Saturday, April 02, 2011

Government Mandates Do NOT Create Jobs

Steve Moore tells a story about Milton Friedman traveling to Asia in the 1960s and visiting a worksite where a new canal was being built. Friedman was shocked to see that instead of modern tractors and earth-mover equipment the workers instead were using small shovels. Milton asked a government bureaucrat why there were so few machines, and the bureaucrat replied: 'You don't understand. This is a jobs program.' To which Milton Friedman replied: 'Oh, I thought you were trying to build a canal. If it's jobs you want, then you should give these workers spoons, not shovels.'" 

A more recent version of the same story is happening in Michigan, as the state ends its outdated 1976 law that requires Michigan retailers to put individual paper price tags on every item. Michigan AFL-CIO President Mark Gaffney claims that the change in the law on September 1 this year will eliminate 200 to 300 Michigan jobs.

Jarrett Skorup of the Midland, MI-based Mackinac Center counters with a job-creating proposal:

"If it is true that government mandates can create employment and wealth, then I have a proposal. Instead of the current law, which requires businesses to have one paper tag per item, the state should mandate 10 tags per item. In fact, maybe we should up that to 100 tags per item. After all, think of how many more jobs will be created by forcing businesses to hire more and more workers to comply."


At 4/02/2011 11:19 AM, Blogger Jason said...

Canal story is great. Reading it I feel the same anxiety as when I hear the argument that the government should continue to subsidize gas and oil (aka "Drill, drill, drill") instead of investment in new energy technologies.

At 4/02/2011 11:22 AM, Blogger Ironman said...

"Instead of the current law, which requires businesses to have one paper tag per item, the state should mandate 10 tags per item. In fact, maybe we should up that to 100 tags per item."

And so, we accidentally discover what the government is really doing with all those proposals for nutrition labeling requirements - they're creating jobs!...

At 4/02/2011 12:12 PM, Blogger Che is dead said...

"... investment in new energy technologies."

Isn't that just the lefty phrase used to describe a subsidy? There isn't a "new energy technology" that is viable without massive government subsidies, or in lefty speak "investments". The truth is that the government collects more in taxes from the oil companies than the oil companies make in profits.

At 4/02/2011 1:50 PM, Blogger Benjamin Cole said...

This post is right on--adding waste onto a function does not create more jobs, anymore than taxing people to pay for all those Homeland Security people at an airport creates jobs, or having a military creates jobs.

Those jobs, or mandated jobs, are financed by taxing or taking money out the pockets of people who are productive. Those jobs stifle economic growth.

For now, the priority should be to pay down the national debt, and environmental, social, military and rural welfare concerns need to take a back seat.


At 4/02/2011 4:46 PM, Blogger Sean said...

Actually, by the common definition, you just proved government mandates *can* create jobs ;)
Of course, if your definition of a job is that it's a net value creation activity... well, then nothing directly on that topic has been said in this post. Which, I suppose, is just as well.

At 4/02/2011 8:02 PM, Blogger Mkelley said...

Here's a snapshot of the way "green" energy is subsidized way, way more than traditional sources:

At 4/02/2011 8:47 PM, Anonymous Anonymous said...

I think for people already on welfare or getting unemployment checks, it might still be better to make them do something(even if unproductive) rather than sitting at home.
First, it will create an incentive to go get a real job since they cannot just sit at home any longer.
Second, it is probably better for an unemployed person's psychological health if he just gets out of the house and does something.

At 4/02/2011 9:57 PM, Blogger Hydra said...

"A [n information] firewall would protect citizens from “unidentified” and ‘unsupported’ information as well from as Idea Spam and Intentional Information Sabotage during the period when citizens are making up their minds about what is in their best interest –individually AND collectively. To preserve democratic government"

Ed Risse


This is what some would say to ironman, che, Benjamin, juandos, and anyone who disagrees with them.

At 4/02/2011 10:03 PM, Blogger Hydra said...

I think we need to get away from the quaint notion that everyone needs to, or should, work.

In the example given, the canal was a government project. If it was more efficient to use machinery, then government could have used machinery and still pay most of the displaced shovel pushers.

They would then have the freedom and the money to go find something worthwhile to do.

At 4/03/2011 6:56 PM, Blogger Richard Rider said...

Milton Friedman was WRONG!! Useless make-work jobs are GREAT for the economy. I wrote a tongue-in-cheek newspaper column last year proving this beyond all doubt!

For a fun read, go to:
"The perfect "stimulus" - Dig huge holes, then fill 'em up"

I think you'll find my 12 reasons justifying this program offer a rather compelling logic.


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