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<div class="timestamp">October 21, 2012</div>
<h1>The Myth of Job Creation</h1>
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<p>
The headlines from the last presidential debate focused on President
Obama challenging Mitt Romney on issue after issue. There was a less
noticed, but no less remarkable, moment when Mr. Obama agreed with Mr.
Romney on something — and both were entirely wrong. </p>
<p>
The exchange began with a question about the offshoring of American
jobs. Part of Mr. Obama’s answer was that federal investments in
education, science and research would help to ensure that companies
invest and hire in the United States. Mr. Romney interrupted.
“Government does not create jobs,” he said. “Government does not create
jobs.” </p>
<p>
It was a decidedly crabbed response to a seemingly uncontroversial
observation, and yet Mr. Obama took the bait. He said his political
opponents had long harped on “this notion that I think government
creates jobs, that that somehow is the answer. That’s not what I
believe.” He went on to praise free enterprise and to say that
government’s role is to create the conditions for everyone to have a
fair shot at success. </p>
<p>
So, they agree. Government does not create jobs. </p>
<p>
Except that it does, millions of them — including teachers, police
officers, firefighters, soldiers, sailors, astronauts, epidemiologists,
antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s
old job) and congressmen (like Paul Ryan). </p>
<p>
First, the basics. At last count, government at all levels — federal,
state and local — employed 22 million Americans, with the largest
segment working in public education. Is that too many? No. Since the
late 1980s, the number of public-sector workers has averaged about 7.3
for every 100 people. With the loss of 569,000 government jobs since
June 2009, that ratio now stands at about 7 per 100. </p>
<p>
Public-sector job loss means trouble for everyone. Government jobs are
crucial to education, public health and safety, environmental
protection, defense, homeland security and myriad other functions that
the private sector cannot fulfill. They are also critical for
private-sector job growth in two fundamental ways. First, the government
gets its supplies from private-sector companies, which is why
Republican senators like John McCain have been frantically warning about
the dire effects on job creation if Congress moves ahead with planned
military spending cuts. (Republicans insisted upon the cuts as part of
their ill-advised showdown over the debt ceiling.) Second, government
spending on supplies and salaries reverberates strongly through the
economy, increasing demand and with it, employment. </p>
<p>
That means the economy suffers when government cuts back. A <a title="Economic Policy Institute, 2012" href="http://www.epi.org/blog/years-recovery-state-local-austerity-hurt/">report</a>
by the Economic Policy Institute examined the effect of recent cutbacks
at the state and local level — including direct loss of government jobs
and indirect loss of suppliers’ jobs; the jobs that should have been
added to keep up with population growth; and the reduction in purchasing
power from other cutbacks. If not for state and local budget austerity,
the report found, the economy would have 2.3 million more jobs today,
half of which would be in the private sector. </p>
<p>
The government does not create jobs? It most certainly does. And at this
time of state budgetary hardship, a dose of federal fiscal aid to
states and localities could create more jobs, in both the public and
private sectors. </p>
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