Job Creation 101

(What Washington does not want you to know)

Government spending is prosperity-negative. So, how to solve an increase in poverty levels? Get government to spend more on helping the poor. Geez, why haven’t I thought of this before?

If you take $100 million from the private sector and give it to Washington (as done through the tax system), Washington could use this booty to create jobs. The question is: how many jobs? Nobody knows, but the exact number doesn’t matter. Just call it “X” number of jobs.

If we keep the $100 million in the private sector, it will also lead to job creation. Again, we do not know how many, but we can call it “Y” number of jobs.

We are now faced with a very simple mathematical equation:

Is X > Y?

Or is Y > X?

The folk who lived in the old Soviet Union, where the ruling class laid claim to virtually all of the country’s production and labor, know without a shadow of doubt that Y is always bigger than X. There was a direct correlation between the decline in jobs (increase in poverty) and growth in the size of the Soviet government.

We can’t hope to raise the water level in a swimming pool by taking water from the deep end and pouring it into the shallow end. In the same way, we can’t generate prosperity as a nation by taking hard-earned wages from the subject class and giving it to the ruling class. The ruling class can create a modicum of prosperity, especially when reinforced by talking heads on TV.

Job creation and, by implication, prosperity, thrives in a country where the size of government is kept as small as possible. Singapore has grown its economy by more than +9% p.a. over the past 40-plus years. They have done so, because they have adhered strictly to the rule that kept the size of government to 12.5% of GDP. It is the fourth wealthiest country in the world, measured on a per capita basis. It has no natural resources to boost its GDP, for example, as is seen in oil rich countries. Singapore is a pure economic miracle based on the simple equation: Y is always > than X.

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