So Barack Obama is running ads on the Olympic Games, promising to create five million new jobs by way of building an “alternative-energy” economy. This is also something Nancy Pelosi talks about a fair bit. And of course the newly-created jobs are to be of the Good, High-Paying™ variety, which is Democrat-speak for: Union.
What’s this all about? In a word: Redistribution.
Let me explain…
You can count the hoped-for economic output of five million jobs that don’t exist today in a handful of ways. Perhaps the most conservative would be to double per-capita GDP (perhaps half of all Americans have a job) and multiply. A shade under $500 billion in new output, from alternative fuels and all the associated economic activity.
That’s bigger than the Defense Department. It’s several times more than the total profits of America’s food-producing industries. It’s more than half the total amount of money that we spend buying crude oil every year.
Heck, it’s even bigger than the total revenues of Exxon Mobil. So let’s at least give the Democrats credit for dreaming big.
So how does a government go about creating a major new industry out of nothing? Especially if they hope much of the labor will be unionized?
Two ways: either you take money from someone else and spend it building your new industry. Or you create legislated “incentives” for private actors to do it for you.
Here’s the problem: in either case, you’re performing a non-economic act. That’s just definitional, because if you have to take money from existing uses and redirect it somewhere it won’t go by itself, you’re being inefficient.
So that’s the first problem: creating an alternative energy industry may make sense as social policy, and I’m not going to engage that argument in this post. But in his Olympic advertising, Obama is selling it as economic policy, and that’s not what it is.
In fact, his problem is even worse than just inefficiency. If you’re going to divert resources to create a new industry, you also have to shut down the uses to which the resources are being put today.
And people aren’t just sticking that money in their piggybanks. The new taxes and incentives that Obama wants to use to generate five million new jobs will come from money that is already creating jobs today.
Redistribution in support of socialism isn’t a particularly novel idea, nor is it known to work all that well. At least it doesn’t work all that well if the goal is to create new jobs.
Redistribution doesn’t create jobs. Good old-fashioned risk-taking and capital deployment create jobs. That’s the kind of thing I and other businesspeople do every single day, and government has never, ever done.
If Barack Obama really wants to create jobs, he should stop running for President and start up a business venture. Except that his wife has already said that young people shouldn’t aspire to careers in business.
She may be right. Going into business, taking risk, and creating jobs might not be a very rewarding thing to do, if her husband follows through on some of the stuff he’s promised to do.
And keep firmly in mind that Obama is selling this warmed-over Carterism as an economic policy. It says so, in big white letters, right on his television commercial.
So my question for The Audacious One is this:
Senator, how many jobs will you need to destroy in order to create the five million new ones you’ve promised us?