Government Cannot Create Sustainable Jobs

Government Cannot Create Sustainable Jobs por Arnold Kling:

Modern Keynesians claim the problem is that businesses and consumers are not doing their part. Borrowing and spending is a tough job, the Keynesians say, but somebody has to do it, and that somebody should be the government .. For Keynesians, job creation is simple. Entrepreneurs have knowledge of how and what to produce. All that is required is more demand, in order to induce them to undertake more hiring.

In contrast, in our Smith-Ricardo story, the knowledge of how and what to produce has to be discovered. Entrepreneurs have to figure out ways to utilize resources that satisfy wants in an efficient way. The market mechanism first must undertake trial and error to create production processes that exploit comparative advantage. Until these new patterns of sustainable specialization and trade are discovered, there are no job slots.

Experimenting with new patterns of specialization and trade is relatively easy. Discovering patterns of sustainable specialization and trade is much harder. Our economic well-being depends on the ability of entrepreneurs to make these discoveries.

If the Keynesian demand story is not valid today, then perhaps it was not valid during the Great Depression either. The 1920s and 1930s were, like the present, a period in which major technological changes were working their way through the economy. Economic historian Alexander Field has argued that the decade of the 1930s saw more technological progress than any other decade in American history.

The Keynesian story would lead one to expect a recovery to consist of workers returning to the jobs that they held prior to the recession. That is not what happened after the Great Depression. It is not what has happened in recent recessions in the U.S., particularly the one that ended in 2009. Regaining full employment requires significant restructuring of the economy, rather than simply returning to the pre-slump status quo.

More government spending can at best create some unsustainable jobs in the short run. In the long run, it will only distort and impede the adjustments that are needed to create patterns of sustainable specialization and trade.

2 pensamentos sobre “Government Cannot Create Sustainable Jobs

  1. ricardo saramago

    Em Portugal também temos a nossa quota parte de gente que espera o “fim da crise” para voltar ao “business as usual”. Inclusive no governo.
    Ainda não perceberam que nada vai ser como dantes e que a mudança não é para ficar tudo na mesma.
    Ou o país muda de alto a baixo, e se adapta com sucesso ao mundo, ou temos pela frente décadas de empobrecimento.

  2. Paulo Pereira

    É verdade . O Governo é mau a criar “jobs”

    O problema é que com impostos altos o sector privado também é mau a criar jobs.

    Resultado : Desemprego elevado, PIB baixo, miseria, estagnação cientifica e tecnológica.

    Solução : Reduzir Impostos sobre as empresas em primeiro lugar. Se mesmo assim não funcionar, reduzir impostos sobre os particulares, se mesmo assim a economia se mantiver em recessão, melhorar a saude e a educação, se mesmo assim não resultar, mandar construir infraestruturas e sistemas que reduzam o consumo de energia importada (por concurso ao menor peço) , se mesmo assim não resultar renovar habitações degradadas , etc. etc.

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