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.
It's a theme we've shared with you since April. And it's only gotten worse. The gaming industry has come under all sorts of pressure--a situation I first noticed in the charts. The powerful, multi-year uptrends started showing cracks. And it wasn't long before those cracks turned into gaping holes you could drive a friggin' truck through. That's where things stand today.
The oil market has been under siege for six months. From service providers to producers this downturn has been painful. Of course, we’ve known all along that oil prices were a little toppy over the summer. In fact, when asked just how low oil prices could go I usually answered with a simple “lower than you’d expect…”
Our forecast that Cuba would be open and integrated within 5-10 years is on track after yesterday's big announcement. Ahead of schedule, even. Click here to see how some investors have profited and what the island's likely future is...
The opportunity to sell and install LEDs is enormous. We’re talking about over a billion lighting fixtures. And the areas with the largest potential -- like parking lots -- have barely begun to change. Banker to the presidents Chris Mayer says you could triple your money in this new tech trend. Here's what you need to know.
By the time you do… Kaboom! It’s too late. They’ve already blown up your retirement. There are three time bombs the mutual fund industry has planted within your 401(k). By the time you’re done with this article, you’ll know how to identify them. And, more importantly, how to disarm them. Dave Gonigam has the scoop...
The latest victim of the crude rout is none other than the stalwart tech stocks. These are the go-to trades that have held up all year long. I'm talking about stocks like Google, Yahoo! and Microsoft. Like I said before, these aren't no-name stocks you're seeing drop more than 10% from their highs last month.