Bye Bye Stimulus Jobs

Posted by Jason | Posted in Economics, Government | Posted on 01-12-2009

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The Wall Street Journal had an article about how construction companies are going to be laying people off as the stimulus money projects run out.

WASHINGTON—Highway-construction companies around the country, having completed the mostly small projects paid for by the federal economic-stimulus package, are starting to see their business run aground, an ominous sign for the nation’s weak employment picture.

Tim Word, vice president of Dean Word Co., a heavy-construction company in New Braunfels, Texas, said his income is now coming mostly from projects that are winding up. He said that in normal times he has about $100 million of signed contracts in hand. But that number has fallen to $30 million, and the pipeline is empty.

via Job Cuts Loom As Stimulus Fades – WSJ.com.

This is why stimulus does not create jobs. It does not create permanent jobs, because it does not create wealth. Where does the government get the money? It must take it from one area of the economy whether through taxes or borrowing, and it gives it temporarily to another area of the economy. This is temporary, and businesses aren’t stupid enough to fall for it. Yeah, the businesses who receive the money love it. They aren’t going to turn it down. But the other businesses that don’t receive it are either laying off or not hiring because of it. They either don’t have the money to hire because it was taxed away, or they are competing with the government to borrow money. The more money the government is borrowing, the harder it is for small businesses to borrow. After all, who is considered the safest bet when lending, and if the government keeps demanding more money in a slow economy, wouldn’t it be best to lend them the money?

This whole story highlights several things. The government cannot create jobs, create wealth, control the economy, fix economic problems, or help you in anyway that doesn’t hurt you more in other ways.

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