TCS: Tech Central Station - Highway Robbery - Or Why Republicans are Clowns Too
In honor of the Democratic National Convention, I've been meaning to write about why both the Republicans and Democrates are clowns (or suck if you prefer that term). A couple years ago I realized that I could no longer support the DemoPublicans (save for a Ron Paul type candidate here and there that actually wants to decrease the Federal government) and began voting as often as the Vote Or Die celebs (never). At one point I was a naive college student who bought the teaching of the government schools and believed that we had great leaders like Lincoln and the rest of the croonie. Thankfully I at some point realized that the war mongering power grubbers like not very honest Abe, Tricky Dick and Bill I Didn't Inhale (and the rest of the lot) were all of the same breed. Now I'm also not a Michael Moore type of character who hates America, the government perhaps, but not the people. What makes this country and the world in general so amazing is the plethora of just wonderful and talented folks that are out there accomplishing things in spite of their governments. Anway in honor of the election I will be posting nothing but all the rediculous ideas that the two parties of the people are proposing. The laws of economics and commonsense (letting people make their own decisions) will be ignored because that is what people that make laws for this country do. Once again we find ourselves facing an election that offers us the choice of shooting overselves in the left arm or the right arm.
Here is our first example.....
Lately, Senate Majority Leader Bill Frist and House Majority Leader Tom DeLay have been touting the substantial job growth they claim will occur if Congress would just spend an extra $280 billion or more in federal taxpayer money on proposed transportation projects. In a February press release, Frist states the 2004 transportation bill would "create 47,500 new jobs" for each $1 billion spent. In a March press release, DeLay was even more ambitious: Citing the same figure, he couched the issue in terms of the federal government's attempt at "kicking the economy into high-gear… This is a jobs bill, pure and simple." In fact, that's been the mantra of Hill supporters of the highway bill on both sides of the aisle for months.
The problem with all of this is that it is wrong. Government spending won't actually create any "new" private-sector jobs. To understand why, take a look at Bastiat's famous essay, "What Is Seen and What Is Not Seen." There he explained what has become known as the "broken window fallacy." The story goes like this: When a shopkeeper's window is broken, a window repairman receives a job and compensation for his handiwork. To someone simply looking at this transaction in isolation it seems that the broken window, while the result of an accident, is actually a benefit to the economy - the window repair industry did receive business, didn't it? That, as Bastiat wrote, is what is "seen."
What is "not seen," however, is what the shopkeeper might have spent that money on if the window were never broken. Perhaps he would have bought any number of other goods or services, or hired another employee to work in his shop, but now he cannot. The breaking of a window does not increase net employment in the economy as a whole, even though it increases the employment of the window repairman.
Bastiat extends this logic to taxation and government spending. To spend money on anything, the government has to first tax that money out of the economy or borrow it from the capital markets. While supporters of a government project will argue that it creates employment for some, they fail to mention that the taxes or debt -- a form of future taxes -- will inhibit employment of others. As Bastiat wrote, "public spending is always a substitute for private spending," which "adds nothing to the lot of the working class taken as a whole." When politicians say that highway spending will create new jobs, taxpayers need to remember that the fuel taxes used to finance that spending have already taken a chunk of productive capital out of the economy.
He then ends the article with this gem...
To put it another way, if these types of government-financed transportation projects were indeed sources of real job growth, West Virginia would be an economic dynamo and pork-master Senator Robert Byrd would have won the Nobel Prize in economics by now. The truth is that increased government spending on highways usually only guarantees new jobs for bureaucrats. That's not the type of jobs program that the U.S. economy needs.
In honor of the Democratic National Convention, I've been meaning to write about why both the Republicans and Democrates are clowns (or suck if you prefer that term). A couple years ago I realized that I could no longer support the DemoPublicans (save for a Ron Paul type candidate here and there that actually wants to decrease the Federal government) and began voting as often as the Vote Or Die celebs (never). At one point I was a naive college student who bought the teaching of the government schools and believed that we had great leaders like Lincoln and the rest of the croonie. Thankfully I at some point realized that the war mongering power grubbers like not very honest Abe, Tricky Dick and Bill I Didn't Inhale (and the rest of the lot) were all of the same breed. Now I'm also not a Michael Moore type of character who hates America, the government perhaps, but not the people. What makes this country and the world in general so amazing is the plethora of just wonderful and talented folks that are out there accomplishing things in spite of their governments. Anway in honor of the election I will be posting nothing but all the rediculous ideas that the two parties of the people are proposing. The laws of economics and commonsense (letting people make their own decisions) will be ignored because that is what people that make laws for this country do. Once again we find ourselves facing an election that offers us the choice of shooting overselves in the left arm or the right arm.
Here is our first example.....
Lately, Senate Majority Leader Bill Frist and House Majority Leader Tom DeLay have been touting the substantial job growth they claim will occur if Congress would just spend an extra $280 billion or more in federal taxpayer money on proposed transportation projects. In a February press release, Frist states the 2004 transportation bill would "create 47,500 new jobs" for each $1 billion spent. In a March press release, DeLay was even more ambitious: Citing the same figure, he couched the issue in terms of the federal government's attempt at "kicking the economy into high-gear… This is a jobs bill, pure and simple." In fact, that's been the mantra of Hill supporters of the highway bill on both sides of the aisle for months.
The problem with all of this is that it is wrong. Government spending won't actually create any "new" private-sector jobs. To understand why, take a look at Bastiat's famous essay, "What Is Seen and What Is Not Seen." There he explained what has become known as the "broken window fallacy." The story goes like this: When a shopkeeper's window is broken, a window repairman receives a job and compensation for his handiwork. To someone simply looking at this transaction in isolation it seems that the broken window, while the result of an accident, is actually a benefit to the economy - the window repair industry did receive business, didn't it? That, as Bastiat wrote, is what is "seen."
What is "not seen," however, is what the shopkeeper might have spent that money on if the window were never broken. Perhaps he would have bought any number of other goods or services, or hired another employee to work in his shop, but now he cannot. The breaking of a window does not increase net employment in the economy as a whole, even though it increases the employment of the window repairman.
Bastiat extends this logic to taxation and government spending. To spend money on anything, the government has to first tax that money out of the economy or borrow it from the capital markets. While supporters of a government project will argue that it creates employment for some, they fail to mention that the taxes or debt -- a form of future taxes -- will inhibit employment of others. As Bastiat wrote, "public spending is always a substitute for private spending," which "adds nothing to the lot of the working class taken as a whole." When politicians say that highway spending will create new jobs, taxpayers need to remember that the fuel taxes used to finance that spending have already taken a chunk of productive capital out of the economy.
He then ends the article with this gem...
To put it another way, if these types of government-financed transportation projects were indeed sources of real job growth, West Virginia would be an economic dynamo and pork-master Senator Robert Byrd would have won the Nobel Prize in economics by now. The truth is that increased government spending on highways usually only guarantees new jobs for bureaucrats. That's not the type of jobs program that the U.S. economy needs.
posted by Champion at 9:52 AM
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