Creating jobs, but at what cost?

It's easy for government to spend money because it's other people's money. It's easy for government to justify that spending because it benefits people, albeit only some people; government never seems to mention that taxpayers experience an equal loss.

These truisms are very well demonstrated in subsidized labor, including a federally funded program that helps military personnel's spouses find jobs. There are obvious criticisms to anyone who understands how the free market works. These jobs did not exist beforehand, so it clearly wasn't worthwhile for the private sector to hire the "military spouses." Or, the person did not have the skills before, and the program provided training. Therefore, government had to spend money to facilitate the employment -- at everyone else's expense.

Let's say the program trains and helps a serviceman's wife for some job at $40,000 per year. It wasn't worth the search cost for the company to find her and trust that she'll be worth her hire. (Companies incur the expense of hiring an employee who will overall cost more money than he or she produces, which is implicitly passed onto employees in the form of slightly lower pay.) But now here's the federal government picking up those costs, or rather, here's the taxpayer picking them up.

The worst is when the spouse finds work whose paychecks are paid by the taxpayer, like at a public school or government office. The taxpayers pay for the training and hiring costs, and then for sustaining the job in its entirety. But this is a good thing, the program's proponents say, because it creates jobs. Yes, but at what cost? The desirable kind of job creation comes through economic expansion. Subsidized labor, in whatever form, merely creates jobs by taking from (even destroying) others elsewhere. Just like FDR's attempts to create work via the Civilian Conservation Corps and Works Progress Administration, such economic illusions come straight from Keynes' mythology: "To dig holes in the ground, paid for out of savings, will increase, not only employment, but the real national dividend of useful goods and services."

And once again, we cannot escape the broken window fallacy. The article quotes a Congressman:

Rep. John Carter, R-Texas, says the program is vital for local economies because military spouses often go home to extended families when their husband or wife is deployed.

"If all those spouses went home every time, it would be an economic disaster," he said. "If they don't have jobs, they're liable to go home."

Carter would do well to read Bastiat's "What Is Seen and What Is Not Seen." It would tell him that the averted "economic disaster" in one area is necessarily funded by money taken from everywhere else. A small town might give thanks to Washington for its "saved jobs," but no one weeps for the rest of America that must do without a dollar here and there. When a shopkeeper hires a new stockboy because business is doing so well, that's real economic expansion. When taxes are used to train, hire and employ someone, that's a broken window. Even if it's limited to just training and hiring, others are harmed by subsidizing a job that isn't worth its face value.

I am in no manner impugning military service, but spouses of our armed forces personnel should be left to train for and find jobs on their own, and I am pleased that this "grant" is not being renewed. Unfortunately the grant will continue in another form, through distributed funds not specifically meant for military spouses. And rest assured, some bureaucrat will simply ask for more money to make up the difference. The only solution is to eliminate all these programs.

If anything, subsidized labor creates a moral hazard: instead of improving themselves or searching for jobs on their own, people know they can stay dependent on government training them and finding them jobs. They aren't doing it out of malice, but they know at least subconsciously that the dependency is cheaper than doing it themselves.