Paul

Ibrahim

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December 8, 2008

Barack Obama Cannot ‘Create’ a Job

In a much-publicized video on Saturday, Barack Obama declared: “We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s.”

Obama’s claim, by definition, is false. Obama will not “create millions of jobs” or, as he also asserted, “put people back to work” by upgrading federal buildings and investing in national infrastructure. It is economically impossible.

The Merriam-Webster Online Dictionary defines the word “create” as follows: “to bring into existence,” or “to make or bring into existence something new.” Obama cannot possibly bring into existence a new net job.

Let us establish up front that essential and effective infrastructure is economically beneficial. Even though it incurs building and maintenance costs, such infrastructure allows for cheaper transportation and more efficient economic activity, and thus no reasonable person can possibly stand against it.

But when it comes to government funding of infrastructure projects designed for the sake of “creating” jobs, it is a completely different story. When the infrastructure project is neither needed nor necessary in its own right, it hurts the economy and destroys private sector jobs without providing compensatory benefits.

Unfortunately, this is the type of infrastructure projects that Obama proposed on Saturday. He specifically framed the projects in the context of “creating” jobs, and even wrote a rule called “use it or lose it,” which he explained as follows: “If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.”

In other words, it is irrelevant to Obama whether the infrastructure is necessary to local communities. If a state isn’t in genuine need of, say, a tunnel, Obama would still want the state to use taxpayer money to build a tunnel just to put people to work, even if it runs close and parallel to an existing tunnel. This is how you know that Obama’s proposed projects are a waste of taxpayer money and economically destructive.

The fact is that every single government infrastructure project will sooner or later be paid for with taxes from the pockets of Americans. For example, the government might take $200 million from Americans in order to build a tunnel, and the politicians involved will boast about having funded the construction of this tunnel, which will have temporarily employed 1,000 people.

But what these politicians – and, unfortunately, most of their constituents – do not see is that those $200 million, if they were not taxed away, would have been spent by people at computer stores, restaurants, pet stores, hospitals and so on. (Alternatively, the money would have been “saved,” meaning it would have been given to investors through banks or stocks and used to start or expand computer stores and restaurants). The money would have created jobs in those businesses and industries, and would have created them in a much more efficient and sustainable manner than the government did.

In other words, by funding the tunnel project, the government did not “create” any net jobs. Yes, it created tunnel jobs, but was only able to do so by destroying at least as many jobs in the computer, restaurant, hospital and other industries. But the government did not add one single net job to the economy by hiring people to work on the tunnel. It merely reassigned these jobs from other industries into the tunnel industry.

Now, this consequence would be acceptable if, as noted earlier, the community was in genuine need of a tunnel. But Obama’s plan, which by his own admission is designed around the objective of “creating jobs,” and which even pushes states to spend on infrastructure projects they don’t need, does not justify taxing Americans and diverting their jobs.

Americans deserve to spend their money on things they desire. Taking their money so politicians can claim credit for “creating” jobs not only carelessly reassigns workers, but also forces Americans to spend their money on unneeded projects. To the extent that Obama’s plan is intended to “create” jobs, it is an irresponsible waste in every way.

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