Make a Difference

Day: October 7, 2009

Governments Cannot Create Jobs

Only business can. While the government may seem to create jobs when it hires people or buys things, it destroys at least as many jobs as it creates when it does so.

Via Hyscience, which links to this article from the Wall St Journal about the lessons to be learned from government economic policy in Texas and Ohio.

When governments try to create jobs, or stimulate the economy, or support industry or ‘good causes’, they can only do so by taking money from business. Which means fewer people employed, less reason to take the risk of investing in business, reduced production of saleable commodities, lower profits from which to pay taxes, less income to government, less capacity to care for the poor.

Ohio has an economy burdened by high taxes and work rules that impose heavy costs on employers. Texas embraces free trade, keeps taxes low, doesn’t impose unions on business and has tooled itself for 21st century global competition. Ohioans may not like to hear this, but for any company considering where to locate a new plant or move an existing one, the choice between Ohio and Texas isn’t even a close call.

Texas has lower unemployment, higher average personal income, and creates more jobs and more exports.

The lesson is, the less government tries to do, the better off everyone is.

Government cannot create jobs, only business can.

Are you listening Mr Rudd? Mr Obama?

Art Without Bludging Off the Taxpayer

I know, I’ve said it a thousand times before, almost all subsidies are a waste of time, and end up costing more than any benefit they provide.

There are three reasons:

First, if you are getting a subsidy, you don’t have to worry so much about careful planning, or financial responsibility (because someone else – the taxpayer, usually – is picking up the bills), or whether anyone will like or buy what you produce. In other words, subsidies enourage a lack of efficiency, and the production of goods and services which nobody wants.

Secondly, subsidies are inefficient. Subsidies mean taking money off some people and giving it to other people at the whim of a politician or lobby group. This bad enough, but the process itself, its planning, administration and record-keeping, all cost time and money – which means substantially more money is taken from the taxpayer than ends up in the hands of the recipient. In some instances, the cost of assessing a person or group’s eligibility for a subsidy is more than the value of the subsidy itself.

Thirdly, subsidies (and food and clothing and other material aid, except in the most dire emergencies) discourage potentially viable businesses, and therefore discourage investment of both time and money in creativity, in business, in research and industry. The long term consequence of this is that businesses, artists, causes, etc, that might be successful on their own merits are disadvantaged.

In developing nations, local business people cannot compete with shiploads of food and clothing aid. So the West’s generous subsidies mean local people have no incentive to invest in developing the primary production, trade and industry which produce long-term wealth.

In relation to art, it is sometimes argued that good art is not necessarily commercial. Something may not sell well, and yet be worthy of support.

But who decides this? If no-one wants something enough to pay money for it, on what basis is it judged to be good?

I cannot think of a single piece of visual art or music, or a play or film that people have wanted and enjoyed, or which has shown itself to have lasting value, which depended on subsidies for its production.

On the other hand, there are hundreds of talented artists, musicians and playwrights who stand on their own feet, and who have made the world a more interesting place, by showing us truth or beauty or meaning where we had not seen it before.

My friend Neil Sheppard is one. Neil makes a good living from producing good paintings – that is, paintings that say something worthwhile, and that people enjoy enough to be willing to pay for.

Neil’s (Shep’s) website is on visualartist.info, but you can see more of his work on Flickr.

Enjoy!

© 2024 Qohel