Sunday, November 6, 2011

Why Government cannot Increase Employment

Government cannot increase employment, because new employment requires additional money.  Government can print more money, but government cannot create more money.  More money is only created when a profit is made.  Government is not a profit making entity.  Government is a tax collecting entity.  Only the Private Sector can make a profit (or more money), and therefore only the Private Sector can create new jobs.  Government jobs created with borrowed money are not real since the borrowing cannot be sustained indefinitely.  The only way a job can be sustained is with a profit making system.  Our profit making system is the Private Sector.

You are thinking that can't possibly be right; didn't FDR create thousands of jobs during the Great Depression?  Think about this: Did any of the jobs paid for by the WPA survive into the 1940s?  The answer is no, because the jobs were not needed and were paid for with borrowed money.  The government did not make a profit on the employees hired by the WPA, consequently there was an insufficient revenue stream to pay for the employees.

FDR did not create jobs.  He simply made welfare payments contingent upon completing a task before checks were passed out.  The difference between an employment check and a welfare check is the employment check pays a worker for contributing to an activity that makes a profit.  Since no government activity makes a profit, a worker engaged by the government is simply a welfare recipient unless the worker provides a service the Private Sector agrees to fund through taxation policy. 

This is the dilemma faced by the citizens of Greece.  Their massive Public Sector is sucking the vitality out of the Greek economy.  Billions and billions of Euros are spent on jobs that the Private Sector does not need to make a profit, and consequently, the Private Sector's ability to grow the economy is strangled.  You can see that any effort to expand Public Sector employment will further burden the fragile Private Sector in Greece.  Greece needs economic growth and that can only be provided by the Private Sector.  This is not a new problem for Greece.  For over 100 years Greece has been run by two political parties that promoted Public Sector employment.  One party emphasized Public Sector employment in the social services arena and the other party favored employment in the military and foreign affairs arena.  For over 100 years the Private Sector and economic growth was ignored with the current disastrous economic effects on the Greek citizenry. 

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