Why The Democrat Plan For ‘Job Creation’ Doesn’t Add Up

PHILADELPHIA, PA - MAY 18: Former U.S. Vice President and Democratic presidential candidate Joe Biden speaks during a campaign kickoff rally, May 18, 2019 in Philadelphia, Pennsylvania. Since Biden announced his candidacy in late April, he has taken the top spot in all polls of the sprawling Democratic primary field. Biden's rally on Saturday was his first large-scale campaign rally after doing smaller events in Iowa and New Hampshire in the past few weeks.
Drew Angerer/Getty Images

For many on the Left, government is the solution to all of our problems. In a similar fashion to Elizabeth Warren’s “I’ve got a plan for that,” the government is presented as a vague savior for every issue we face. Climate change? Poverty? Mental health? It doesn’t matter how general or specific the problem. Some form of government action is assumed to be the answer.

In addition, the hypothetical outcomes of such governmental proposals are used to justify the proposals themselves, providing a circular argument which avoids the need for factual evidence. One such example we see time after time is the presumed outcome of “job creation,” where politicians will describe vast expenditures as “investments” in “us” which will provide countless new jobs.

For example, when criticized for the much-maligned Green New Deal, Biden’s response has been to talk about the creation of “more than 10 million well-paying jobs.” Using the same logic, Bernie Sanders promised 20 million new jobs, double Biden’s hypothetical number. Biden’s running mate, Kamala Harris, has made that same promise, saying, “We’re going to invest in renewable energy, create millions of jobs.”


Research firm Moody’s Analytics also assures us that Biden’s plan will create jobs; in fact, we’re assured, more than four more years of Trump. But there’s a catch: it will do so by racking up more federal debt and by increasing taxes. Here’s how Business Insider reports on Moody’s economic projections:

The study, conducted by Mark Zandi and Bernard Yaros, evaluated the economy’s trajectory under four different scenarios. But it found that a Democratic sweep where Biden is elected and Democrats recapture the Senate would lead to a significant increase in federal spending. They assume it would be largely “deficit-financed,” meaning the government racks up a bigger federal debt.

The spending, though, wouldn’t be a drag on overall growth. Instead, 18.6 million jobs would be created during Biden’s first term, and lift the average American’s household after-tax income by $4,800. That’s 7 million more jobs compared to a scenario where Trump is reelected and Republicans hold onto the Senate. Household incomes largely stay the same should the GOP control both the legislative and executive branches.

The basic counter-argument to such statements involves one of two obvious facts. The first is that politicians routinely make promises which never materialize, and yet people continue to believe them this time. The second is that such lazy “job creation” math disregards the number of real and existing jobs which will inevitably be destroyed by their policy suggestions. 

However, there is another counter-argument which runs deeper than the financial illiteracy of politicians, and surrounds the question “should the government be in the business of job creation in the first place?” 

The fundamental assumption of figures like Biden, Harris and Sanders is that government job creation is an objective good and has a direct and undeniable impact on employment statistics. In their mind, if the government was to “invest” X dollars in government programs which will create Y jobs, then unemployment numbers will have been reduced by exactly Y jobs. In reality, this is far from the truth.

Politicians intentionally forget that the money they choose to spend did not appear out of thin air, but must be collected from one of three sources. The first is to collect funds from an additional tax on individuals or corporations. The second is to borrow funds. The third is to raise funds through inflation.

If X dollars are “raised” through individual taxes, then these individuals now have X fewer dollars in total disposable income which will not be spent elsewhere. The income of private businesses will therefore be reduced by up to X dollars, resulting in a reduced need for workers. Similarly, if X dollars are “raised” through corporate taxes, those same corporations will either be forced to raise prices for consumers, lower wages or layoff workers, or provide lower returns for their investors. Each choice results in an impact on the economy and therefore employment. 

In the same way, borrowing or inflation have externalities which are ignored by politicians who seek to justify their policies. Borrowing funds will reduce investment in the private sector, and inflation will cause a decrease in purchasing power. Both result in a decrease in employment.

In other words, governmental job creation is itself somewhat of a fallacy.

The crucial point to remember is that the government will be spending your money when they enact their latest fantasy project. By spending that money on new programs which will supposedly create some number of jobs, they ignore that they will be destroying jobs directly as side effects of their new legislation, and indirectly by taking money out of our hands and away from other industries and sectors which provide real, more sustainable jobs.

Ultimately, the Democrats want you to vote for them because they believe they know how to spend your money better than you. If you want to have less money and exchange real jobs for imaginary jobs, go right ahead.

Ian Haworth is host of The Ian Haworth Show and The Truth in 60 Seconds. Follow him on Twitter at @ighaworth.

The views expressed in this opinion piece are the author’s own and do not necessarily represent those of The Daily Wire.

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