50.9 F
Mobile
42.8 F
Huntsville
45.9 F
Birmingham
44.9 F
Montgomery

Troy professor: The government isn’t Santa Claus

The Grinch
The Grinch

If you have been through the frustration of untangling cords, replacing bulbs, and teetering on a ladder – maybe the eggnog ought to wait until after the job is done next time! – to put up exterior Christmas lights, new laser light products that obviate the need for putting up traditional Christmas lights probably fill you with holiday joy. 

It is useful to reflect on why laser light products have you humming “Joy to the World.” That is, in addition to that aforementioned eggnog. It is because laser lights free up labor. Labor is a cost to obtain the ends – goods and services – that we desire. By freeing up the time you would have spent putting up Christmas lights this year, you will be able to do attend to other tasks or spend more precious time with your family and friends. 

I’ll bet this seems obvious. It is. Whenever it comes to government, however, we often forget this obvious fact. The defenders of various government programs and subsidies often tout job creation as a benefit. But, it is actually a cost because government is pulling labor away from producing the goods and services consumers value enough to actually pay for!

Now, labor is a necessary cost of producing goods and services. Yet the cost of nearly every government program inevitably spirals out-of-control, oftentimes creating unnecessary and overpaid jobs. These jobs often involve producing goods or services that don’t actually benefit consumers. Or, they create jobs that could readily be provided by the private sector at a more reasonable cost, such as ABC liquor stores or golf courses.

In the market, however, businesses compete against each other by finding ways to lower costs. That includes reducing or even eliminating labor costs. Now, that may sound like something Scrooge would say, but let me explain why that is a good thing.

Economies flourish not by creating more jobs to create the same goods and services, but by finding ways to free up labor to produce new goods and services. For instance, it wasn’t that long ago that nearly every American was a farmer. In fact, agriculture took up 97% of the workforce. New labor-saving innovations, such as mechanized farming equipment (thank you, John Deere) and more intensive fertilization techniques, freed up labor to produce other goods and services that enrich our lives such as F150s, gun safes, and pump action shotguns (Hint, hint: this is my, admittedly unrealistic, Christmas wish list in case my wife is reading this). More importantly, it created something never fully achieved in human history, occupational choice; it enabled Americans to choose careers beyond farming that suited their unique talents and passions.

Imagine how impoverished and unfilled our lives would be if government took action to protect agricultural jobs to ensure that 97% of us still were farmers. Or, if government subsidized the horse and carriage industry to save jobs when the automobile was invented. Or, if the government created programs to protect jobs in the ice industry when the refrigerator came along.

Thankfully, labor-saving technologies have even made writing columns like this one easier. I’m able to dedicate the time I save using a computer to write this column, rather than quill and ink, to do academic research, policy work, and prepare lectures. Not to mention, Yellowhammer News probably also appreciates receiving the article electronically in Word rather than on parchment because it frees up their labor costs to devote to continuing to produce quality news and radio content. While there are probably some bureaucrats, politicians, and readers who don’t appreciate me being more productive in this regard, the market incentive to reduce labor cost is an important factor driving economic growth and prosperity, and yes, employment opportunities. 

All-too-often, politicians impose needless costs on the economy building bridges to nowhere and undertaking stimulus projects (which, ironically – but not unexpectedly – failed to create the promised jobs). If politicians want to foster job opportunities that encourage economic growth they should allow the free market to unleash entrepreneurship and innovation by reducing government spending and regulation.

Just remember that labor is a cost whenever you hear politicians trying to sell you their next round of subsidies, their newest government handout program, or the inevitable tax increases necessary to pay for it all. Government only creates jobs by pulling labor away from producing what consumers actually want, ultimately reducing economic growth and prosperity. In other words, as my former professor Walter Williams puts it, government isn’t Santa Claus.


Daniel J. Smith is the associate director at the Johnson Center for Political Economy and an associate professor of economics at Troy University. Follow him on Twitter: @smithdanj1