Can Politicians Help Us?

Can Politicians Help Us?
Wednesday, September 29, 2010 by

The word “politician” usually comes with a negative connotation. It often brings to mind thieving, lying, corruption, and malfeasance. Nonetheless, most people seem to look to politicians to manage their world for them, to protect them, and to make their lives better. In every instance of local or national elections, citizens are deeply focused on choosing the politician they think will do the best for their community or nation. They seek politicians with experience, knowledge, insights, and ideas. They seek a leader.

But can our elected officials, even if honorable and well-intentioned, really improve our lives? Let’s take a look at the various possible avenues of assistance.

Currently, the main demand placed upon politicians is to create jobs for us. But, since it is companies — not the government — that create jobs, such a task is impossible. Government can expand and draw more workers into its ranks, or it can directly finance the creation of specific jobs in a specific marketplace with taxpayers’ money. In either case, a destruction of wealth is involved, and the jobs — unlike private-sector jobs — do not pay for themselves but in fact require ever more taxpayer funding each year, which further reduces capital in the economy.

If jobs are not profitable — if they are not part of a production process that results in creating at least the same amount of sales revenues as the costs that went into generating those revenues — then they use more resources than they create; they destroy wealth. That ultimately means fewer goods available for each person, and at higher prices.

But even if the government subsidizes unprofitable jobs (e.g., green jobs) and “funds” (i.e., subsidizes) that work to make up for its lack of profit, there is still a net destruction of wealth. This is because subsidies come directly from what would otherwise be our incomes.

When money is taken from us through taxes to pay the extra costs required to produce something that we would not voluntarily choose to purchase on our own at that higher total price (i.e., the selling price plus the subsidy we paid out of pocket to make the item “worth” producing), our money is wasted. Other goods we would prefer will not become available because the resources used to make those goods were instead used in making the product we didn’t want.

Except for building space stations, military bases, or other government-funded, wealth-destroying activities, government creates and builds nothing. It thus has no power to create real jobs in the marketplace; it can only “manage” and regulate.

To repeat, only individuals and individual companies produce and create; their ideas and capital are what profitably creates jobs.

Year by year, most of the currently existing companies would hire more workers if only they were allowed. For example, suppose a company has $100 to pay out in wages. Suppose further that it has hired 9 people for an average wage of $11.11 per hour each ($11.11 × 9 people =$100). If there had been a tenth person available to perform work at the company and help increase its production, why wouldn’t the company have hired that person and spread the $100 across 10 people, instead of 9, at a wage of $10 per hour each ($10 × 10 people = $100)?

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One response to “Can Politicians Help Us?

  1. This is simply an awesome essay on the waste and worthlessness of government’s interference in the market.

    Nothing could highlight the effects of government “help” better than the dollar price of gold.

    I am not sure how to “fix” the system which would require the removal of most, if not all of the ABC bureaus, the unwinding of all government regulations and a return to free-market money.