Beware of Government Job Creation Schemes

To pull us out of the current recession, politicians on the state and federal level are jumping on the job creation bandwagon. Governor Kulongoski wants to spend a billion dollars on transportation infrastructure, in part to put Oregonians to work. President-elect Obama wants to spend hundreds of billions of dollars to create millions of infrastructure and so-called “green” energy jobs.

Infrastructure and alternative energy projects may or may not be good investments, but selling them as job creation engines almost certainly will end in disappointment. Government is not likely to make better investment decisions than the private sector, yet it will be government that takes money from the private sector, in both higher taxes and misdirected borrowing costs, to fund these projects.

Just remember the bridge to nowhere in Alaska. Building it would have created jobs, but eventually everyone realized that it would simply deflect money from more productive projects. Yet in today’s climate, don’t be surprised if many bridges to nowhere are proposed, and funded, because job creation is now such a high government priority.

Green energy projects should raise the same concerns. Many such projects won’t pencil out without massive government subsidies. So funding them will be a net drain on the economy, even while politicians point to the jobs created.

Jobs are good, but let’s make sure that they make the overall economic situation better, not worse.

Steve Buckstein is founder and senior policy analyst at Cascade Policy Institute, Oregon’s free market public policy research center.