beneficiaries. It would actually cost the poor a lot less in the long run if we just let the free market work.
Anyway, back to jobs. Government can not, and should not, even attempt to "create" jobs. Only private businesses can do this, and it’s directly related to profit. A business absolutely must make a profit, by marketing a product that consumers are willing to purchase. No one is going to pay for something that has no value, such as digging and filling holes. Then the more profit a business makes, the more help they need - thus more jobs.
The progressives may counter by pointing out that the now-more-profitable business owner might, instead of hiring more employees, spend his new wealth on frivolous luxuries, such as a yacht, or a mansion, or fancy clothes, or eat out at fancy restaurants. Well, that means that more yacht-builders, or construction workers, or clothing-makers, or restaurant employees will be needed to satisfy their lavish demands. Any way you slice it, a strong, growing, profitable economy benefits all.
But you never hear Biden and the Democratics utter a word about expanding profits and growing the economy. All they promise is more government spending, free this, free that, more rules, more regulations, more wage and price controls, more taxes, more more more of everything government does - which will not stimulate profits. In fact, all this increased government largesse and bureaucratic weight will have the exact opposite effect. Let's be clear: programs ostensibly designed to "create" jobs will actually destroy jobs.
Certainly any elected official will take credit for the sun rising in the morning.
The bigger question: Is seemingly economic good news based on sound fundamentals or are we just having a big party running up the national credit card? The US Dollar’s status as the “reserve currency” allows us to sort of get away with massive budget and trade deficits, enabling America to consume more than it produces. But for how long?
I oft lamented the fact that the federal government is the largest employer in the U.S., and to what end? Where in the Constitution are we told that this is to be? Who made the "discovery" of the that gem the founding fathers had hidden so well that the government exists to "create jobs"? Great piece David.