Where are the Jobs?

Yale economist Robert Schiller is not very optimistic about the economy. "There is a significant likelihood of (a second) recession if the government doesn't do something" he was quoted as saying in a report by Moneynews.com. Many point to the dismal job statistics as a key factor behind the poor economy. Despite the massive spending by Congress, jobs are still hard to come by these days. "Job growth in the private sector hasn't improved as we would have expected" said the chief economist at Wells Fargo, John Silvia.

Despite the nearly $1 trillion spent, unemployment is at 9.5%. Economic growth for the second quarter was 2.4%, down from the unimpressive 3.7% registered in the first quarter. Schiller recommends more spending by the government. If $1 trillion can't stimulate the economy, let's spend two.

The government should do something. It should get out of the way. Massive spending and increased regulation have not helped. Some argue it has only made things worse. Government does not generate wealth, it spends it. As a rule, government programs cost more to maintain than they produce and government employees cost more in tax revenue than they generate. Even if we put aside the issues of efficiency and effectiveness, government is expensive, very expensive.

Reducing taxes leaves more money in the economy which is precisely where it needs to be if the economy is to improve. If businesses are to hire people, they need to sell things. If people are to buy things, they need money. If people are to have money, they need jobs. Taking money out of that cycle through higher taxes does nothing to improve it. Neither does hobbling it through regulation. Injecting more money into that cycle by lowering taxes has a much higher probability of improving it. Government money can help in the short term by keeping the cycle from freezing up but it is not a solution. Persistent government spending only deforms the cycle. The only real solution is to restore the cycle to its natural state.

It was once said that the definition of insanity is to keep doing the same thing and expecting different results. Government spending and expansion have not helped. Why it is believed that more spending and more regulation will work is beyond me, but, then again, I am not economist at Yale. If we are to rely on the government to get us out of this recession, I suggest that the government simply hire everyone who is out of work. If the government did so, not only would it take a huge bite out of unemployment and provide quality health care to many, it would simultaneously stimulate the economy when those new workers went out to buy things. Perhaps best of all, tax revenue would increase since all of those new employees would pay taxes on their income. Sure, the debt would increase, but so what? It is not likely anyone will ever get elected on a platform of cutting the debt, not when you can get elected for generating jobs.

If the government is going to spend a couple of trillion dollars to improve the economy, it should just cut out the middleman and put that money in the hands of the people on whom the economy relies. But it won't because the government is the middle man.

Money not collected by the government remains in the hands of those who earned it where it is either saved, spent, or invested. Each benefits the economy. A healthy economy generates jobs.