Why Government Employment Doesn't Spur The Economy

Recently the PotUS put forth the proposal that the way to pull the economy out of recession is to employ more government employees. Federal employees, state employees and local government employees is the answer to our economic woes according to our New Party PotUS.

Well, I have to agree that if all the various levels of government were to hire more people, more people would be working. For a short period of time anyway.

The problem as I see it is, LibPos (Liberal/Progressives) don’t seem to understand the economics of government employees.

For there to be an employee in the private sector, a business must produce a product, good or service that someone else is willing to give the company money for. They must be willing to give them enough money for this product/good/service to cover the cost of production, distribution and sales plus enough left over for the owner to pay the employees to do these tasks. Additionally, there must be enough left after all of these costs for the owner to meet his own basic levels of Maslow’s Hierarchy of Needs. If the business doesn’t produce enough for the owner to meet the first two levels of the hierarchy for the owner and their family, there is no point in the owner keeping the doors open. Thus negatively affecting all of his employees also.

If the business wishes to increase its number of employees, it must sell enough of its product/good/service to meet all of the afore mentioned costs, plus enough extra to be able to pay for the new employee. (Understand that a $10 an hour employee will cost the company between $12.50 and $15 per hour when you add in things like taxes paid by the company, insurance, holiday pay, vacation pay, etc. etc. This does not include the hidden costs like the extra time it will take to do the extra paperwork, etc. that is required for each employee.)

Again, the business owner must generate this money above and beyond the monies required to run the business at its current level.

Now consider a government. Any government; Local, State, Federal, it makes no difference. How does a government generate its money?

It gets its money by taking it from its constituents. It does it through taxes. Be they personal taxes, consumption taxes or taxes on businesses, they are taking taxes from those who are out there being productive. Where private businesses must produce something and sell it to someone who wants it. A government just takes it from its citizenry by force through a byzantine tax structure that is nearly impossible to understand by the average citizen. (This is proven by the fact that there is a whole area of accounting dedicated to assisting individuals and business stay out of trouble with the various governmental agencies as they deal with the tax system.)

So for the government to hire a $10 an hour employee they must take enough money from those being taxed to cover the same $12.50 to $15 per hour that a business would. That means for every $10 per hour employee the government has they, there must be 3 to 5 $10 per hour employees and their employers in the private sector to take the money from. For the LibPos to fund another employee without having to borrow the money from another country they must have another 3 to 5 privately employed individuals to take the money from.

Only a Democratic LibPo would think that more government employees will help stimulate the economy.

The ONLY thing more government employees will do is either: A) Increase the country’s debt to foreign creditors which will require increased future taxes to pay off, or B) Require higher taxes now on those employees who are currently working in the private sector, thus reducing their expendable cash and therefore depressing the economy even further. The higher taxes route will also reduce cash in a company’s coffers that might be used to employ more people.

This is such a straight line correlation that you would think anyone with two synapses firing would be able to see. Clearly the LibPos who are currently in charge of the Senate and the White House can’t see what’s so obvious to those of us who are realists and understand cause and effect.

Or so it would seem to an old farm boy.