Thursday, March 5, 2009

Jobs vs Productivity

Speaker of the House Nancy Pelosi said that the goal of the stimulus plan is to create jobs. This is wrong for two reasons:

First, it is not the government's role to create jobs or stimulate the economy. The free market is perfectly capable of creating jobs and promoting economic growth without the government. The problem that must first be identified is that what we have is not a free market. There are myriad acronymic federal agencies that pepper the economic spectrum that remove any real functionality from a true free market. A true free market would be one without the interference of the largest destructor of wealth the world has ever known -- the Federal Reserve. A true free market rewards for success and punishes for failure.

Second, the goal should not be job creation but productivity. Twentieth century British economist John Maynard Keynes was such a proponent of government's role as the creator of jobs that he recommended that government pay people to dig holes and fill them up. Unfortunately this philosphy has spread like a disease throughout the media, politics, and academia. Productivity is the key to economic viability, and the easy credit conditions created by the Fed and the misdirected focus on job creation without long-term sustainability is what has turned this nation into the largest debtor and consumer in the history of mankind.

Read Tom Woods' article.

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