How the Government Can Create Jobs

[lostinblue 1,989]

Testimony by Peter D. Schiff

Offered to the House Sub-Committee on Government Reform and Stimulus Oversight

September 13, 2011

Mr. Chairman, Mr. Ranking member, and all distinguished members of this panel. Thank you for inviting me here today to offer my opinions as to how the government can help the American economy recover from the worst crisis in living memory.

Despite the understandable human tendency to help others, government spending cannot be a net creator of jobs. Indeed many efforts currently under consideration by the Administration and Congress will actively destroy jobs. These initiatives must stop. While it is easy to see how a deficit-financed government program can lead to the creation of a specific job, it is much harder to see how other jobs are destroyed by the diversion of capital and resources. It is also difficult to see how the bigger budget deficits sap the economy of vitality, destroying jobs in the process.

In a free market jobs are created by profit seeking businesses with access to capital. Unfortunately Government taxes and regulation diminish profits, and deficit spending and artificially low interest rates inhibit capital formation. As a result unemployment remains high, and will likely continue to rise until policies are reversed.

It is my belief that a dollar of deficit spending does more damage to job creation than a dollar of taxes. That is because taxes (particularly those targeting the middle or lower income groups) have their greatest impact on spending, while deficits more directly impact savings and investment. Contrary to the beliefs held by many professional economists spending does not make an economy grow. Savings and investment are far more determinative. Any program that diverts capital into consumption and away from savings and investment will diminish future economic growth and job creation.

MORE.....http://www.safehaven.com/article/22513/how-the-government-can-create-jobs

[slim 1,533]

I still think the government should give us each $50,000 and call it a day.

[mawilson 2,133]

I still think the government should give us each $50,000 and call it a day.

Obama's latest plan is to create 1.9 million jobs at a cost of $250,000 per job.

It might be better to just have a free national lottery and mail $250,000 checks to a lucky 1.9 million people.

[Craneman 2]

The government did create some "Green Jobs" at a cost of $5,000,000 per job.

Now that is tax money well spent.

I still think the government should give us each $50,000 and call it a day.

[luckytxn 2,265]

I have actually talked to few over the last few years that have told me they thought it was the Feds responsibility to insure give us jobs.

[kytwell 179]

I posted this in another thread here, but it has some relevance. I edited it some to fit the topic at hand. All of these projects created jobs, temporary and permanent, direct and indirect.

The Land Grant Colleges

Perhaps no legislative act has had greater consequences for America’s educational system and leadership in agriculture and technology than the Morrill Act, which created the land grant colleges. First championed by Vermont Senator Justin Morrill in the 1850s, the Morrill Act was a complex legislative feat to create a system of state schools funded by large federal grants of land. Justin Morrill was a Republican

The National Highways

A second critical American accomplishment was the creation of the National Highway System. In 1955, President Dwight Eisenhower, who had experienced first hand the difficulty of moving an army across America along the Lincoln Highway (the first cross country road) as a young Lieutenant Colonel — and then contrasted it with the autobahns he had seen in Germany — committed his administration to building a national highway system. The Interstate Highway System had been lobbied for by major U.S. automobile manufacturers. Eisenhower was a Republican.

The Hoover Dam

The Hoover Dam is rightly considered one of the great engineering wonders of the world. Engineers had to divert the Colorado River to build the dam and its construction literally opened up much of the American southwest for development. An extraordinarily complex political feat as well that involved the cooperation of seven states, the project was nurtured by Herbert Hoover who as Secretary of Commerce brokered the final water-sharing deal that enabled the dam to move forward. Dozens of companies cooperated on the project. The project was hardly bereft of problems, and over one hundred people died in the course of construction, yet it was completed two years ahead of schedule. Today, the dam provides much of the electricity in the region, and the country’s largest reservoir, Lake Meade at the top of the dam, irrigates vast portions of the Southwest. Approved 1928 Hoover was President, a Republican.

The Internet

The U.S. role in the creation of the Internet is well known. Originally financed by the Defense Advanced Research Projects Agency (DARPA) and then the National Science Foundation (NSF) It was eventually turned over and funded privately.

I am not for big government. And this goes against my free market principles, but private industry today is driven by greed and profits NOW, not in 100 years. So the above Republican Presidents had a vision to improve our infrastructure to improve our country for the future benefit of all. And we were a leader in Education and national infrastructure. Now we need to repair and upgrade our infrastructure so that we can get back on top and put Americans back to work at the same time. I don't agree with 97% of what our current President says, but when he talks about infrastructure improvements, I tend to agree with the idea.

I may not agree with all big government/ central planning etc...but all of the above things were centrally planned and funded and were vital to making USA what it was.

We also built a railroad system and many other crucial projects for infrastructure throughout our history and all helped to make us into who we were. Being against all things now, is thinking for yourself and not worrying about the future viability of our country. Or as my coworker used to say, "hooray for today, ** tomorrow!"

Quailifier: I am not for giving a blank check to get these done and I know there's budget issues, but it doesn't mean they shouldn't be done or a way found to get them done.

[slim 1,533]

Obama touted China as having better railroads and airports.

First of all, do we need a good railroad anymore? And, isn't railroad dominated by private companies?

Secondly, aren't airlines also private companies?

[kytwell 179]

You think that Ford, GM, Edsel, Chrysler etc would have built the National Highway system and funded its upkeep? It would take them centuries to eventually turn a profit. When the government built it, it gave them an immediate benefit to market their product and employ 10's maybe 100's of thousands over the last 60 years in direct and indirect fields. Which in turn increased our(USA) GDP, wages, consumption etc etc etc etc

The Hoover dam again you think private industry would have undertaken the massive project without any government support? It created an immediate demand there, for people to build their homes, so builders, appliance people, lumber yards, building product manufacturers all began ramping up production and employing people etc etc

Railways are privately owned, again without government assistance would Conrail or CSX or any of them have begun laying track nationwide to build an infrastructure?

Airlines are privately owned. Most major airports though, are owned by some type of local government entity.

I think infrastructure needs to be in place, before private enterprise decides to invest in it. And once this happens as has been the case with rail, roads and air it creates markets and drives our economy. I will say once again I don't believe in big government, but in regards to infrastructure, they are a necessary evil. And it has a proven track record. The way this President is going about it has been a boondoggle, but the Republican counterparts should offer a sensible countermeasure compromise rather than being obstructionists.

[slim 1,533]

You think that Ford, GM, Edsel, Chrysler etc would have built the National Highway system and funded its upkeep? It would take them centuries to eventually turn a profit. When the government built it, it gave them an immediate benefit to market their product and employ 10's maybe 100's of thousands over the last 60 years in direct and indirect fields. Which in turn increased our(USA) GDP, wages, consumption etc etc etc etc

So car companies weren't successful before the highways?

The interstate highway was originally made for national security purposes. It wasn't built as a jobs creation program.

The Hoover dam again you think private industry would have undertaken the massive project without any government support? It created an immediate demand there, for people to build their homes, so builders, appliance people, lumber yards, building product manufacturers all began ramping up production and employing people etc etc

There was absolutely no reason for the Hoover Dam to be constructed other than, "let's give people some jobs at tax payer expense."

Railways are privately owned, again without government assistance would Conrail or CSX or any of them have begun laying track nationwide to build an infrastructure?

Couldn't you argue now that railways are an antiquated way to transport people across the country the responsibility for their upkeep should be private?

If it's for freight... it's up to the freight companies.

Airlines are privately owned. Most major airports though, are owned by some type of local government entity.

Local is the key word there. If local government chooses to engage in business, that's their business. They shouldn't receieve federal funding to do so.

I think infrastructure needs to be in place, before private enterprise decides to invest in it. And once this happens as has been the case with rail, roads and air it creates markets and drives our economy. I will say once again I don't believe in big government, but in regards to infrastructure, they are a necessary evil. And it has a proven track record. The way this President is going about it has been a boondoggle, but the Republican counterparts should offer a sensible countermeasure compromise rather than being obstructionists.

Necessary evil.

Along with "vote for the lesser of the two evils" this is probably the worst phrase and a big reason why we have a deficit right now. There is no such thing as a necessary evil.

If we left private economy to the private sector they'd either build infrastructure or they wouldn't. Either way, we wouldn't have to pay the government for it. Right now, we're paying the private companies (think airlines) and the government (think FAA, TSA, etc.) to operate what should cost nothing more than the price of business through a private company. As is, we have to pay the price of business.... and the price of government.

[Dan J 277]

Private/public companies don't create jobs. They are in the business of making money. Jobs are a function on achieving that goal. But if that goal can be achieved through automation, financial markets, or other cost cutting measures, you can bet most companies will choose that over creating jobs.

[SuperDuper! 230]

Obama's latest plan is to create 1.9 million jobs at a cost of $250,000 per job.

It might be better to just have a free national lottery and mail $250,000 checks to a lucky 1.9 million people.

You are not far from the mark, Mark. The MacArthur Fellows Foundation does just this, but hands out $500K no strings attached to folks with sparks of genius and potential , crackheads need not apply.

--------

One Call Out of the Blue — $500,000 — No Strings

September 20, 2011

The MacArthur Foundation named 22 new MacArthur Fellows for 2011. The recipients learned, through a phone call out of the blue from the Foundation, that they will each receive $500,000 in no-strings-attached support over the next five years. More »

http://www.macfound.org/site/c.lkLXJ8MQKrH/b.959463/k.9D7D/Fellows_Program.htm

[slim 1,533]

Private/public companies don't create jobs. They are in the business of making money. Jobs are a function on achieving that goal. But if that goal can be achieved through automation, financial markets, or other cost cutting measures, you can bet most companies will choose that over creating jobs.

It seems to me part of the problem is not an absence of jobs but an absence of jobs people want.

Businesses are still doing business. People are still working and people are even getting hired. What's going on is people without jobs are saying, "I won't work for $30,000 year because I can't afford to." The government, instead of saying, "you'll work there and deal with it" is saying, "no problem. We'll find a way to create a job out of thin air and pay you the $100,000 you used to make plus a whole group of people to adminster and oversee that program. It's a win-win." Until you factor in who's actually paying for that.

Plain and simple - everyone needs to start living within their means or we're doomed.

[mawilson 2,133]

It seems to me part of the problem is not an absence of jobs but an absence of jobs people want.

Businesses are still doing business. People are still working and people are even getting hired. What's going on is people without jobs are saying, "I won't work for $30,000 year because I can't afford to." The government, instead of saying, "you'll work there and deal with it" is saying, "no problem. We'll find a way to create a job out of thin air and pay you the $100,000 you used to make plus a whole group of people to adminster and oversee that program. It's a win-win." Until you factor in who's actually paying for that.

Plain and simple - everyone needs to start living within their means or we're doomed.