The Cato Institute has brought attention to a telling graph offered by the Federal Reserve Bank of Philidelphia. The graph (below) shows the trends of employment during the 1981 (Reagan) and 2007 (Obama) national economic recessions. Reagan sought to keep government out of the way of the private sector and Obama has tried to use government spending to lead our economy out of its problems. It is obvious which was the best policy. While there are many differences between the mechanics of the two recessions, among the biggest is the amount of government intrusion.
Government cannot create jobs on a net positive basis, it can only cause a misallocation of resources which always results in fewer net jobs. The job of government is to facilitate the flow of resources to the most productive uses, not to disrupt that flow. This usually means they should stay out of the way.
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