printFrom last Night:
The Iraqi government will spend $10 billion of its own money on reconstruction and infrastructure projects that will create new jobs.
Question: The Iraqi government has its own money? $10 billion of it?
In any event, government job creation schemes are predicated on government taxing, borrowing or inflating the money supply. Such programs are politically popular because they are visible. However, for every job “created” by government, an unidentifiable job will, tit-for-tat, be destroyed in the private sector.
Fox News, keen to hype this good-news story, may broadcast images of earnest Iraqi men and women put to work by Nuri Kamal al-Maliki (read the American taxpayer). Invisible will be those thrown out of work because private economic activity has been crowded out by taxing or borrowing to finance these job programs. Government borrowing (and Iraq is all about borrowing: American borrowing) serves to reduce capital available to the private sector (Iraqi, American—your choice, whoever you believe is really funding this latest scheme). A further diminution of assets occurs when government expands the money supply and causes inflation in order to finance job creation schemes.
Creating good, long-lasting employment lies in producing goods or services for which there is a legitimate consumer demand. A rise in consumer demand for a product, reflected in relative higher prices, galvanizes business to hire more workers and produce more of the commodity. Hence jobs in the private sector are real jobs because they are sustained by consumer preferences. Unsustainable government make-work schemes merely usurp the wishes and needs of consumers, and substitute them with the fancies of bureaucrats, who, in turn, are beholden to their political masters.
Sustainable jobs in Iraq will be created by the private sector. For that, ordinary Iraqis require peace and the rule of law. These preconditions are unlikely in the chaos of a civil war, created by Bush’s adventure in the region.
Bush remains oblivious to an immutable principle, once understood by conservatives: Top-down central planning—economic or political—is doomed to fail.
Bush doesn’t understand the pitfalls of central planning? That’s OK. Most Americans don’t either.
One of my favorite thinkers, Dr. Thomas Sowell, offered a soft-spoken yet razor sharp critique of economic airheads a few weeks ago. In an essay called “Hollywood Economics”, Sowell took to task the loudmouths who protest Starbucks’ wages to Ethipian coffee growers. He writes, “Are the Ethiopian coffee growers worse off now that Starbucks is buying their beans? The laws of supply and demand would suggest otherwise. But then, moral crusaders seldom have time for economics.”
Indeed. Those without time for economics can be found among the more-aid-for-the-poor types and the wage-war-for-democracy types. We do no good for Ethiopian coffee growers if we demand that Starbucks pay them American wages. We do no good for Iraqis if we bomb the crap out of them, creating a chaotic mess impossible to run a business in – even after the benevolent public works program offered by Bush.
My kingdom for a Return to Reason.
President Bush is a small government, constitutionally adept politician? Please! He is nothing more than a socialist that only cares about how to enslave the American people. Three cheers for the dictatorship of the proletariate.
Sorry – Ilana –
Iraq can’t favor private over public sector because the private sector is in worse shape than the public sector.
[Spoken like a true neocon. I guess, like Bill O’Reilly, you’ve gone to the Iraqi markets to see how these heroic people are still trading… Didn’t think so. No, those–like O’Reilly, Rice, and Rummy–who hunker down in the Green Zone–they are the True Heroes.–ILANA]