Monday, September 12, 2011

How it hurts the economy when the government hires the unemployed

On www.bloggingheads.tv, John and Glenn ask the question why can’t the government just hire people, WPA style, to create jobs. http://bloggingheads.tv/diavlogs/38656?in=04:46&out=09:52  One answer is a very practical one. Hiring people to repair park benches and clean the streets will impact the government workers who are currently employed to do just that. Unions of government workers and contractors would likely be the strongest opponents of WPA like work projects.
The core problem with the government hiring people to do work is the inability of the government to know what to produce. An economy is all about producing the goods and services that people want and need. When the government decides to tear up and repave a road in order to replace the sewer pipes, how confident are you that that project was selected to be implemented because it was necessary? Or because it would employ 30 workers for 6 months? And when the project takes 6 months to complete, is that better than getting the job done in 3 months?

Put aside the ridiculous circumstance we are in these days where the government pays people to be idle thru ever extended unemployment benefits. ( Requiring those receiving unemployment checks to show every day for their WPA work assignment would help the economy simply by encouraging people to take an available private sector job. ) Paying people to produce a good or service that is not in demand prevents that person from producing goods and services that are in demand. The way to know there is a demand for something is the price people are willing to pay for it. The free market is far superior to setting prices and weighing demand than government decision makers.

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