Just like I don't think Peter Peterson is stupid enough to believe his anti-Social Security propaganda, President Obama can't actually believe this:
"Now, government can't create jobs, but it can help create the conditions for small businesses to grow and thrive and hire more workers," President Barack Obama said yesterday as he urged Congress to take up new jobs legislation at an event honoring Small Business Owners of the Year. "Government can't guarantee a company's success, but it can knock down the barriers that prevent small-business owners from getting loans or investing in the future."
It seems to be a new talking point. Here's Treasury Secretary and Rockefeller Republican Timothy Geithner:
We have a pro-growth agenda. Part of the agenda is growing exports. They're central to our future. What the president today is to say, that is important to the United States, we're going to be committed to making sure we're that we're expanding opportunities for American business everywhere. Now, this president understands deeply that governments don't create jobs, businesses create jobs. And our job as government is try to make sure we're creating the conditions that allow businesses to prosper so they can hire people back, get this economy going again.
Of course, government can create jobs--it creates jobs all the time: it simply has to hire people to do things. It's easy to do, especially when local governments are laying off workers.
What's truly depressing is that neither Geithner nor Obama are stupid enough to actually believe this. But they apparently have decided to parrot conservative, Republican talking points, while at the same time, alienating their own party's rank-and-file. It's as if they're intentionally trying to lose control of the Congress.
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You're missing the importance of exports. Government can't create jobs, but it can create the conditions for exporting them.
Only small businesses create jobs? Hmmm.
What an unfortunately stupid remark on the part of our president.
From the start Obama never had much interest in pushing back against republican ideology, so this is hardly surprising. And I wouldn't be that surprised if he actually half-way believes it too. The fact that he was considered the most liberal option just shows you how bad things are.
Can't Create Jobs?
A mere $6 million more for the national park service creates 2 new rangers at every park, or 118 jobs.
Every National Park project that closes a road to buses only creates 8 to 10 part-time jobs at the park
The great forgotten history of Roosevelt was all about the government creating jobs.
The CCC alone put 3 million men at work prior to the war, and as for investment? Most of the projects they did are still in use today in communities across the country.
Stimulating business to make jobs didn't work. It never could. Businesses don't add jobs until they have real profit or have real investment capital. Simple tax cuts won't make up for the fact that so long as there aren't any jobs, there's no market to buy stuff - the downward cycle continues. The introduction of outside capital (in the form of real government spending on real people) is the only thing that works. Until there are people with money to actually BUY stuff, companies can't sell stuff, and therefore companies have no reason to hire new people.
The fact that most large-scale company investment ends up going into acquisitions which reduce jobs by cutting out suddenly redundant middle management, human resources, and office administration staff seems to be something utterly lost on those that have been crafting the current stimulus plans.
"What's truly depressing is that neither Geithner nor Obama are stupid enough to actually believe this."
Don't be too sure. Obama may be smart, but that does not mean that he cannot believe stupid things. Greenspan convinced himself that financial markets are self-regulating. Remember, in May, 2009, in a low-key CSPAN interview Obama said that we (the gov't) had run out of money. Former President Clinton is also a smart guy, but he believes that the gov't should run surpluses to pay off the national debt.
When Geithner say, "Now, this president understands deeply that governments don't create jobs, businesses create jobs," that strongly suggests that the two have talked about the question. There is a strange belief out there that gov't jobs don't count. It would not at all be surprising if Geithner held that belief, even though it means that his job doesn't count. ;) Since 1980 the presidential economic advisors have been cut from the same cloth, regardless of party.
Former President Clinton is also a smart guy, but he believes that the gov't should run surpluses to pay off the national debt.
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Though it should be noted that was at a different economic time than we are now and he was doing it to lower interests rates to encourage people buying homes not out of some grand economic theory, just good politics.
You can talk till you're blue in the face, but it won't get through if the receiver is turned off. In the ugliest part of 2009, a co-worker swore to me that whacking taxes was all we needed to get business going again. I asked what good that would do, and he explained that it would free up investment money for business.
So I asked about whether our employer would fire up production and hire more people if it had funds available for investment. He gave me a funny look and pointed out that the company was sloshing with cash and there was no point in making stuff when there weren't any buyers. Several trips around the loop and he just couldn't get from the example right before his lying eyes to doubting the dogma he swears by.
Complete disconnect.
DC, my sympathies ;) The only comparable conversation I had with a co-worker went as follows:
"I'm voting for McCain because we've never tried lowering taxes in this country"
"Are you fucking retarded? The tax rate on the richest was over 90% a mere 60 years ago! The tax rate on the richest 1% is now barely over 1/3 the rate it was during the greatest economy this country's ever seen! Where on earth do you get the idea we've never lowered taxes? Let me guess, Fox News?"
"Well, I'll check on this, I don't believe it was that high, and I think we've raised taxes in the past few years."
Guess who never changed their vote? To be fair, this is also a guy who said that Al Gore said Katrina was caused by global warming. I asked for proof, and he showed me a Whirled Nut Daily headline, with quotes in thr article that completely refuted said headline. And this guy called himself a scientist! Nobody else did, but still . . .
On the face of it, you're right, but I think you're all missing the broader point. (Disclaimer: I am not an economist.) The phrase, "government can't create jobs" is (I think) shorthand for the notion that "government can't create private sector jobs that don't require continued government spending to support". True, the government can create (citing the example above) jobs in the National Park Service. However, most discretionary government spending is related to government employees. When government needs to "cut spending", the first things that get cut are going to be those National Park Service jobs (as a typical example). In down times, the government can indeed keep the economy moving by recycling money (taxing and then spending on government jobs), but it can't "grow" the economy. (AFAIK)
A possible counter to that position might be government spending on jobs to actually create things, like roads and other infrastructure. This might be considered as "growing" the economy, as it "enables" (I hate that word) other businesses to grow.
Another possible counter is that the (federal) government can "grow" the economy by spending borrowed money (or printing more). But again, that isn't a sustainable long term proposition (despite that Mr. Cheney said that deficits don't matter). I'm thinking of WWII as an example.
Does that sound reasonable?
I think what we are witnessing is the emergence of a secular religion. Religions are not about what is believed, but about why and how it is believed. Try convincing a creationist. It is impossible, not because their beliefs are nonsensical, they are, but because their beliefs are based in an unshakable acceptance of dogma. There is not other truth beyond the accepted dogma. The same is happening to our political and economic discourse. A large part of America believes in market fundamentalism. Market forces need to be encouraged not because they work, but because they are moral. The righteousness of the free market is independent of its results, the free market is right because is moral regardless of its results. The free market separates the good from the bad. The poor are poor because they are intrinsically immoral. The poor have traits that make them inferior moral entities, therefore their elimination is moral. Government intervention, as in the form of government employment, interferes with this natural process. Government jobs are immoral because they prevent the holy work of the free market from purging the lesser people. Many Americans believe this. It is a religion. It has temples in the form of Wall Street. It has preachers in the form of the economic experts. It proselytizes to other nations in the form of the Chicago Boys. It has inquisitionists in the form of Glenn Beck and Rush. It has an arcane language and incantations in the form of complex financial instruments. It has a monastic order in the form of our financial sector. It has devoted crusaders in the Tea Party. And it has a legion of opiated followers in the form of us, the populace, who mindlessly consume the needles products the religion has to entertain us with. We follow because most of us believe that if worship hard enough one day we too will gain financial paradise and be rich. Government jobs? That is blasphemy.
That's the nature of accommodationism. It causes otherwise smart, honest people to repeat damaging talking points they know to be false. It makes people vehicles for the rhetoric of their enemies.
Scott: "In down times, the government can indeed keep the economy moving by recycling money (taxing and then spending on government jobs), but it can't "grow" the economy."
I suppose what you mean is that for the economy to grow, real people have to produce goods and services that other people use. The gov't alone cannot do that, the people as a whole have to.
However, the gov't can jump start the economy by supplying money to people who will spend it. As a result, businesses will have customers, some of them will respond by hiring people, some will expand their businesses, seeing the increased demand, banks will begin to lend to businesses like they normally do, etc., etc., in a virtuous cycle. (This is not just theory, history provides plenty of examples.)
Taxing and spending is unlikely to be enough to provide the jump start. Deficit spending is required. Also, when a recession is accompanied by a financial crisis, history indicates that stimulus may be required for a few years. The U. S. had an inadequate stimulus, China is doing better, with a stimulus equal to 15% of GDP. A comparable stimulus for the U. S. would have been more than $2 trillion.
None of this is rocket science. But do not take my word for it. There is plenty of stuff available online and offline about this. Brad DeLong recently pointed out that John Stuart Mill first solved the riddle of depressions, where there seems to be an oversupply of stuff (including labor), but people were not buying it. He said that there was an increased demand for money. That is the case now. Money is something that the gov't can supply, no problem, since the gov't is the source of money. (The gov't used to be constrained by the gold standard, but not any more. :)) The only reason that the gov't is not supplying the economy with money is political.