Panacea, so goes Greek mythology, was the goddess of healing. She had the power to cure all diseases and prolong life indefinitely with a potion she created. Anyone who had it would have the elixir of life and immortality. All ills would vanish forever. Today and ever since the Great Depression, economists have believed that the economic equivalent of Panacea's potion is government spending. It will cure all ills, save the free market, and bring infinite prosperity. If only such a story were not as false as the myth of Panacea. Keynesian economists constantly demand that government spend more money to pull us out of recession. When such policies fail miserably, and their predictions of recovery are revealed to be utterly false, the answer is never more than "it must not have been enough" or the more clever but equally inaccurate "government spending is needed to stimulate idle resources." (it only takes one question to realize such an answer is a poor economic argument: Why are resources idle, and should they be forced back into usage? The answer is 1) because resources were misallocated into sectors out of line with consumer preference, thus were generating losses and 2) no, for doing so will force hasty descision making and only misallocate resources again.) Jobs created by the public sector can only displace or even destroy private sector jobs. How can this be? Because if people are taxed $10 million to fund some government project--be it roads, bridges, or ice rinks--they now have $10 million less to spend on things they need, and that dropoff in spending will cost other people their jobs. Imagine a bridge project embarked by Congress trying to create jobs to stimulate the economy. We can see the bridge being built, and we can see the people doing the building. But there are other things we do not see, because, alas, they have never been permitted to come into existence. They are the jobs destroyed by the $10 million taken away by the taxpayers. All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, television technicians, clothing workings, farmers. The existence of the bridge is usually enough to win the argument because it is far easier to point to the bridge and convince all those who cannot see beyond the immediate range of their physical eyes. But all this is even granting government that it will merely divert jobs in a zero-sum game fashion. This is not correct. Bureaucrats have to be paid. Signs are constructed on freeways, costing hundreds each, so people focus only on the seen and forget the unseen. In the private sector, resources must be employed in line with consumer preferences if entrepreneurs wish to see a profit. If they do not employ resources in such a manner, they make losses and must either change their business plans or see their capital slip out of their hands. Government, on the other hand, lacks this crucial feedback mechanism, since it earns its money not by satisfying consumers but by the coercive means of taxation. Without having to pass the profit and loss test, it can never know how efficient or destructive its projects are. How much of something is needed? Where should it go? What materials should be used? Operating outside the realm of voluntary human relations and answering to no profit-and-loss test to guide them in resource allocation, government is inherently unable to answer these and countless other questions. Government spending, far from being the elixir of life, is really the angel of death. Like Panacea, its power is no more than a myth.