Stimulus II

Mary Kay Henry, president of the Service Employees International Union, in an editorial in the Wall Street Journal today, said Congress must pass the American Jobs Act immediately so Americans can be put to work “rebuilding outdated and dangerous roads and bridges and ensuring our kids have first-class schools….keep[ing] teachers in our classrooms, police on the beat, healthcare workers at our hospitals and clinics, and ensure[ing] that we have enough firefighters to protect our communities.”

She says [in so many words] the Occupy Wall Street protests are a new spark of destiny for a new union resurgence to give every American a job, presumably working in road and bridge construction, public education or as a first responder of some sort.

Leave aside, for the moment, that Stimulus I already swelled the ranks of police, fire, teacher, road construction and school janitor staffs with fresh new faces, and leave aside that Stimulus I already re-equipped first responders and construction crews across the nation with new fire trucks, ambulances, police cars, SWAT vans, and all the gear that goes into them.

Stimulus I and II [the American Jobs Act] are funded with public debt and they don’t add a nickel of net new value to the economy.  They are wealth redistribution schemes that move capital from the productive private sector into the consuming public sector, with a large amount of government overhead consumed in the process.  They don’t add any productive–wealth generating–capacity to the economy.  Public sector employers can only hand out paychecks for as long as the debt Ponzi scheme funding them keeps functioning.  The jobs they provide don’t create products, don’t yield profit, don’t generate capital, and don’t lead to new investment.

Eventually, perhaps soon, the well will run dry on public debt and a whole lot of unfunded public employees will become very angry.  Many of them will be well armed for a living.

Only jobs created through private capital can potentially–there’s always risk–produce a profit and thereby build new capital which can grow the economy and create more new jobs.  Only private sector jobs can replicate capital to grow new jobs.  Publicly financed jobs can never do this.  They may look nice and shiny driving down the road in a brand new fire truck or police vehicle, but those vehicles are symbols of a debt that will never be re-payed, and a job that will never create wealth to re-invest and grow our economy.

Moreover, public sector jobs pull scarce labor out of the private sector and thereby raise the cost of labor to the private sector.  Increased costs reduce the private sectors productive capacity to generate profit, capital and wealth, and to create more productive jobs.  In addition, more public sector jobs enlarge vocal voting constituencies who advocate for more public spending, more public sector jobs, more taxes, and more non-productive public-debt-financed economic activity.

It is a pernicious, vicious cycle, and Mary Kay Henry and the Occupy Wall Street bunch couldn’t be more wrong.

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