Monday, February 08, 2010

The false choice on job creation

James Surowiecki:
One thing voters do want is jobs. But even here populist sentiment is at odds with itself. People want the government to help provide jobs, but they also want it to cut the deficit. Of course, one can worry about rising long-term debt and still think that, right now, more deficit spending is crucial to the nascent recovery. But angry voters aren’t that nuanced in their thinking: they want the government to tighten its belt and fight unemployment at the same time. Not that they believe that the government’s efforts will do any good: three-quarters of Americans think that much of the money in the first stimulus program was wasted, perhaps because they can’t see all the jobs that the stimulus saved, only the nearly eight million jobs that the economy has lost.
Beyond the condescension exhibited by Surowiecki towards voters, what this statement really reveals is his own insular thinking and ignorance. Implicit in this excerpt is the notion that government-led efforts to promote job growth can only consist of spending programs. While perhaps this makes sense if one is a dyed-in-the-wool Keynesian (at least as Keynesianism is popularly understood), it is absolutely false. Despite Surowiecki's protestations there is absolutely nothing contradictory about the preferences expressed by voters.

Here, for example, is one initiative which satisfies the requirement of deficit reduction, reduced government spending and job creation: Simply reform the tax code to eliminate all loopholes and deductions. Take the extra revenue generated and devote half to deficit reduction and half to tax rate reduction. In addition, have a commission go through the Federal Register and look to eliminate unnecessary or harmful regulations which do not pass a cost-benefit analysis and place an undo burden on businesses (only the most devoted fans of big government believe that every regulation contained in the Federal Register's tens of thousands of pages are absolutely essential). The commission's recommendations would then be subject to an up or down vote by Congress.

Presto: less regulation, a reduced deficit, lowered taxes, less government spending and increased job creation. That Suroweicki refuses to even acknowledge such an option is either a demonstration of his own ignorance or dishonesty.

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