Hey ho…what goes?
The stock market registered a gain of 53 points on the Dow yesterday. Gold saw a modest gain too.
And the White House came right out and with a straight face said it had saved 2 million jobs. How do you like that? More than 7 million jobs have disappeared in the correction so far. But the total would have been more than 9 million, had it not been for the feds.
Let’s see, $700 billion worth of stimulus spending…hey, that’s $350,000 per job. But every dollar of deficit is actually ‘stimulus spending.’ At that rate, each job cost about $800,000. And what about all the Fed’s pump priming? What about all the loan guarantees and toxic asset purchases…and bailouts of the auto industry, AIG, the banks, mortgage holders, Fannie and Freddie…etc. etc? That’s all stimulating too, isn’t it? The total is said to be around $13 trillion, putting the cost at $65 million for each job saved.
Of course, it’s all hooey…all nonsense…all balderdash.
It makes sense to ‘save’ a job if and only if the job didn’t need saving. In other words, the jobs that are worth doing are worth saving…but they don’t need saving. Why? Because a job that is worth doing is a job people will pay for. And if they won’t…or can’t…it’s NOT worth doing.
Otherwise, the feds could have 100% employment…just as they did in the Soviet Union. Give everybody a job. What the heck, give everybody two jobs! But it only really does any good if the jobs are productive. And how can you know if they’re productive or not? You have to wait for Mr. Market to tell you. If a job is productive, people will pay for it. If not, well…the job is cut and/or the business goes bust.
Mr. Market never gets a say on government jobs, however. That’s why the feds can say any fool thing they want.
Washington, DC is full of government bureaucrats who earn 30% to 50% more than people in the private sector. In the private sector Mr. Market puts his thumb up or his thumb down. The job is saved. Or the job is cut. But here in the federal city his thumbs are in his pockets.
For example, every day, we drive by the NIH – National Institute of Health. Thousands of cars go in and out every day. The NIH was set up in 1930. It had 140 employees, which seems like more than enough. Today, it has 18,442. The same sort of employee inflation happens at every government level on practically every government project. You set up an agency or a commission. Then, you can’t get rid of it. As the saying goes, ‘nothing is more eternal than a temporary government agency.’
But are Americans any healthier thanks to the NIH’s 18,000 + employees? No one knows.
And that’s just the NIH…where employees might conceivably be doing something worthwhile. Just for fun we went to the A-Z Index of US Government Departments and Agencies and copied some of the list. This is just the beginning of the As:
Would we be worse off if half of these people were sent home? Probably not.
But what are we ranting about? The Daily Reckoning is about money, right? It’s not about politics…
But…whoa…now politics and economics are mighty cozy with one another. A growing part of GDP comes directly from the federal government. Already, there is now more government spending than there is private investment.
And many mainstream economists are calling on the government to spend more money to fight the downturn…and ‘save jobs.’ They don’t bother to think about whether the jobs are worth saving or not. And they don’t seem to care that government spending is not the same as private spending. As the feds take over, the economy changes shape. It becomes less and less a free-market, productive, wealth enhancing economy. Instead, it becomes more and more of a centrally-planned, unproductive, wealth destroying one.
It becomes Sovietized, in other words…like Venezuela.
Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.
The economists are just trying to save their own jobs bill, because they’ve been proven so horribly wrong over the past 30 years. Also is harry a real person?
No, Harry is a figment of his own imagination!
Largest voting block, AARP, Unions or general population?
No, it’s the government itself. A now self-perpetuating cancer on what once was a healthy economic patient. Usually someone says here, we’re freaking doomed!
I suspect Harry works either for the Fed or the government… trying to discourage people to know the truth!
Harry is the result of some very cruel scientists who captured stray dogs and spliced some of their DNA with ground cinder blocks. This explains his density as well as his affinity for the hands that feed him.
Great article. It clears up the muddy fog the politicians call ‘government’. Soon the majority of voters will be government employees. Then the only winning vote will be for ‘leaders’ that will feed them more favors and any remaining almost worthless dollars they can suck out of the US citizens that still have a real job.
How about a few thousand more government employees to administer the new government run health care plan….
Strong Earnings Growth Unlikely, say Bill Bonner.
I said I would post this after all the big earnings come out. Guess what? INTC crushed earnings top and bottom lines. And has a great forecast going forward.
So far BB, you’re way wrong once again.
I’m not going to argue whether most government jobs are needed or not, but if you think the private sector doesn’t have a lot of unnecessary jobs, you’re dreaming.
I’ve worked for both the federal gov’t and private sector and while the gov’t has more dead weight, there are a lot of useless employees on private payrolls also. If you have an incompetent manager, regardless of where you work, you can get away with pretty much anything.
Small typo (which is easy to overlook because the numbers are so big): it’s 6.5 Million per job not 65.
Getting into space is getting more complex, and a lot cheaper. A recent launch typifies the new power of private rocketry as well as the ability of competitors like SpaceX and Boeing to cooperate to make the price tag of a launch cheaper. Stephen Petranek has more…
Companies go public to rake in a few billion dollars for themselves and the underwriters. And the suckers-- sorry, investors who gobble up shares when these things come out-- usually end up losers. The stock sinks once the initial euphoria wears off. Then it levels off at a much lower price before maybe rising at a normal pace again.
A money illusion sounds like something a prestidigitator performs by pulling $100 bills from a hat shown to be empty moments before. In fact, money illusion is a longstanding concept in economics that has enormous significance for you if you’re a saver, investor or entrepreneur. Jim Rickards explains...
Traders bid up oil prices this week, based on reports of major escalation of hostilities in Yemen, just south of Saudi Arabia. It’s part of Iran’s long-term strategy to surround the Saudis. Which is why Byron says the Saudis’ primary motivation in crashing oil prices last November was to weaken Iran...
Traders bid up oil prices last week, based on reports of major escalation of hostilities in Yemen, just south of Saudi Arabia. Byron King updates his "Oil War" thesis as Yemen burns and as Saudi Arabia continues to be surrounded by opposition. Read on...
Just look at retail stocks. The S&P Retail Index has surged higher by more than 23% over the past six months. And even after a slow start in January, the index is up nearly 6% year-to-date. That blows away the S&P...