(Steven Miller and Kyle Gillis/NPRI) – President Obama claims his recently proposed American Jobs Act could provide $1.3 billion to Nevada and create nearly 10,000 jobs.
But what the historical data strongly suggests, says a Duquesne University economics professor, is that the money will do no such thing.
“The government does not create jobs. It moves jobs,” says Dr. Antony Davies, who is also a research fellow at George Mason University’s Mercatus Center.
“Yes, it is absolutely the case that when the government spends money, jobs appear,” he says. “But that’s only half of the argument.
“The other half is that the money doesn’t fall from heaven — right? You get the money by taxing somebody else. So when you’re taxing somebody else, you’re destroying jobs.
“What really happens is, you’re moving jobs,” says Davies.
So is it possible that Obama’s legislation could still move jobs to Nevada — even if equivalent jobs are being destroyed somewhere else?
That prospect appears unlikely, since — in the competition between the states for federal dollars — Nevada is a net loser, by a hefty margin: As of last year, only 65 cents of every dollar paid by Nevadans in federal taxes returned to the Silver State in the form of federal spending.
Moreover, says Davies, the longer-term historical impact of all so-called government stimulus spending is actually negative. He cites data over 50 years showing that when one looks back, from either four or eight quarters down the road after government spending, the impact of that spending on economic growth is seen to be negative (See here and here).
(To continue reading this article, click here. – Ed.)
