Creation Myth

October 18, 2011

With the recent bankruptcy of Solyndra, a solar panel-manufacturing company that received $535 million in government loans, President Obama lost the poster child of his 2009 American Recovery and Reinvestment Act (ARRA) and its promise to create more green jobs.  Unfortunately, the mistakes of that legislation and its eventual failures were not isolated to one specific company in California, but were prevalent across the board.  The government scooped up hundreds of billions from taxpayers, redistributed it in the name of creating jobs, and then attached a series of requirements that made job creation much more expensive and therefore unlikely.  The end result was not worth the cost, says Matt Welch, editor in chief of Reason Magazine.

  • The ARRA's $7.2 billion in "clean tech" money created only 7,140 jobs, at a cost of about $1 million each.
  • In January 2009, the White House predicted that its stimulus bill would create up to 4.1 million jobs, yet the economy ended up losing 4.7 million nonfarm payroll jobs in 2009.

With all of the rhetoric about creating jobs and jumpstarting the economy in order to get growing again, recent results suggest that the government is incapable of such ambitious projects.  However, President Obama and the federal government do have one area in which they can act so as to "create" jobs: removing cumbersome regulations from the private sector.

According to the inspector general of the Department of Energy, one reason that the ARRA failed to create as many green jobs as was expected is the wage and regulatory provisions of the Davis-Bacon Act, the National Environmental Policy Act and the Buy American Act.  Similarly, the Department of Justice's increased workplace raids to enforce immigration, drug and even milk pasteurization laws add a cost of compliance on all businesses that hurts their ability to employ additional workers.  Instead of focusing its efforts on uniting unwilling and mismatched employers and employees, the federal government ought to work on reining in these regulations so that corporations will have the time and money to seek additional employees on their own.

Source: Matt Welch, "Creation Myth," Reason Magazine, November 2011.

For text:

http://reason.com/archives/2011/10/10/creation-myth

 

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