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Barack Obama and Mitt Romney Both Believe Crazy Idea That Government Doesn't Create Jobs

Citizens of a modern democracy demand the work the public sector performs.

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Our political system is living a lie, and it’s crippling our economy. By funding conservative think tanks, buying media outlets and supporting vicious anti-government politicians, the right has spread the false meme that that the only true engine of job growth is the private sector. As a result, our nation is blinded to the most crucial fact about modern capitalism: The private sector is totally incapable of providing all of the goods and services a modern society demands.

But you won't hear much about that reality during this campaign. In the second debate, Barack Obama was asked what he thought voters' greatest “misperception” about him was. “I think a lot of this campaign, maybe over the last four years, has been devoted to this notion that I think government creates jobs, that that somehow is the answer,” he replied. “That's not what I believe. I believe that the free enterprise system is the greatest engine of prosperity the world's ever known.” Mitt Romney offered the claim up as a mantra, repeating, “Government does not create jobs. Government does not create jobs.”

Public sector jobs are desperately needed to produce goods and services that the private sector has no incentive to do. It’s ludicrous, for example, to expect free enterprise to create competing private navies to protect our shores. It also makes little sense for private fire departments to compete with each other to sign up homes to protect. We know that the private sector has no pecuniary incentive to protect the commons – like putting out forest fires on public land or building public (non-toll) highways or cutting carbon emissions. There is no incentive for offering healthcare to a poor child. No individual employer has the incentive or the means to provide public education for all our children regardless of income. Many of these tasks can be – and are -- contracted out. But when the government provides the funding, it is the government, not the private sector that actually creates those jobs.

That’s why it is virtually impossible to imagine a modern, complex economy without a robust public sector. Modern economies need vast educational and physical infrastructures. We need scientific and medical knowledge on an enormous scale that only public educational and research can provide. And the private enterprise obviously needs a publically funded infrastructure of roads, rails, docks, telecommunications and airports as well as courts of all kinds to maintain the integrity of business transactions.

But Isn’t Government Growing and Growing?

The drumbeat against government is so incessant that we are blind to the fact that government jobs are declining, not rising, even during these hard times. As the chart below clearly shows, state, local and federal jobs as a percentage of the population are falling. While this decline represents an enormous victory for right-wingers, it’s a curse, not a blessing, for the rest of us.

How Anti-Government Ideology Deepens The Great Recession

From June 2009 to June 2012, 627,000 government jobs were slashed, while more than 4 million jobs were added in the private sector. However, according to an analysis by the Economic Policy Institute, government jobs should have been added, not reduced, just to keep up with population growth. They also argue that if government jobs had not been cut, the multiplier effect from public employment would have added even more private sector jobs as well. As a result, the overall unemployment rate today is much higher than it should be. In fact, they write, “if it weren’t for state and local austerity, the labor market would have 2.3 million more jobs today; half of these jobs would be in the private sector.” Instead of a 7.8 percent unemployment rate, it would be nearer to 6.2 to 7.0 percent had more federal assistance gone to state and local government to prevent layoffs.

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