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Can government create jobs or wealth?

The biggest fallacy of all political rhetoric is that government can create jobs and wealth. Fundamentally, this ultimately refers to the broken window fallacy.

Government is economically incapable of creating jobs and wealth. It is impossible because of taxation. Since government possesses no assets or wealth without coerced taxation, taxation simply reallocates money paid by taxpayers to government projects; it prevents from new investment in capital, labor, land or maybe even entrepreneurship.

1. Taxation doesn't create new jobs or wealth because it only transfers wealth from one who creates new wealth. Sure, government employees received incomes, but it is at the expense of those who produce. Government employees don't produce anything new, they only take from the general public.

2. Government borrowing is just as inadequate as taxation, yet at least in taxation, it is paid. It reduces investment in capital, labor and land. Consequently, this translates into fewer new factories, machines, and homes being built. Not only does this decrease in private investment slow economic growth, it results in additional unemployment in these industries.

3. The worst source of additional government spending is creating new money either by simply printing more money or lower interest rates. Thus, this monetary event always results in inflation by eroding the value of the currency.

It merely shifts attention and valuable resources from one industry to another.

What this reallocation of resources does is it hides the true costs of government interference in the market. Government projects assume that it only knows how to allocate resources better than consumers or businesses know how to spend or invest.

Update:

@old school - spuds to you

Government doesn't create jobs, it merely transfers jobs. There is no new net job growth.

Update 2:

@ suthrnly...

Precisely

Update 3:

@weavings

EASY,

1. Did WW2 get us out of the Great Depression? Who created those jobs?

Simple, private industry only creates jobs. Government merely transfers jobs because government possesses no assets without legalized theft. No, government created the Great Depression and prolonged the depression by high deficits and government overspending. It is no coincidence that the depression ended after the war. The War continued the failed government polices of overspending.

2. Why were taxes so high in the 50's and 60's, when America was at it's peak as a superpower?

Where did you get this misinformation from?

Democratic Rhetoric Handbook Guide.

JFK proved that tax cuts work with his largest cuts in American history.

3. Is government more or less likely to ship jobs overseas to foreign nationals?

Why would government ship jobs overseas?

Again, that is the fault of government policies, and misunderstanding of free trade.

YOU have really no idea what you are talking about and it shows.

19 Answers

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  • bill j
    Lv 6
    1 decade ago
    Favorite Answer

    This is all true. That is why no socialist country can last. In an effort to get more money to pay entitlements to the citizens to buy their votes so the politicians can keep power they always end up either raising taxes, printing, or borrowing money. Raising taxes kills jobs which means fewer taxpayers which means less tax revenue. So they raise taxes again. It's a vicious cycle. Printing more money devalues the dollar, pound, franc, etc. Inflation makes money worth less so it buys less and the government has to print more to buy the same amount. Printing more causes more inflation. It's a vicious cycle. Borrowing money means you have to pay it back with interest. The interest takes money from your country and sends it abroad. With less money available to us we have to borrow more to make up the shortfall. Which puts us deeper in debt. Which means more interest paid out. It's a vicious cycle.

    The liberals in this country point to european countries as models of how our government should operate. They somehow miss the fact these european countries they admire so much are going bankrupt. They also ignore the fact that under capitalism America has prospered for over 230 years and become the strongest, wealthiest nation in the world with the most freedoms and liberties for its citizens. They want to trade a capitalist system that works and works well for a socialist system that always ends in failure. And if you disagree with them you are an idiot, racist, bigot, fear monger, Nazi, etc. Since the facts don't support them they are reduced to personal insults.

  • I'd like to see you explain a few things to me...

    1. Did WW2 get us out of the Great Depression? Who created those jobs?

    2. Why were taxes so high in the 50's and 60's, when America was at it's peak as a superpower?

    3. Is government more or less likely to ship jobs overseas to foreign nationals?

    If you even try to answer these, you'll be the first intellectually honest libertarian I've met. Though to be fair, finding intellectually honest people of any kind is increasingly rare. Few people debate anymore. We're all trying to slay the strawmen we've created.

  • 1 decade ago

    Disagree a little bit here with the first part, being that some of the projects that government has undertaken would have never been built if left to private industry. Bridges and infrastructure. While technically true that they cost money, in the long run, a bridge may save thousands of hours of valuable time which has a dollar amount. That is money creation. Also stuff like the space program... that developed a ton of other technology (computers for example) that has created a huge number of jobs and income for private industry.

  • 1 decade ago

    It sure can and has done so many times at the taxpayers expense. How about the Head of Homeland Security job and the salary that comes with it. How about Political action committees and the money they dole out to politicians. Harry Reid, Nancy Pelosi are very wealthy. So is John McCain, Dick Cheney and George Bush. Look at Bill Clinton, he came from a broken family and through government service is a multimillionaire. But it's only for the elite few and it is always at the taxpayers expense.

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  • Anonymous
    1 decade ago

    We had much more unbridled capitalism 120 years ago. It's no coincidence that we had a tiny middle class then and lots of people who worked 80 hours a week for peanuts.

    We tax too little. Most major countries spend less on interest and military yet have roughly similar tax rates. We will lose our supremacy forever if we listen to the people who support policies that run high deficits whether or not they admit they are causing them (like most tea party candidates - they won't spell out where they'll cut because they want to get elected)

  • Anonymous
    1 decade ago

    Bush created the Homeland Security Department, which created many Government Jobs.

  • Anonymous
    1 decade ago

    Not nearly as well as they can interfere with the creation of jobs and wealth .

    They can , however , create an environment that allows private enterprise to create jobs , profit and wealth .

    For some reason , the Libs seem unwilling to do this ?

  • 1 decade ago

    The government can only create government jobs, however the government can certainly create the atmosphere for job growth. The more regulations government puts on business, the more business is strangled.

  • 1 decade ago

    They do create government jobs that require many private jobs to pay for.

    The main job is for government to get out the way to create wealth and jobs.

  • Anonymous
    1 decade ago

    taxation can create an environment that is friendly to business...

    think about it... do you want to open a company in a nation that has no police, no army, no fire department? probably not... heck, most companies I know of also want sewer and water service or they aren't interested...

    So, the taxes paid create a business freindly environment where it makes it stable and easier for businesses to function..

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