Tuesday, January 26, 2010

Why the Government Can NOT Create Jobs UPDATED

Let's say you've always wanted to start your own business. Let's also say that someone has given you (gratis) $100,000. You would be able to use that money immediately on purchasing stock, setting up the business, and advertising/networking. Within a year or so, you might even be able to start taking on staff.

Let's say you are the government and have received $100,000 in taxes. How many jobs will that create in the same time span?

Few to nil.

Let's take a look at why the government simply can not create jobs like the private sector can.

That $100,000 check needs to be processed by the IRS. That takes government employees and costs money.

The left over money has to be allocated by the government. That takes government employees and costs money.

The money is allocated to a particular "stimulus" program - say infrastructure. That takes government employees and costs money.

The infrastructure project needs to be selected and bids reviewed/approved. That takes government employees and costs money.

The infrastructure project is awarded to a particular construction company but "oversight" by the government to make sure the project is running as bid must occur. That takes government employees and costs money.

By the time, the $100,000 in taxes makes its way through the government system to an actual "job", it has practically evaporated.

Any and ALL government-run programs and projects cost far more than what it would cost in the private sector simply because of all the "layers" our taxes must percolate through before the money that left the private sector in the form of taxes returns to the private sector in the form of a project.

This vicious cycle of diminishing returns must stop. The more we scale back the government, the more benefits we will reap.

New Link proves my point - Updated: How Much Does It Cost To Hire a New Federal Employee?

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