- $30 billion to community banks to loan to small businesses
- tax credit to small businesses “who hire new workers or raise wages”
- tax incentives for businesses to ‘invest in new plants and equipment”
- additional infrastructure spending (e.g.; high-speed rail in places like Florida)
- tax rebates to “Americans who make their homes more energy efficient, which supports clean-energy jobs”
- tax breaks to companies that create jobs in the U.S.
At first glance, to many these steps may seem laudable. Lost, however, is the realization that all of these steps involve government direction of the economy. Money to community banks and infrastructure takes money away from individuals (either through taxes, borrowing or inflationary money printing) and redirects it to what government deems worthy, and tax credits and incentives subsidize those activities government prefers.
This redirection involves politicians and bureaucrats deciding what they believe is the wisest way to spend money. These steps substitute the judgment of free individuals in the economy with the judgment of government officials — insulated to a large degree from conditions in the private sector. Those who espouse these means of “creating jobs” often believe they are wiser at determining what individuals should spend their money on than the individuals are.
The problem is that these “wise” people in government are often wrong. After all, it was government that encouraged banks and lending institutions to loan money to individuals who, in reality, were major credit risks. It was politically popular to promote “home ownership” and “non-discriminatory lending practices,” regardless of the real-world unintended consequences of such actions.
In the same sense, it is politically popular to support ideas like “clean-energy jobs” (no longer called “green jobs” due to perhaps the negative attention that phrase has gotten over the last year, particularly with the resignation of Obama’s former “green jobs” czar) and “higher wages,” despite what such “investment” (read: spending) means in real-world application. These goals mean politicians substituting their judgement for individuals in society, also known as paternalism (other examples) — a dubious practice at best.