How to raise employment

Discussion in 'Economy' started by BoredDead, Nov 28, 2012.

  1. BoredDead
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    BoredDead Member

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    I've been working on a hypothesis as to what taxing and spending does to the unemployment rate in the economy, and here is how it has shaped up so far. I want to debate/discuss it with everyone.

    Here is my hypothesis on taxing and spending's effect on the unemployment rate: taxing and spending can create or destroy a net amount of jobs based on the quality of the jobs government creates through spending.

    For example, I'm going to say taxing 40,000$ (The per capita personal income, the average amount one job pays I believe) costs one job in the private sector, while the government can counter that by creating one 40,000$ public sector job (salary and benefits total). Or, according to this hypothesis, the government can create 2 public sector jobs that pay 20,000$ each. The important part of this is that government can kill two PS jobs by taxing 80,000$ and making one public sector job that pays 80,000$, which is similar to what the US government is doing now.

    My explanation as to why: Taxes in the economy no doubt destroy jobs, this should be obvious, as when you take 1000$ from someone they don't spend it, and the retail service that the money would of gone to doesn't get it, and they see smaller sales, and then they have to downsize. But the other side to taxing is government spending. Money that was previously taxed (not printed or borrowed, hopefully :\ ) is spent and jobs are created through the creation of government jobs, and by giving private sector companies business (causing them to expand). Also, high paying government jobs require higher taxes, thus more killed jobs for less created jobs.

    Now, public sector jobs pay vastly more than private sector jobs, 2x more according to the second paragraph of this source. This means according to this hypothesis, the government destroys 2 jobs for every 1 job it creates.

    How this can be fixed is to lower the wages and benefits of public sector jobs to their private equivalents, maybe even pay less if we want to lower unemployment further.

    Another hole in employment government creates is through entitlements. They cost tax dollars, thus jobs, but no jobs are created with the money.

    How that can be solved is by creating "welfare jobs" instead of entitlements. How they would work is that the government would pay a person to work, but they would work under private sector companies.

    Obviously an exception would have to be made for the disabled.

    What do you guys think?
     
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  2. TNHarley
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    TNHarley Gold Member

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    Maybe you could sell that idea to obama. Heard he needs help..
     
  3. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    good stuff!!
    1) Yes we could end unemployment problem by cutting government pay in half and using the savings to hire all those unemployed.

    2) A guy who works for government does not work for the private sector so one government job means one less real job in the private sector

    3) Private sector jobs are real or serious jobs because the private sector operates in a competitive environment to invent new products, and that is how we grew from the stone age to here.
     
    Last edited: Nov 28, 2012
  4. eflatminor
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    eflatminor Classical Liberal

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    As a libertarian and not an anarchist, I understand there must be government jobs. And I believe those jobs should be pay well, to attract reasonable talent. All fine.

    However, the idea that government spending, regardless of how it's spend, stimulates the economy a flawed ideology. It's akin to me robbing the local grocery market of it's till, taking some of that money for my trouble, having a few bucks fall through the hole in my pocket (there's always waste), and handing the rest of the money over to a homeless guy. Then, when that homeless guy goes into the same grocery store I just robbed to buy beer, we call it stimulus. It's patently ridiculous. Sure, the homeless guy got his beer, but the grocery store is now less likely to expand or hire. Additionally, that store must pay for my job (robbing them), which is now a tenured public sector union gig where I cannot be fired. Wonderful.

    Read the 'Broken Window Fallacy' for more on the ridiculousness of calling government spending stimulative.
     
  5. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    Great post!! Yes liberals would have us believe that when the government steals and spends our money its magic and stimulative, but when we very carefully spend our own money its not.

    There is not an ounce of logic in liberal thinking. They are as deceptive as Hitler Stalin and Mao, the great 20th Century liberals
     
  6. Wry Catcher
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    Wry Catcher Platinum Member

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    The fact is government spending is not = to a homeless guy stealing beer.
     
  7. Wry Catcher
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    Wry Catcher Platinum Member

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    Do you actually believe anything you post? Or is this forum simply an attention getting device and something to do while you wait to be called for dinner?
     
  8. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    sure it is in the sense that both are theft and both are destructive to both parties and the larger society
     
  9. eflatminor
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    eflatminor Classical Liberal

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    Didn't say it was. Read more closely next time.
     
  10. BoredDead
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    BoredDead Member

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    :eusa_clap: That's a good example of what government taxing and spending does, except your missing that the suppliers of the retail goods are more likely to expand. Other than that this is a good representation of what taxing and spending does. It takes money from one place and gives it to another by purchasing goods. It doesn't increase GDP but it doesn't lower it, all taxing and spending does is change what is produced. You are completely right in that stimulating the economy through spending utterly fails. However you are wrong in that government spending hurts the economy.

    One thing to note is that government buying goods from a retail business (like buying office supplies from staples) doesn't benefit the retail store as much as it hurts everyone else. However it does benefit the retail store + the suppliers equally to how much it hurts everyone else.

    I know a little bit about the broken window fallacy, I saw the learn liberty video on it (you probably know these guys, they're libertarian, like you. smart people). Taxing and spending is like the broken window fallacy, except with no broken window, just a different path for the money to take.

    [ame="http://www.youtube.com/watch?v=erJEaFpS9ls"]Learn liberty video[/ame]

    As for waste I would say that that money still finds its way back into the economy (assuming it isn't destroyed or lost somehow, but we print money to counter it). You might point out this could be a corrupted official taking the money and ending up in a large bank account, but banks will use that money to make investments. Though of course corruption is still bad.
     
    Last edited: Nov 28, 2012

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