For some reason, John Maynard Keynes and his largely disproven economic ideas about government involvement in an economy, “full employment,” and government's ability to “create jobs,” just refuses to go away. Some of the arguments against Keynes are:
1. Government doesn't create jobs. It only takes money, in the form of taxes, from one part of the economy and redistributes it to another part of the economy. This is called a spending multiplier. Its ratio is 1:1. In other words, one dollar gets produced in the economy for every dollar government takes out of the economy. Again, in other words, the pie doesn't get any bigger. It just gets distorted.
2. Government, and its concomitant bureaucracy, has been proven to be one of the least efficient methods of job production. It's much less efficient than the private sector.
3. Government job “creation,” in areas like public works, can only go on for as long as government continues to spend in those areas.
4. Keynesianism failed during Roosevelt's time in office.
5. It failed during the Hoover administration.
6. It failed during President Carter's fight with stagflation during the '70's.
7. And it failed more recently in Japan, during the 1990's, when the Japanese government spent a fortune trying to force their country out of a moribund economy. It cost them a fortune, and it didn't work. It was a hugely expensive mistake. The '90's are now referred to as "The Lost Decade."
Yet what does the president elect want to do to pep up the U.S. economy? Spend, spend, spend – exactly the opposite of what the country really needs. It's the very same mistake that has been made already, all over the world. When will our politicians learn?
"The Fallacy That Government Creates Jobs," by Daniel J. Mitchell.
"Obama Offers First Look at Massive Plan To Create Jobs," from The Washington Post.
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