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Framing the debate about government jobs, private jobs and a healthy economy


Active Member
Aug 11, 2011
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OK. This started off as a response to a post in another thread but as I started to write, I realized that this debate needs to be framed correctly or else people are not really talking about the same thing.

If you are one of the people that is concerned that if we shrink the government we will lose jobs then on the surface you are right. People will lose their "jobs". But lets take a step back an analyze this for what it is. Let us simplify and frame the discussion so that we can have meaningful discourse because unless you separate the smaller parts of the argument and discuss them first any debate will ultimately wind up with party line rhetoric. I realize that it is wordy but part of that is because buzz words like job, unemployment, labor and productivity have a tendency to mean one thing to one group of people and an entirely different thing to other people.

In an attempt to understand the dynamics of how a government and government jobs contribute to an economy, we define a job. If your definition of a job is showing up to a place, performing a task and receiving compensation then when someone approaches you about cutting government it is only natural to assume that jobs will be lost. If the idea of an individual or multiple individuals losing their job, regardless of need, is unacceptable then further discussion is probably not warranted. I disagree wholeheartedly with your opinion and will work hard, especially when I run, against you but you certainly do have the right to that opinion. I'm not going to call you names, malign your character or even try to change your mind, I will just say that I believe you are misguided and you need to consider a few factors but if you are hell bent on keeping every person who is paid to perform labor employed then so be it.

In stead of asking did someone lose a job, we need to be asking did someone lose a "quality job" and "will it be replaced by the private sector". A quality job is a job for which there is a natural demand which adds value to the economy. Now bare with me for a minute while I try to explicate the usefulness of a job and its effect on an economy.

If person A is hired to dig a hole and person B is hired to fill that hole back up they are said to have jobs. The problem is that while both person A and person B are performing labor and receiving compensation, the labor that they are engaging in does not actually add value to the economy. Of course there are these moral questions to ask when considering terminating the employment of A and B. Things like "they will put money into the economy anyways... so the money is not lost" and "what happens to person A and B if you fire them? What about their families? They are obviously willing to work... so give them something to do and at least reward their willingness to work." All of these are very compelling reasons to allow them to keep digging their holes. But its not that simple.

In reality this creates a drain on the economy... allow me to explain. Along with having a hole dug and filled, to no discernible end, you also have to pay the person that hired the people and the person that hired him. You have safety concerns (is the shovel too sharp? will they develop blisters from digging? Have called before we dig to make sure there is no power/gas line below the surface?) to pay for and a host of other things which create labor for these two individuals. Essentially you have created a need for work to support a fruitless job.

I talk about adding "value to the economy" quite a bit and I should probably explain what I mean by it before I go any further. Its an important concept to grasp in order to understand what exactly I'm saying. First you have to understand the relationship between fiat currency and work. A dollar is nothing more than a promise that someone will do work, at some point in the future, on you behalf. Currency is really nothing more than a tool to give liquidity to labor. In the absence of currency people barter. While its fine for some things, say a farmer, that are necessary for everyone it doesn't lead to a diverse economy because it does not encourage any growth in sectors that may not have a universal demand. For example, if you are a farmer and you grow corn you will likely be able to trade your corn with just about anyone you meet because everyone uses corn. If however, you make snorkeling equipment you might have a harder time moving your wares. If you want corn but the corn farmer doesn't want your snorkel then you're kind of SOL; enter currency. Not that long ago gold was the standard form of currency. It was believed to have an inherent value, be in short supply and be easily coined. Gold became a simple way for people to trade their labor (growing corn or making a snorkel for example) without having to find the perfect buyer. Recently we have "evolved into a fiat currency" and "fractional lending". Essentially this means we have an ever evolving money supply and and in order for the economy to expand you need expanding demand for labor.

Essentially, currency has become a commodity that represents labor but it does not necessarily represent labor at a constant rate. As the money supply expands, unless the labor that will need to be performed in the future expands at the same rate, the amount of labor necessary to buy one dollar either increases or decreases. Essentially, this accounts for inflation and deflation. Of course demand in this case represents an individual having both the desire to have labor performed on his behalf and the ability to pay for the labor.

Now we get to the adding value (or necessary/desired labor) to the economy. Locke's theory of property ownership details how a person's labor, in the form of improvement allows a person to claim ownership of property (or anything in the world for that matter) and is kind of related to the idea of adding value to an economy.

Back to person A/B. As they dig and fill the hole, they are adding their labor to the economy. The problem is that their labor is essentially zeroing out to a net gain of zero. There is the potential for both person A and B to add something to the economy, if there is a need for a hole then person A is performing a task. There is an inherent demand for his/her labor and he is being justly compensated. He is then able to go and compete with the fruits of his labor (his money) on the open market. Instead he is now contributing to the demand for labor while having his labor negated by the labor of person B.

Now how does this apply to government? The government, with a fiat currency and a fractional reserve (banks can lend money they don't have yet) the government has no profit motive and no motivation to stay within its budget. The government's primary job is to create a need for its own existence. I've seen it in the recent cutbacks, people scrambling to save people's jobs. In some cases even creating unnecessary jobs to replace the jobs that were lost. How does this happen? The government prints more money. The first job of every government official is to ensure there is a demand for his job the next day. This is how pet projects get created. After that happens you now have someone who is being compensated for something which does not need to be done. In the private company this job will eventually be lost because a private company cannot afford to purchase labor that it does not need, especially as the economy gets into trouble. It is a kind of a natural defense mechanism that the government removes from the economy.

Its late, I'll finish this in the morning... just kind of tired of typing. go ahead and comment so far.. I really didn't mean to write an essay.


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