Job-Creation Schemes Don't Work Nov 3, 2003 22:45:10 GMT -5 Quote Select PostDeselect PostLink to PostMemberGive GiftBack to Top Post by RS Davis on Nov 3, 2003 22:45:10 GMT -5 [glow=red,2,300]Richard Teather Wrote:[/glow] Free-market economists like myself attack government tax-and-spend policies as being damaging to prosperity, accusing the government of "sucking money" or "leeching resources" out of the economy. We claim that taxes damage not only the welfare of the person from whom they are taken, but the whole country. Politicians, supporters of state spending, and even questioning students often challenge this negative view of taxation with the positive effects of public spending. In essence, the argument runs something like this: Say man A makes $100,000 and man B is unemployed. The State decides to create a government job for man B. To do this, they tax man A $50,000 to pay for man B's salary. Surely the $50,000 that man A lacks is now in the hands of man B, who will spend it in the economy instead? Therefore shouldn't there be no overall loss to the economy, but more people employed? This is the old 'zero-sum' fallacy; the politicians' belief that the size of the economy is fixed and they only have to decide how to divide it up. Austrian economists, with their focus on the real world and human nature, know better; wealth does not just exist, it has to be created, and the disincentive effects of government actions do not just distribute wealth—they actively destroy it. - Rick