ALL GOVERNMENT SPENDING CREATES JOBS, SO WHAT?

ALL GOVERNMENT SPENDING CREATES JOBS, SO WHAT?

Matt HealeyTuesday,5 March 2013

The Snap:

We have now gone over the sequester. I do not think this is a big deal as it only cuts 2.5% of the total budget. Granted it does cut a larger portion of the discretionary budget. I think that everyone agrees that this is not a good way to cut the budget. Regardless, the cuts have gone through and we will now begin the process of trying to restore some of the spending. During this process, inevitably the argument will arise that restoring the budget will create jobs.

The Download:

This argument is true. There is no way that anyone can refute that. However that is true for any government spending. Direct government purchases create jobs as workers have to make the stuff the government is buying. Indirect government spending, things like unemployment benefits, creates jobs as workers have to manufacture the things that the unemployed buy with that money. So the question should be in addition to creating jobs, is the money being well spent?

The problem is that is a hard question to answer. It depends a lot on the perspective of the person evaluating the program. The reason for this is a lot of government spending can not be justified using the same tools that corporations use to evaluate spending. Corporations look at spending money and see what that will do to future sales and profits. However, the Government is not in the business of turning a profit, nor should it be. So the profit and sales metrics are not applicable. This leaves a void that should be filled by determining what spending provides the greatest public benefit. But that is very hard to do with a country that is as divided as the U.S. currently is. So, politicians will resort to the “creating jobs” argument, which I fear will result in the same inefficient budget.

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  1. […] funding. The first argument is jobs. Eliminating the program will cut jobs. As I have said before, all government spending create jobs. The question is in addition to creating jobs, does the program create other benefits? In this […]

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