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How many jobs are created ...?

RoyLatham
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5/2/2013 3:20:22 PM
Posted: 3 years ago
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).
FREEDO
Posts: 21,057
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5/2/2013 4:36:09 PM
Posted: 3 years ago
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

I would take this stance as well. These kind of questions are what's wrong with economics.
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sadolite
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5/2/2013 8:19:49 PM
Posted: 3 years ago
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

Correct, The govt has never created a job and it has never created any wealth. The govt must first confiscate money from the private sector to do anything. Or barrow money from other countries at interest. The money govt uses to pay someone to do something was taken from someone else who lost wealth. When the person who was paid by the govt spends his or her money they are only returning what was confiscated back to the private sector. No wealth is ever created. A net loss ensues when the money is borrowed. Now the private sector is on the hook to pay back money that is 100% borrowed. It is not even created wealth confiscated. Additional wealth must be created to pay it plus interest in addition to all the confiscated wealth lost.
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RoyLatham
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5/3/2013 10:52:29 AM
Posted: 3 years ago
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

If the results of economic stimulus are unknowable by any economic theory, does that mean the government should avoid it? Or is it the case that experts in government will be able to accurately predict the effects at any particular time, even though there is no good generality?
RoyLatham
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5/3/2013 10:54:09 AM
Posted: 3 years ago
At 5/2/2013 4:36:09 PM, FREEDO wrote:
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

I would take this stance as well. These kind of questions are what's wrong with economics.

And your kind of answer is what's wrong with politics. It's a pronouncement, not an explanation.
dylancatlow
Posts: 12,242
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5/3/2013 11:08:09 AM
Posted: 3 years ago
At 5/3/2013 10:52:29 AM, RoyLatham wrote:
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

If the results of economic stimulus are unknowable by any economic theory, does that mean the government should avoid it? Or is it the case that experts in government will be able to accurately predict the effects at any particular time, even though there is no good generality?

My point was just that the answer isn't logic based, and this thought experiment cannot be answered without empirical data. Functionally, it's just a matter of whether or not you think a stimulus would create jobs.
dylancatlow
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5/3/2013 11:11:21 AM
Posted: 3 years ago
At 5/3/2013 11:08:09 AM, dylancatlow wrote:
At 5/3/2013 10:52:29 AM, RoyLatham wrote:
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

If the results of economic stimulus are unknowable by any economic theory, does that mean the government should avoid it? Or is it the case that experts in government will be able to accurately predict the effects at any particular time, even though there is no good generality?

My point was just that the answer isn't logic based, and this thought experiment cannot be answered without empirical data. Functionally, it's just a matter of whether or not you think a stimulus would create jobs.

I'm against the notion of stimulus because, for one, it's immoral; and two, on balance, I think it costs jobs. If there is a 95% chance a stimulus will cost jobs, and a 5% chance it will create jobs, it follows that someone can be against stimulus in 100% of cases, while still recognizing it has the possibility to create jobs.
1Percenter
Posts: 781
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5/3/2013 1:48:54 PM
Posted: 3 years ago
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

Spending doesn't stimulate the economy. Production does. You can't consume something that isn't produced. The wages someone earns from producing something represents that persons ability to purchase another persons product.

Digging holes and filling them has no value. The money to pay their wages must be diverted from capital that would otherwise be used for productively. This causes jobs to be lost.
lewis20
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5/3/2013 2:08:15 PM
Posted: 3 years ago
Make it more interesting, if person A get's a job in the private sector as a tax compliance officer for a large company and person B gets a job as a tax compliance officer for the IRS and all they do is pass paperwork back and forth how many jobs are made?
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FREEDO
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5/3/2013 3:47:34 PM
Posted: 3 years ago
At 5/3/2013 10:54:09 AM, RoyLatham wrote:
At 5/2/2013 4:36:09 PM, FREEDO wrote:
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

I would take this stance as well. These kind of questions are what's wrong with economics.

And your kind of answer is what's wrong with politics. It's a pronouncement, not an explanation.

Touche.
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RoyLatham
Posts: 4,488
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5/3/2013 4:15:39 PM
Posted: 3 years ago
If a rich guy spends his inheritance on something frivolous, he has a "job" in the sense that he is doing something and he is receiving money while he is doing it. That's a different meaning of "job" from the meaning of "creating value through labor in return for money." A government make-work job, I claim, is not a job in the same sense of free enterprise job. Of course, there are government jobs that provide value, like teachers and firemen. he

The point about tax compliance jobs is a good one. There is something like $300 - $500 billion spent in making sure that the tax code is obeyed, by which about $2600 billion is raised. The "productive" aspect of that is making sure that the 3500 loopholes in the tax code, provided by Congress to reward good behavior, is applied correctly. Obamacare will add enormous compliance costs to health care. I think it's a net drain on the economy, equivalent to digging holes and filling them.
DoubtingDave
Posts: 380
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5/3/2013 4:31:34 PM
Posted: 3 years ago
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

I would also say (4). Government cannot create jobs, that is what the private sector does. For every dollar the government spends, it has to take that money out of the private sector and thus out of the economy that would create economic growth.

That is the problem with Keynesian economics.
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sadolite
Posts: 8,836
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5/3/2013 7:47:18 PM
Posted: 3 years ago
At 5/3/2013 4:31:34 PM, DoubtingDave wrote:
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

I would also say (4). Government cannot create jobs, that is what the private sector does. For every dollar the government spends, it has to take that money out of the private sector and thus out of the economy that would create economic growth.

That is the problem with Keynesian economics.

"For every dollar the government spends, it has to take that money out of the private sector" You are leaving out the additional dollars it spends using borrowed money over and above what it actually confiscates as taxes. The govt currently spends twice what it collects in taxes. All govt does by doing this is put off the inevitable and make the inevitable 100 times worse. Massive job loss and depression. Anyone who thinks the govt can go on spending twice what it takes in taxes and increases spending every year is living in a world of economic delusion. I pose the question to all who doubt. How many trillions of dollars can this nation go into debt before the end comes and no more borrowing will be allowed or possible? I just want a figure so I can estimate a total collapse date. The current rate is an increase of 1 trillion a year with nothing being paid on principal. Total debt is 17 trillion this figure does not take into account future unfunded liabilities promised by the govt in the past.
It's not your views that divide us, it's what you think my views should be that divides us.

If you think I will give up my rights and forsake social etiquette to make you "FEEL" better you are sadly mistaken

If liberal democrats would just stop shooting people gun violence would drop by 90%
wrichcirw
Posts: 11,196
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5/4/2013 1:23:48 AM
Posted: 3 years ago
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

The question I would then ask, is what exactly is a job? Is it merely someone being paid to do something, or does that "something" have to be constructive and beneficial to society?

I think most people would think that a "real job" has to be minimally constructive. Flipping burgers is a "real job", just not a very good one, because people are getting fed, which is constructive. Your example of someone digging holes and then refilling them is prima facie not constructive. It could be seen as a government handout. However, it does maintain minimal levels of human capital, by ensuring that people maintain a worker's routine of checking into work, and checking out of work, etc, even if it is to dig holes and refill them. Maintaining such skills is indeed minimally constructive. Hence, this is indeed a job - one in which the workers are grossly overpaid to do and provides minimal benefit to society - a benefit nonetheless.

Do government jobs result in the multiplier effect? Yes. So 2) is also true.

Such jobs do require taxes/debasement. Taxes (on corporate America) clearly discourage private sector activity, and one would imagine that any private sector activity would be able to beat this government program in creating more capital. Inflation however does not discourage private sector activity. I do not know how the OP reached the conclusion that inflation discourages private sector activity - if anything, it would make it easier, as it makes less onerous the burden of debt.

Also, if wages do not inflate, and the rest of the economy does inflate, then you have lowered the cost of doing business in America. This would stimulate economic activity.
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suttichart.denpruektham
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5/4/2013 2:51:42 AM
Posted: 3 years ago
3. No job is created

The government can pay for this assignment (not a job) by cut off some of its spending without raising tax or foreign borrowing.

Assume that the government has not run any business of profitable value, the tax paid is actually a "cost" of running the country, not investment for profitable goal. Therefore, by using surplus tax or cut off some of its less necessary spending, the government has not reduced job because no wealth is ever created by the government, thus no wealth can ever been reduced.

If the government spend some of its budget on social policy (unprofitable), losing some of it will not affect the wealth of the nation, because no wealth is ever created here at the first place.

If the government do not run any social policy and spend all of its budget on administration, administration cost is fixed while tax income is not, therefore the government should have some reserve money. Using this reserve money certainly not losing a job from any where.
Kleptin
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5/4/2013 9:25:08 AM
Posted: 3 years ago
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

Not 1, because economics is far more complex.
Not 2, because most money spent for necessities winds up overseas

I would say that 3 and 4 are not mutually exclusive.
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Greyparrot
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5/4/2013 9:34:06 AM
Posted: 3 years ago
At 5/4/2013 1:45:59 AM, Smithereens wrote:
dig up coal and fill in holes with waste. Profits for everyone :D

Or sell tickets to China to come watch the entertainment show called "America digging holes."
suttichart.denpruektham
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5/4/2013 10:35:13 AM
Posted: 3 years ago
This is interesting.

I just discuss this topic with my friends who work in a financial sector today. He said the answer is definitely 2. Because regardless of how digging hole have no value, the fact that the money is given to someone else who is selling a goods or performing service to this guys certainly does have value. Therefore jobs are created.

Any body can comment on that?
dylancatlow
Posts: 12,242
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5/4/2013 10:53:29 AM
Posted: 3 years ago
At 5/4/2013 10:35:13 AM, suttichart.denpruektham wrote:
This is interesting.

I just discuss this topic with my friends who work in a financial sector today. He said the answer is definitely 2. Because regardless of how digging hole have no value, the fact that the money is given to someone else who is selling a goods or performing service to this guys certainly does have value. Therefore jobs are created.

Any body can comment on that?

This reeks of package-deal fallacy.
dylancatlow
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5/4/2013 10:55:35 AM
Posted: 3 years ago
At 5/4/2013 10:53:29 AM, dylancatlow wrote:
At 5/4/2013 10:35:13 AM, suttichart.denpruektham wrote:
This is interesting.

I just discuss this topic with my friends who work in a financial sector today. He said the answer is definitely 2. Because regardless of how digging hole have no value, the fact that the money is given to someone else who is selling a goods or performing service to this guys certainly does have value. Therefore jobs are created.

Any body can comment on that?

This reeks of package-deal fallacy.

Yes, you create jobs, but that just means we need to reevaluate WHAT kind of jobs we mean when we say we want to create jobs.
dylancatlow
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5/4/2013 10:58:11 AM
Posted: 3 years ago
Because regardless of how digging hole have no value, the fact that the money is given to someone else who is selling a goods or performing service to this guys certainly does have value.

No value is actually created, by definition. It's just artificial.
dylancatlow
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5/4/2013 11:00:41 AM
Posted: 3 years ago
Essentially, someone just digging holes and filling them IS what that is, regardless of what we call it. I hope I'm making sense :)
Greyparrot
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5/4/2013 2:13:50 PM
Posted: 3 years ago
At 5/4/2013 10:35:13 AM, suttichart.denpruektham wrote:
This is interesting.

I just discuss this topic with my friends who work in a financial sector today. He said the answer is definitely 2. Because regardless of how digging hole have no value, the fact that the money is given to someone else who is selling a goods or performing service to this guys certainly does have value. Therefore jobs are created.

Any body can comment on that?

Imagine an island with 3 people, 2 dig and fill holes, the third pays taxes. How can you say those 2 hole digger/fillers create the 3rd ones job? Even if it is true, the 3rd person keeps and spends much less of his earnings. That's not a "created" job with any real meaning.
Contra
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5/4/2013 2:43:11 PM
Posted: 3 years ago
At 5/3/2013 4:31:34 PM, DoubtingDave wrote:
At 5/2/2013 3:20:22 PM, RoyLatham wrote:
Suppose the Federal government pays person A to dig holes and person B to fill in the holes. The question is: how many jobs are created by doing this?

1. Two jobs, one for A and one for B.

2. More than two jobs, because A and B spend their money and that creates more economic activity. It is stimulus.

3. No job are created, because no value is created. A and B have government gifts, not jobs.

4. Jobs are lost, because the government gets the money to pay A and B either by taking in taxes or by inflating the currency. In either case, money is taken out of the economy and the loss costs jobs elsewhere.

I vote for (4).

I would also say (4). Government cannot create jobs, that is what the private sector does. For every dollar the government spends, it has to take that money out of the private sector and thus out of the economy that would create economic growth.

That is the problem with Keynesian economics.

Agreed.
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jimtimmy2
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5/4/2013 2:47:37 PM
Posted: 3 years ago
It is impossible to determine the amount of jobs created. What is clear, however, is that the government reduces net consumer welfare by misallocating capital from productive uses to unproductive uses.
twocupcakes
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5/4/2013 5:28:28 PM
Posted: 3 years ago
Jobsare added and output increases in the short run. Which makes adding government jobs a sound policy in response to a depression. No one is arguing that the government can countinuously forever spend a lot. It makes sense to borrow in a recesion and pay back in a boom. The money to get the economy going in a recesion is far more likely create value than having extra extra money in a boom.
twocupcakes
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5/4/2013 7:37:05 PM
Posted: 3 years ago
At 5/3/2013 11:11:21 AM, dylancatlow wrote:
At 5/3/2013 11:08:09 AM, dylancatlow wrote:
At 5/3/2013 10:52:29 AM, RoyLatham wrote:
At 5/2/2013 4:25:35 PM, dylancatlow wrote:
Jobs could be created, jobs could be lost, or there could be no change at all. There is not a definite answer to this.

If the results of economic stimulus are unknowable by any economic theory, does that mean the government should avoid it? Or is it the case that experts in government will be able to accurately predict the effects at any particular time, even though there is no good generality?

My point was just that the answer isn't logic based, and this thought experiment cannot be answered without empirical data. Functionally, it's just a matter of whether or not you think a stimulus would create jobs.

I'm against the notion of stimulus because, for one, it's immoral; and two, on balance, I think it costs jobs. If there is a 95% chance a stimulus will cost jobs, and a 5% chance it will create jobs, it follows that someone can be against stimulus in 100% of cases, while still recognizing it has the possibility to create jobs.

You think a stimulus is immoral? I think it is immoral not to have a stimulus. It is documented that on average people who graduate in a recession will never make as much as others even when the economy recovers. I think it is immoral to allow large business cycle swings that randomly hurt unlucky generations.