Guest Opinion: For whom the bell tolls

The views expressed in Guest Opinions represent only those of the author and are in no way endorsed by Richmond BizSense or any BizSense staff member.

Our new governor Bob “For Jobs” McDonnell wants to create 29,000 new jobs. Job Czar Lt. Gov. Bolling has been quoted as saying “you’ve got to spend money to make money.”  The only problem is, the state coffers are empty. Still, with 29,000 jobs on the line, surely they will scrape together the money somewhere.

But here’s the rub: their plan requires cuts in certain government agencies and functions, which, it is feared, will lead directly to job cuts. So Virginia is now at the point where it has to “break jobs to make jobs” – a zero-sum game. What is to be gained if, as a direct effect of a job creation program, state employees lose their jobs immediately, while the new jobs take time to germinate?  

If you believe that $50 million buys 29,000 jobs, it’s a no-brainer politically, but it’s a tough pill to swallow if you are one of those whose job is sacrificed for the greater good.  So what is the net benefit of such a program?  How real are those 29,000 jobs?  Can’t we just give some of them to the people whose jobs are being cut?

That’s a fair question, but I don’t think it’s the real question. The real question is why our government and we ourselves don’t seem to realize that this kind of thing is happening all the time in the private sector as taxes are levied on job creating private industries. The more that profits or salaries are taxed, the fewer jobs created, overall.  This is the “crowding out” effect of government expenditures. Government job creation efforts have been compared to breaking windows to create business for window companies. Yes jobs are created, temporarily anyway, but there is an economic cost and the net effect when all is said and done is that overall wealth has been diminished.

Now I’m not arguing that government shouldn’t spend any money, or that the Governor should not try to support job formation.  It’s politically untenable to just say “Let the private sector do it.” What I am saying, though, is that the long-term effect of ever-increasing taxes for ostensibly worthy projects, including job creation, takes an invisible toll.

Ultimately, we will never know how many more jobs, and how much more prosperity there would be in Virginia, and in the nation as a whole, if federal and state governments were smaller, and less infiltrated into so many aspects of our lives. It seems next to impossible to check the ever growing budget of state and federal government.  But, one by one, private sector jobs are lost, or never created in the first place, as government budgets and the taxes and borrowing that fund them grow ever larger to fund the programs that our leaders say we need, or to pay for the jobs that they want to take credit for. This all happens quietly, invisibly and inexorably, but rarely are the effects brought to light.

So in a way, it’s good news to see this conflict arise between job creation and job destruction within the state government itself.  Perhaps the first rule of government should be like the Hippocratic Oath – “First – Do No Harm.”  It’s beyond dispute that government, even red state republican self-proclaimed free market loving government, cannot create permanent jobs out of thin air without cost. Too often the costs are hidden. In this case, the costs may fall directly on a small segment of government employees, the effect is real and immediate, and the alarm bells clang loud and shrill. This takes some of the political sizzle out of a $50 million dollar jobs creation program, and well it should. Governor McDonnell, Lt. Governor Bolling – can you hear those alarm bells?  Ask not for whom they toll – they toll for thee.

The views expressed in Guest Opinions represent only those of the author and are in no way endorsed by Richmond BizSense or any BizSense staff member.

Our new governor Bob “For Jobs” McDonnell wants to create 29,000 new jobs. Job Czar Lt. Gov. Bolling has been quoted as saying “you’ve got to spend money to make money.”  The only problem is, the state coffers are empty. Still, with 29,000 jobs on the line, surely they will scrape together the money somewhere.

But here’s the rub: their plan requires cuts in certain government agencies and functions, which, it is feared, will lead directly to job cuts. So Virginia is now at the point where it has to “break jobs to make jobs” – a zero-sum game. What is to be gained if, as a direct effect of a job creation program, state employees lose their jobs immediately, while the new jobs take time to germinate?  

If you believe that $50 million buys 29,000 jobs, it’s a no-brainer politically, but it’s a tough pill to swallow if you are one of those whose job is sacrificed for the greater good.  So what is the net benefit of such a program?  How real are those 29,000 jobs?  Can’t we just give some of them to the people whose jobs are being cut?

That’s a fair question, but I don’t think it’s the real question. The real question is why our government and we ourselves don’t seem to realize that this kind of thing is happening all the time in the private sector as taxes are levied on job creating private industries. The more that profits or salaries are taxed, the fewer jobs created, overall.  This is the “crowding out” effect of government expenditures. Government job creation efforts have been compared to breaking windows to create business for window companies. Yes jobs are created, temporarily anyway, but there is an economic cost and the net effect when all is said and done is that overall wealth has been diminished.

Now I’m not arguing that government shouldn’t spend any money, or that the Governor should not try to support job formation.  It’s politically untenable to just say “Let the private sector do it.” What I am saying, though, is that the long-term effect of ever-increasing taxes for ostensibly worthy projects, including job creation, takes an invisible toll.

Ultimately, we will never know how many more jobs, and how much more prosperity there would be in Virginia, and in the nation as a whole, if federal and state governments were smaller, and less infiltrated into so many aspects of our lives. It seems next to impossible to check the ever growing budget of state and federal government.  But, one by one, private sector jobs are lost, or never created in the first place, as government budgets and the taxes and borrowing that fund them grow ever larger to fund the programs that our leaders say we need, or to pay for the jobs that they want to take credit for. This all happens quietly, invisibly and inexorably, but rarely are the effects brought to light.

So in a way, it’s good news to see this conflict arise between job creation and job destruction within the state government itself.  Perhaps the first rule of government should be like the Hippocratic Oath – “First – Do No Harm.”  It’s beyond dispute that government, even red state republican self-proclaimed free market loving government, cannot create permanent jobs out of thin air without cost. Too often the costs are hidden. In this case, the costs may fall directly on a small segment of government employees, the effect is real and immediate, and the alarm bells clang loud and shrill. This takes some of the political sizzle out of a $50 million dollar jobs creation program, and well it should. Governor McDonnell, Lt. Governor Bolling – can you hear those alarm bells?  Ask not for whom they toll – they toll for thee.

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Tom Dorsey
Tom Dorsey
12 years ago

I just received an email from Senator Warner inviting me to a jobs forum in Richmond. It was for people interested in working for the government. It appears the thrust with these jobs programs designed by the government is to hire more people in the government. This is insane.

Brian Glass
Brian Glass
12 years ago

Creating jobs doesn’t necessarily mean that they are created out of thin air. We have in recent years created hundreds of jobs as a result of companies such as Philip Morris/Altria, Meadwestvaco and Hilton Hotels relocating to Virginia from New York, Connecticut and California respectively. We are now in thr running for the relocation of Northrup Grumman to Virginia in competition with D.C. and Maryland. That’s where the 50 million dollar war chest comes in. Part of the decision making on the part of companies relocating is which locality has the most to offer. That includes quality of life, cost… Read more »

admin
admin
12 years ago

I am unclear how the state can boost employment without just adding workers. Reducing taxes is but a small part of the cost of workers. Can someone please explain how this works?

Thomas Lawrence
Thomas Lawrence
12 years ago

Excellent article by Tom. Governor McDonnell may be the instrument of hardship for dismissed state workers but he is not the cause. The choice to set these workers up for hardship was made years ago when Mark Warner expanded the role of Government in the State. If Mark had used the short fall he endured to reduce the size of the Government then, there would most likekly not be any layoffs today. Of course, some citizens would not have benefited from the expanded government services. This lack of benefit would undoubtedly have been offset by all of the citizens of… Read more »

JacksonWardResident
JacksonWardResident
12 years ago

“It seems next to impossible to check the ever growing budget of state and federal government… What I am saying, though, is that the long-term effect of ever-increasing taxes for ostensibly worthy projects, including job creation, takes an invisible toll.”
*****
I believe this is called a “straw man” argument the author is making against those ever-increasing state budgets and taxes in Virginia. Forgive me for asking, but what state budget is growing and which taxes have been ever-increasing? Last time I checked, Virginia’s budget needed to shrink by about $4 billion.