NOTE: This commentary was originally published on June 15, 2004.
Politicians are fond of saying, “Government doesn’t create jobs, the private sector does.” Yet the machinations of state and federal government–and the news releases that follow–reveal that most politicians truly believe a booming or a busting economy hinges on their actions.
Indeed, many politicians in Harrisburg have succumbed to what economist Ludwig von Mises described as “the almost religious fervor of those who believe in salvation through spending.”
Take, for example, Pennsylvania Secretary of Revenue Gregory C. Fajt’s recent news release declaration that “We are beginning to see some signs that the Rendell Administration’s responsible fiscal policies and aggressive economic development efforts are having a positive impact on Pennsylvania’s financial health.”
First of all, few Pennsylvania taxpayers would likely characterize the Rendell Administration’s raising of taxes and jacking up of fees by more than $1 billion last December as examples of “responsible fiscal policies.” In fact, most working moms and dads would consider it rather irresponsible to hike the personal income tax by nearly 10 percent on Pennsylvanians earning as little as $10,000 per year.
Second, what “aggressive economic development efforts” by Gov. Rendell is Mr. Fajt talking about?
It was only two months ago that the governor’s so-called “economic stimulus” package sailed through the Republican-led General Assembly. And this $1 billion in additional taxpayer largess has yet to even be handed out by the newly created–and politically appointed–wealth-redistribution board.
“Aggressive”? Perhaps. Although the average worker who is now taking home a smaller paycheck thanks to Mr. Rendell would probably have another descriptor for the governor’s plans which include more than $300 million in “guarantees” and “loans” to “venture capital partnerships for investments.”
Yes indeed, things have gotten so bad in the commonwealth that venture capitalists will now receive taxpayer-funded subsidies. In other words, politicians will be forcing Pennsylvania taxpayers to take on risks that evidently no private-sector investor will. A cynic might comment that efforts to bring slot machines to Pennsylvania aren’t the only gambling legislation moving forward in Harrisburg.
Of course, this political strategy of using tax dollars to lure or keep jobs in the commonwealth is nothing new in Pennsylvania.
Recently, the House Appropriations Committee rolled out some talking points–presumably designed for incumbents running for re-election–entitled “Republican Stewardship of State Government: 1995-2003.” In addition to highlighting the billions of tax dollars spent on things ranging from agriculture to higher education to arts and recreation, the chairman boasted that taxpayers “Invested $13.7 billion in job-creating economic development.”
Apparently we are to believe that job growth in the commonwealth during that eight year period–which was 39th in the nation–would have been much worse if Harrisburg politicians hadn’t removed billions in private-sector wealth from the economy and redistributed it to politically chosen projects and corporations.
But let’s pretend that the “businesses-not-government” line about job creation was actually translated into sound economic policy. What would be the proper role of government in the economy?
It is actually quite simple. Because government is absolutely incapable of creating jobs–it can only take money from one Pennsylvanian by force and give it to another–it must subscribe to the Hippocratic Oath of “First, do no harm.”
Therefore, the best the government can do–aside from defining and enforcing straightforward and stable rules of contract and property–is just get out of the way! However, this is the same reason too few politicians willingly relinquish their role as our economic bosses. It is boring; and it certainly doesn’t provide them photo opportunities with oversized checks to demonstrate to constituents “why you need me in Harrisburg.”
Yet expanding economic freedom–i.e., reining in the meddling of politicians in the marketplace–is the only way out of our current economic doldrums. Real jobs will never be created by redistributionist “economic stimulus” packages crafted by Harrisburg politicos. Jobs will only be created as a result of the accumulation of wealth by individuals who then decide how, where, and how much to invest, save, and spend.
The reality is that if the “government doesn’t create jobs, the private sector does” cliché is to ever be more than hollow campaign rhetoric, politicians will first have to renounce their faith in “salvation through spending.” Now that would truly be a religious conversion worth witnessing in Harrisburg!
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Matthew J. Brouillette is president and CEO of the Commonwealth Foundation (CommonwealthFoundation.org), a public policy research and educational institute based in Harrisburg, PA. Permission is hereby granted to reprint in whole or in part, provided the author and his affiliation are cited.