Government spending cannot create additional jobs. If the government provides the funds required by taxing the citizens or by borrowing from the public, it abolishes on the one hand as many jobs as it creates on the other. If government spending is financed by borrowing from the commercial banks, it means credit expansion and inflation. If in the course of such an inflation the rise in commodity prices exceeds the rise in nominal wage rates, unemployment will drop. But what makes unemployment shrink is precisely the fact that real wage rates are falling.
Ludwig von MisesRelated topics
additional borrowing commercial commodity course credit drop expansion fact falling government hand inflation nominal public real rise shrink spending taxing wage means funds banks unemployment jobs ratesRelated quotes
If inflation priced us out of world markets we should be back in the old nightmare of unemployment. What folly to risk throwing away all that we have gained. ... Our first duty at a time when there is more money about than goods to spend it on is to keep down Government expenditure. ... The second duty of the Government is to frame policies which encourage saving and discourage spending. ... in the long run there is only one answer to the 64,000 dollar question-to increase production. That is the answer. That is where the real hope lies.
Harold Macmillan
But further analysis and experience soon raised doubts about the efficacy of these new tools. Empirical research indicated that the Keynesian multiplier was much smaller than earlier analyses had assumed, reduced by a crowding out of interest-sensitive spending caused by an induced increase in the demand for money and by the effect of the larger national debt on long-term interest rates. The leakage of demand through imports and the effect of the fiscal expansion on the exchange rate further reduced the multiplier.
Martin Feldstein
In particular, a free market and capitalism, both subject to state control, are now being permitted and are developing; on the other hand, the socialised state enterprises are being put on what is called a profit basis, i. e., they are being reorganised on commercial lines, which, in view of the general cultural backwardness and exhaustion of the country, will, to a greater or lesser degree, inevitably give rise to the impression among the masses that there is an antagonism of interest between the management of the different enterprises and the workers employed in them.
Vladimir Lenin
The supporters of tariffs treat it as self-evident that the creation of jobs is a desirable end, in and of itself, regardless of what the persons employed do. That is clearly wrong. If all we want are jobs, we can create any number-for example, have people dig holes and then fill them up again, or perform other useless tasks. Work is sometimes its own reward. Mostly, however, it is the price we pay to get the things we want. Our real objective is not just jobs but productive jobs-jobs that will mean more goods and services to consume.
Milton Friedman
Economic man and the Calvinist Christian sing to each other like voices in a fugue. The Calvinist stands alone before an almost merciless God; no human agency can help him; his church is a means to political and social organization rather than a bridge to deity, for no priest can have greater knowledge of the divine way than he himself; no friend can console him - in fact, he should distrust all men; in the same fashion, Economic Man faces a merciless world alone and unaided, his hand against every other's.
Lionel Trilling
