Jobs: Just Do Something ?

There is a lot of gnashing of teeth over jobs and the need for ‘the government to do something’.

Let’s consider what happens when the government does something as opposed to the citizenry doing something.

If I earn $100 I will pay $40 in taxes and take home $60. Of this $60 I’ll save $10, invest $10 and spend the other $40 on housing, food, clothes, transportation, and entertainment.

If the government ‘does something’ they’ll take an extra $10 from me in taxes so that they’ll have money to ‘do something’. Of this $10 about $2 will go to the government bureaucracy to run the ‘do something’ programs. Another $2 will go to the government of China to pay interest on the money we’re borrowing from them. Of the remaining $6 that actually goes towards ‘do something’ jobs programs maybe half, $3, will be used to actually employ someone – if we’re lucky.

So that’s good, we’ve employed someone. The program is working.

Oops, there’s a hitch. How many people lose their jobs because of the higher taxes? Since I now have $10 less of what I’ve earned I won’t eat out as much so some restaurants will close, others will just lay off staff. I’ll have less to spend on clothes and I’ll postpone buying a new Ford.

The worst part of the monetary equation though is that I will have less to invest. I’ll cut that $10 to maybe $3. So, U.S. manufacturers will have more difficulty raising capital for new ventures that over future years would have become self-sustaining enterprises that employ people, bring capital into the U.S. from other countries, and prop up the value of the U.S. dollar.

OK, so the monetary side doesn’t look so good…

What about people? Our nation was built on the ingenuity and work-ethic of its citizens. Interestingly, the Democratic party was founded on the principle of freeing citizens from government. The Democratic party’s goals during the 1800’s was as little government as possible. They fought to give every person the freedom to pursue their dreams - Life, Liberty, and the Pursuit of Happiness. Their mantra for decades was ‘We’re Americans, we can accomplish a lot if government will just get out of our way. We don’t need government interference.”

Fortunately, the Democrats won, with perhaps the biggest break coming in the Supreme Court’s decision in Gibbons v. Ogden that limited government meddling and opened up business to unfettered competition. Every person was free to pursue their dreams. Someone who valued life and leisure over wealth could choose to work less for less income. Someone who valued wealth could choose to work harder to obtain the luxuries they desired.

People were responsible for themselves. If someone wanted something they had to work for it. During the 1800’s and into the 1900’s we had the hardest working, most productive, and most inventive and creative citizenry in the world. Because of this we’ve enjoyed the highest standard of living of any nation in history. And this highest in the world standard is not the wealthy, but the average laboring citizen.

Compare all of this to what happens when government gets involved. A government program doesn’t encourage me to work hard or be inventive. Why should I work hard if the government will provide me with what I need? If I work hard and start earning money to support myself the government will just reduce how much it’s giving me and give it to others. If I work even harder and take some risks to invent something or start a company, the government will just tax me more.

Suddenly it seems really stupid for me to work hard or invent anything. What benefit will there be? The only inventiveness that will benefit me is the inventiveness in how best to take advantage of government programs.

But wait, what if the government is just providing job training or education assistance? Certainly that’s OK? How can that hurt?

Well, the same principles apply. If someone else is paying why should I be careful in what training I choose, how well I do in it, or how hard I work to learn? If I’m having to pay for it myself I’ll make sure I get MY money’s worth. I’ll choose a program that I think will have a very high likelihood of providing me with gainful employment in the future. I’ll make sure that the training provided is ‘up to snuff’. I’ll work really really hard to learn so that when I’m done I can earn as much money as possible.

The problem with government programs is that they simply kill individual initiative. I’m a pretty ambitious person (pause of laughter…), but if there is no benefit to me in doing something I’m not likely going to do it. Why waste my time and energy?

There are individual stories of people who have taken advantage of government programs to make a better life for themselves. The problem is that for every one of these there are 9 others who wasted the effort. If these same 10 people were having to pay for it themselves, my guess is that 7 or 8 of them would have chosen not to pursue it, but that the 2 or 3 who did would have each been more successful than the 1 person who succeeded in the government program.

And from a cost perspective, since we wasted money on 9 people, we spent 10 times as much to educate 1 person as that person would have otherwise spent. What a waste! What a waste of our money. What a waste of the resources of the instructors. What a waste of the time of the 9 people who just took up space in the training.