Does Government Create Jobs?

Many people have been talking about job creation lately, especially politicians. But is government the best creator of jobs? And is job creation the best thing for the economy? Professor Steve Horwitz explains that there is a difference between creating jobs and creating wealth. It would be easy to create millions of jobs overnight. For example, we could eliminate all of the machinery and innovation used in agriculture. Then many people would be needed to farm in order to produce sufficient food for society. But no one is suggesting that because it is not practical and it would set our economy back 100 years.
Creating jobs is relatively easy. The problem is that the most economic progress is made when jobs are eliminated as they become unnecessary. New innovations happen gradually, though, and technological innovation means people will need to learn new skills, and some are likely to lose their jobs in the meantime. That unemployment is a bad thing, but the alternatives are worse. To prevent such labor transitions would halt innovation, growth, and the reduction of poverty.
Market signals can indicate what kind of skills people should invest in and where the new jobs of the future will be. But the government doesn’t have these signals. Instead, many government job-creation programs are really about meeting the needs of politicians, not the needs of consumers in the marketplace. “The best job-creation program in human history is the free market and the entrepreneurship it generates,” Professor Horwitz says.
Government Spending Doesn’t Create Jobs (video): This Cato Institute video presents the argument that government spending actually creates a drag on output and employment
Creative Destruction (video): A short video on the economic phenomenon known as creative destruction, the process of dynamic positive change in an economy that often comes at the cost of labor and employment
Reducing Real Output by Increasing Federal Spending [article]: The myth that government can create jobs is closely tied up with the myth that government spending increases output
The Myth of Job Creation [article]: A New York Times editorial on the indispensability of federal job creation
Are Government Layoffs the Problem? [article]: A New York Times “room for debate” piece on the costs and benefits of government layoffs
Why Government Job Programs Destroy Jobs [article]: FEE takes a look at government job-creation programs and presents a number of reasons why they are counterproductive
Does Government Create Jobs?
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