Posted by
Old Retired Fart on Sunday, November 23, 2008 5:08:01 PM
Here we go again with a government program to "create good jobs". When are the powers that be going to learn a basic lesson that they teach every MBA candidate in their first economics class? Specifically, the government cannot "create" jobs. All they can do is take money from the private sector and redirect it to other sectors. When you add the natural friction of transferring money, there is a net loss across the board. This is not subject to debate, this is just the way things are. The government can only come up with money by increasing the money supply, increasing taxes or borrowing. Increasing taxes just moves money around and some of it gets lost in the transfer. Borrowing will just drive the interest rates up, leading to inflation and zero growth (anyone remember stagflation from the late 70's?).
The answer is really pretty simple. Lower taxes to encourage investment, and stop fiddling with things so that the markets know what to expect.
Why is it that Obama and company plan to do just the opposite?