Archive for the ‘Taxes’ Category

Characterizing (U.S.) Democrats and Republicans

August 29, 2007

“Democrats promise social programs without mentioning future costs to taxpayers, while Republicans promise reduced taxes but are vague about future deficits or program cuts.”

unSpun, finding facts in a world of disinformation by Brooks Jackson and Kathleen Hall Jamieson

Fallacy of Public Works for “Providing Employment”

July 20, 2007

Suppose the government decides to build a bridge.   There can be no objection to building the bridge if it is built to meet an insistent public demand, if it solves a traffic problem or a transportation problem otherwise insoluble, if, in short, it is even more necessary to the taxpayers collectively than the things for which they would have individually spent their money if it had not been taxed away from them.But a bridge built primarily to “provide employment” is a different kind of bridge.  When providing employment becomes the end, need becomes a subordinate consideration. “Projects” have to be invented.  Instead of thinking only of where bridges must be built, the government spenders begin to ask themselves where bridges can be built.

Two arguments are put forward for the bridge, one of which is mainly heard before it is built, the other of which is mainly heard after it has been completed.  The first argument is that it will provide employment.  It will provide, say, 500 jobs for a year.  The implication is that these are jobs that would not otherwise have come into existence.

This is what is immediately seen.  A different picture presents itself if we have trained ourselves to look beyond the immediate to secondary consequences, and beyond those who are directly benefited by a government project to others who are indirectly affected.  It is true that a particular group of bridgeworkers may receive more employment than otherwise.  But the bridge has to be paid for out of taxes.  For every dollar that is spent on the bridge a dollar will be taken away from taxpayers.  If the bridge costs $10 million the taxpayers will lose $10 million.  They will have that much taken away from them which they would otherwise have spent on things they need most.

For every public job created by the bridge project a private job has been destroyed somewhere else.

We can see the men employed on the bridge.  We can watch them at work.  The employment argument of the government spenders becomes vivid, and probably for most people convincing.  But there are other things that we do not see, because, alas, they have never been permitted to come into existence.  They are jobs destroyed by the $10 million taken away from the taxpayers.  All that has happened, at best, is that there has been a diversion of jobs because of the project.  More bridge builders; fewer automobile workers, television technicians, clothing workers, farmers.

But then we come to the second argument.  The bridge exists.  It is, let us suppose, a beautiful and not ugly bridge.  It has come into being through the magic of government spending.  The country is richer.

Here again the government spenders have the better of the argument with all those who cannot see beyond the immediate range of their physical eyes.  They can see the bridge.  But if they have taught themselves to look for indirect as well as direct consequences they can once more see in the eye of the imagination the possibilities that have never been allowed to come into existence.  They can see the unbuilt homes, the unmade cars and washing machines, the unmade dresses and coats, perhaps the ungrown and unsold foodstuffs.

What has happened is merely that one (unnecessary) thing has been created instead of other (necessary) thingss.

— Economics in One Lesson by Henry Hazlitt