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by Neville Kennard, veteran preaching and practising capitalist

Our politicians love to tell us that some pet project “will create x number of jobs”.

How wonderful!

These people in politics can, at the flick of a switch, the passage of some legislation, affix their signature on a piece of paper and magically “create jobs”!

How do they do this? And if it is as easy as this, why do we ever have any unemployment?

Politicians love to trumpet the “job creation” of their pet projects. Recently it has been schools and the “education revolution” — presto — “job creation”. There was the Home Roof Insulation Scheme — more magical “job creation” in the name of “green”. Currently there is the National Broadband Network, a weirdo if ever there was one, where tax payers fork up so some other people can have “job creation”.

Money, from somewhere, for the Project of the Month, and, presto — “job creation”!

Of course it is not like this. The way it works is actually like this:

The government takes money from people and companies in the form of taxes. This tax money that the government takes, if it had not been taken, would have gone into something that the person or company would have used for their own ends. Including some “job creation” in the private sector.

Let’s say an individual’s portion of this tax-take was $100. The individual tax-payer would have been left with the $100 and would have spent it in a way that was of value to him, or her. He might have taken his family out to a restaurant, thus creating work for restaurant staff. Or she might have paid $100 off her mortgage thus contributing to some financial security for herself, while making this money available to the bank to lend out. Or a company may have $10,000 in tax not taken and used this money for any of a hundred things, including expanding the business — and creating jobs.

A job “created” by government spending comes at the expense of a job not created in the private sector. In the private sector money is spent where it is profitable for the spender to spend it, be that for business or pleasure.

There can be no such thing as “job creation” without some “job destruction”. This applies in the private sector too. If a company grows and needs more staff it will attract people away from some other job. The new job on offer may pay more or have other benefits to the new employee. This is known as creative destruction, a constant process in a dynamic and evolving economy, as people and businesses seek to maximise their opportunities. Jobs and businesses are in a constant state of creation and destruction as businesses grow and decline.

But when the government forcibly takes money, in the form of taxes, from people and businesses, they are allocating it not to where the market is needing it, but to where the politicians think it should go. This could be to win votes in a marginal electorate, to appease some noisy minority (these days they tend to be “green”), or to fulfil some ideological dream.

“Sustainable” is a buzzword now (whatever that means in this context). So “jobs are created” in “sustainable industries”, and it all sounds beaut. But if something is not “sustainable” it will automatically fall and fail and in due course be corrected.

Bureaucrats are great at dreaming up projects that will give them a future and they come up with ways for their politicians to spend the tax-dollars, and to conspicuously “create jobs”. The jobs destroyed by the taxes taken are not so easily identified. We don’t hear of “job destruction programs” that inevitably are the unintended consequence of any tax-taking.

The Carbon Tax of which we have heard so much is not branded as a “job destruction program”, or if it is, then more tax-payer money is directed to alleviate and appease, thus creating yet more job destruction.

So next time you hear of some fanciful government program that will, among other things, “create jobs”, just ponder what job destruction goes with it.

I would rather have my money to spend my way, be that in investment, in indulgence, in philanthropy, than have it taken forcibly from me so some politicians can grand-stand and buy votes and mis-spend it.

Job creation in Canberra is real. These non-productive, destructive jobs come at great expense to real people, to producers. It is again, as always, the tax consumers versus the tax producers.

(in order of appearance on Economics.org.au)
  1. Welcome from Neville Kennard
  2. Think Tanks Don't Work
  3. "Market Failure": Just what the government ordered!
  4. The Tragedy of the Tax Pool Commons
  5. Corporate Welfare
  6. Citizenship for Sale?
  7. I Don't Vote
  8. Voting: Right or Privilege?
  9. Stockholm Syndrome and our Love-Hate Relationship with Government
  10. Civil Disobedience: The Rules of Engagement
  11. Should Respect for Law Extend to Bad Laws?
  12. Jaywalking as a Demonstration of Individuality
  13. Government Likes War
  14. Collusion is Our Right
  15. Why Not the Drug Olympics?
  16. Unconventional Wisdom
  17. Tiger Farming: An Alternative to Extinction
  18. Looking Backwards: Mont Pelerin Society Conference, Sydney, 2010
  19. Tax Avoidance is a Patriotic Duty
  20. Kennard Writes to IPA Review Editor
  21. Genocide by Welfare: A Tragedy from the Aboriginal Welfare Industry
  22. Separating Sport and State
  23. Your Home is Not an Investment
  24. Dick Smith, Celebrity Philanthropist
  25. A Libertarian's New Year's Resolution
  26. Extend Politicians' Holidays to Create Prosperity
  27. Entrepreneurs are Disruptive, and Bureaucrats Hate It
  28. What is a good Australian?
  29. Governments Like Employment But Hate Employers
  30. The Market Failure Industry
  31. Neville Kennard: The Tax Avoidance Imperative
  32. Wot if ...?
  33. The Tribal Chief and the Witch Doctor
  34. The Tannehills
  35. Democracy versus Property Rights and Prosperity
  36. Government Doesn't Work, and That's the Way They Like It
  37. Minarchy vs Anarchy
  38. Euthanasia and Self-Ownership
  39. The Right Policies to Fix a Depression
  40. Is Howard Our Best PM?
  41. Tax Producers vs Tax Consumers
  42. Where There's a Queue, There's a Business Opportunity
  43. Authoritarian Freedom
  44. Why Classical Liberals Should Debate Anarchocapitalists
  45. The Tyranny of the Majority
  46. If you could choose to whom you paid your tax
  47. Business Should Exploit Boat People
  48. The Immorality of Trade Unions
  49. "America" vs "The United States"
  50. Sweet Anarchy
  51. The Illusion of "Job Creation"
  52. Gold Is Money
  53. Guilty Capitalists
  54. Bureauphobia
  55. Prosperity vs Growth
  56. Capitalism vs Democracy
  57. More people = More fun
  58. Self-Ownership - the very idea!
  59. Government will murder Neville Kennard if he doesn't back away
  60. The Australian Dollar Has Been Cowardly and Criminally Devalued, Harming the Poor Particularly
  61. Is Taxation Theft and Government a Tax Cheat?
  62. My Journey to Anarchy:
    From political and economic agnostic to anarchocapitalist
  63. Government Needs Bad Guys –
    that's why they like wars
  64. What Is Obscene?
  65. Traffic Economics
  66. Wayne Swan stands on the shoulders of other intellectual pygmies
  67. Neville Kennard Obituary
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