by Neville Kennard, veteran preaching and practising capitalist
Our politicians love to tell us that some pet project “will create x number of jobs”.
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.
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