Monday, May 12, 2014

ECONOMIC MISCONCEPTIONS #6: GOVERNMENT SHOULD TRY TO SAVE JOBS

Every attempt by government to save jobs is misguided.

While on the surface it may appear to be a bad thing when companies go out of business and workers are laid off, it happens for a reason, moreover it is beneficial. The worst thing our government can do is take measures to keep failing companies in operation. While it may save jobs temporarily, in the long run, this leads to fewer jobs in perpetuity.
How many companies that have employees go out of business each year? A thousand? Ten thousand? A hundred thousand? Would you believe 600,000. Yes, 600,000 businesses with employees go out of business every year. Oh, but wait, they are replaced by 600,000 new businesses. So scarce economic resources are transferred from bad businesses to fresh new ones who will employ more workers.
Have you heard that 300 million cells die in your body EACH DAY? Why don't we whither away in a few weeks? Because they are replaced by 300 million new, fresh cells that keep us going strong. Economists call this process "Creative Destruction" (but you'll never of it from a liberal economist). If we want a vibrant economy we must allow bad cells to be replaced by new, good cells daily.
So conservatives, please don't dismay when you hear about companies going out of business or laying off workers--this is a necessary thing that helps the economy and ultimately leads to more jobs--not less. Please educate your family and friends when they moan about this or that company going out of business because indirectly (and often directly) those moans suggest that government should step in and "fix" the "problem."
As usual, this fix is just another impediment to the economy and obstruction of personal freedom.

Here is a brief video that communicates this message in a much more entertaining way than I am able.

https://www.youtube.com/watch?v=fEbdgpIQ7n4

Have a nice day.

DWD



No comments:

Post a Comment