I'm writing this because I heard in a lecture on economics, and a couple of things that i took for granted is now dispelled and wanted to write here to see what people thought.
The first one is that 'government cannot create jobs'.
What got me when this was mentioned is that I thought, I always hear government officials saying 'if we put money towards this we will create X amount of jobs in Australia'. But what I heard has now dispelled this myth.
In short it was said that the government (either federal or state) makes their money via taxation. So if they raise a million dollars via taxation and use that money, then a million dollars of 'purchasing power' has moved from those that were taxed, to the government.
No jobs nett get created, as the government now has that million dollars to spend but those that were taxed now do not have a million dollars to spend.
With that money let us say the government will use it towards infrustructer, lets us say they build a bridge, to help traffic flow. They will say 'we created 100 jobs in building the bridge'.
But, the people that paid that million dollars to the government as taxation, would have used it themselves on other items, they must therefore have lost 100 jobs through what they would have bought.
The nett effect is zero job have been created.
Only the purchasing power of what you can buy with that million dollars has moved from the individual to the government. Not the ability to create jobs.
It is immaterial to say that those individuals that first had that million dollars might have not spent that money but only saved it, let us say through a bank. This is not valid as the bank lends that money back into the system as loans and the money is used via the lender.
The other excuse sometimes mentioned is that if the government uses money it doesn't own to build the bridge but has not taxed anyone, then 100 jobs has been created. This is not valid because the government will still own the debt until it is paid off, the longer it doesn't pay it off the higher the interest payments. Untimatley, the government will have to pay it off, and the only way this can be done is via taxation, somewhere in the future, maybe the children of whom those that benefited from it.
So, think of it this way, a robber steals your wallet and spends your $100. When he is caught he tells the police he has done the country a service because when he spent the $100 he created a job. His statement is not correct as you would have spent that $100 anyway, the robber never created a new job.
It is the same with the government spending taxed money, the money has moved from the publics pocket to theirs.