The way many politicians talk, you’d think they could simply pull a lever or wave a magic wand, and poof – a new job appears out of thin air. All their talk about creating jobs raises an important question: Can government even create jobs?
The simple answer is “no.”
Basic economics teach us that entrepreneurs and businesses in the private sector create jobs, not government. Government programs designed to “stimulate” the economy just shift jobs and other valuable resources from some companies to government-preferred companies or from the private sector to the public sector.
As we all know, any government resources ultimately come from taxpayers, so job-creation programs usually just lead to more government spending and, sometimes, even to fewer jobs.
And more spending certainly isn’t the answer. As Russ Roberts, an economics professor at George Mason University, explained, “When the economy is healthy, you don’t need to spend money from outside to create more jobs. And when the economy is not healthy, all the spending in the world won’t create jobs.”
What can we do about it?
So if government can’t create jobs, is there anything it can do to help the economy?
Sure – government can create a legal and policy framework in which entrepreneurs (the real job creators) can do what they do best without government getting in the way. This means cutting taxes and eliminating burdensome regulations. It also means supporting initiatives like “economic gardening” to help connect entrepreneurs with the information and resources they need to create jobs.
When it comes to job creation, government is not the answer, but it can encourage economic growth by maintaining a fertile, level playing field where anyone with good ideas and a strong work ethic can thrive.
Newsletter: Government Job “Creation”
Article: The myth of government-created jobs
Blog: Government-created jobs? Pure fiction
Policy Paper: Economic Gardening: A Proposal for Growing Utah’s Economy from the Inside Out