Again with Full Employment

jobs are a means, not the ends in themselves
people work to live better, to put food on the shelves
real growth means production of what people demand
That’s entrepreneurship not your central plan

— Hayek’s character in the “Fight of the Century: Keynes vs. Hayek Round Two


Listening to the Fight of the Century again, and also in light of stories like this where contractors are being paid under Obamacare to do nothing, I had a follow up thought to my previous post on Government Job Creation.

If you spend any time on the internet reading about economics, you’ve probably seen something that’s been attributed to Milton Friedman about building a canal with spoons. The meme may go something like this:

At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton 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.”

I’ve said this before, but one of the many differences between private business and government agencies is their end goal. Government “Jobs Programs” are designed to employ people. Doesn’t matter if those jobs are needed or if there are alternatives that are more efficient (ie. closing one of the countless Federal Agencies which the US Government admits doesn’t even know how many exist).

Entrepreneurs, for the most part, are not in the business of employing people because, as Hayek points out, jobs are a means to an end. Entrepreneurs are in business to stay profitable. Their product or service is what will attract buyers. Growth and market demand for more will stimulate true job creation.  Yes, there are non-profit organizations out there.  But the ones that are privately funded still have to balance incomes vs. outflows.  This may include having to add or eliminate employees to fit their budgets.

One more closing quote from Hayek’s character

Creating employment’s a straightforward craft
When the nation’s at war, and there’s a draft
If every worker was staffed in the army and fleet
We’d have full employment and nothing to eat


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