Creating so many jobs that destroy wealth

As Americans face an intense, hyperpartisan presidential election, every labor market report becomes fodder for the administration’s claims about what great managers of the economy they are, and counterclaims about how misleading such management claims are.

Recently, such dueling narratives have featured issues such as the seven-figure (and growing) gap between the official employment rate and the lower employment rate from the Household Unemployment Survey, and whether rising official employment did not mean more full-time jobs for American citizens with due to rapidly increasing immigrant employment and how the reduction in hours worked by full-time workers and the shift from full-time to part-time work have resulted in a reduction in labor services provided, even as formal employment increases.

Lately, I’ve been particularly interested in the large portion of jobs that have been “created” in government. While it hasn’t received much attention in the (reflexively pro-Biden) mainstream media, some more careful observers are taking notice. For example, last month Ryan McMaken published an article in Mises wire titled “Employment declines for third month despite 50,000 new government jobs created,” which noted that “government job growth accounts for about 20 percent of all new jobs.” This month “Wall Street” daily in an editorial titled “Government Spending Job Boom” noted that “more than half of new jobs last month were created in government, health care and social assistance” (the latter two areas relying on “transfer payments from the government”) .

The reason this issue is so important is that government spending does not actually create jobs, but instead moves them from places that people would choose for themselves to places that the government dictates through its tax, spending and regulatory. The distinction between job creation and job displacement makes a critical difference considering that there are nearly 3 million federal workers in America and about 20 million state and local government workers (13 percent of all jobs). This substitution means that many jobs created directly or indirectly by government policies impose net costs on society rather than benefits, thereby worsening rather than improving the well-being of Americans.

The most obvious examples come from the vast (and ever-expanding) crazy structure of federal executive agencies, mandates, regulations, etc. But these are mountains of state and local interventions (or is it the other way around?) to measure “good” (at least if you mistakenly search for antonyms for the term , not synonyms). Peaceful wealth creation comes from voluntary agreements among people, but the core activity of the regulatory state is often to interfere with mutually productive workplaces, undermine social coordination, and destroy wealth. Placing additional restrictions on voluntary production arrangements does create some jobs, but it acts as a huge regulatory tax on jobs that benefit other people.

Professors Susan Dudley and Melinda Warren examined federal regulatory agencies that explicitly restrict private sector transactions. They found that there were 277,000 such regulators in 2015 (far more than General Motors’ global workforce) and an 18-fold increase in these agencies’ inflation-adjusted budgets since 1960, to more than $57 billion (in US dollars). 2009).

Recently, The American Action Forum reported that Biden administration agencies “published $875.3 billion in total costs and added 4.7 million annual paperwork hours” in just one week last month, “only $20 billion less than what President Obama did in two terms.” what its president, Douglas Holtz Eakin, called “a simply stunning regulatory onslaught.”

Coercive federal interventions often lead to spillover effects on state and local government employment as well (even if these are not the Keynesian spillover effects that students hear about in macroeconomics courses). Moreover, interventions at all these levels also create jobs in the private sector to meet the growing scope of its dictation. For example, many jobs in the human resources and health care industries were created to comply with Obamacare and since then, as Medicaid has expanded rapidly. However, with careless programs and restrictions, such jobs can generate costs rather than benefits to society.

The surge in the government’s “Peter-Paul” approach (robbing Peter to pay Paul), evident in almost every area of ​​public policy, is also causing an increase in the number of lobbyists hired to help special interests benefit at the expense of others. Others are forced to employ more people in self-defense to cope with the scale of robbery they will be forced to deal with. The expanded fight to control federal government theft has created a booming influence industry job market that has dramatically boosted the economy in Washington but destroyed the wealth of people around the world in a massive negative-sum game.

Similarly, when regulations or policies of questionable constitutionality or legality are promulgated (as in the case of the Biden administration’s environmental and education policies), it increases the number of lawyers and legal resources the government employs. It also increases the number of employed people who could experience violence. Such opposition may be one of Americans’ most valuable investments in stopping such intrusions on human rights, but even stopping it leaves Americans worse off than if these norm-breaking initiatives had not been undertaken at all.

While much has been said about President Biden’s job creation “achievements,” and even more will happen before November (at least to the extent that the cone of media silence in defense of Biden can be bypassed), there is one area where which he significantly exceeded. It has created many jobs in government (as well as in government compliance) that undermine our private efforts whose mutual gains are guaranteed by the need to obtain the consent of all parties affected by the rights. In the process, he expanded the government’s reach into areas where we have no such protection from it. But such overachievements are diametrically opposed to what our founders understood (from John Locke) to be the primary reason for government – to better protect all our rights and property from invasion. We would do well to remember that “creating” such jobs may increase employment, improving Biden’s re-election chances, but it inhibits rather than increases our prosperity.