Can the Government Create Jobs?

Thursday, October 18, 2012

US President Barack Obama and Republican Presidential nominee Mitt Romney debate on October 16, 2012 at Hofstra University in Hempstead, New York. US President Barack Obama and Republican Presidential nominee Mitt Romney debate on October 16, 2012 at Hofstra University in Hempstead, New York. (STAN HONDA/AFP/Getty Images)

In Tuesday night’s presidential debate there was much discussion about job creation, but it was the comments of one of our independent voters in Ohio, Dan Starr, that really set a lot of listeners off. "The government doesn't create any jobs — they really don't," he said. "That's the job of the private sector. There was a moment right in the beginning when Obama said, 'Look, we've created such and such jobs,' and I said, 'No you haven't, that's false.'”

Several listeners called to say they disagreed with this view of job creation. So today The Takeaway takes a closer look: What really drives job creation? And how much is being an effective president similar to being an effective CEO?

Edward Conard is the author of “Unintended Consequences: Why Everything You Think You Know About the Economy is Wrong.” Timothy Noah is the author of “The Great Divergence: America’s Growing Inequality Crisis and What We Can Do About It.” He is also a senior editor at The New Republic, for which he writes the "TRB" column.

"It's a semantic argument," Noah says of the disagreement over whether or not the government creates jobs. "I think actually Ed and I both agree that the government does assist in creating jobs," Noah says. "It's got two ways to do that — one is by spending, and one is by tax cuts. Really, that's what the true argument is: What's the better way?" 

In Conard's opinion, government spending not only does not help to create jobs, but in fact it may destroy them. He thinks that increasing government spending causes the private sector to shrink. "I think lower taxes on successful risk takers and investors create incentives that produce the innovation that grow our employment and I think that lower taxes on investors help us accumulate equity," Conard says. "Europe and Japan have tried a different alternative — higher government spending, higher taxes — and have achieved nowhere near the level of success, the level of jobs, the hours of employment, the median wages that the United States has been able to produce."   

But here, Noah disagrees.

"It's very hard to demonstrate that tax cuts have provided much in the way of economic stimulus, increased savings," Noah says. "The last time we had a big tax increase, it was the 1990s, and the economy boomed."

"I think the way you have to judge the president is, when you lose 5 million jobs, what has normally happened after that? We've had big rebounds," Conard says. Though he concedes that we have deeper structural problems that might temper this rebound, he does think that government spending has not helped matters.

"Look, it's a really simple story," Noah says. "The economy was in terrible shape when Obama came in, it's in somewhat better shape now. It's still not in very good shape, but there are more jobs." 


Edward Conard and Timothy Noah

Produced by:

Mythili Rao

Comments [15]

Sue from Miami, FL

Boca Raton is an apt place for the formation of hedge funds and presidential debates. It's name translates to 'Rat's mouth'.

Oct. 22 2012 09:56 AM
timmy1987 from usa

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Oct. 18 2012 10:58 PM

I really liked this segment. I liked the way that John Hockenberry let two very capable and highly conversant guests (well-selected by Takeaway producers) interact directly. I personlly thought that Ed Conard was brilliant. Mr. Conard merely got equal time, of course, opposing Tim Noah. But even the notion of "equal time" for a free-market voice is such a refreshing change on public radio.

Oct. 18 2012 03:41 PM
Joel from Secaucus

Is it the private sector's job to make jobs? It isn't. Their only job is to make money for their owners. They only make jobs if they need to. If they could profit without hiring a single employee, they would.

Oct. 18 2012 03:29 PM
Mike from Oregon

Jason from Atlanta said "Long term higher paying jobs are done through the private sector".

But I thought the private sector was more efficient than the public sector: lower cost to do same job; part of lower cost is lower labor cost-- lower pay rates, part time workers, temporary workers.

Oct. 18 2012 01:34 PM
Doug Sweet from Portland Oregon

Jobs are created by government. Government contracting and services are jobs just as important and community building as private sector jobs.

The Obama economy has restored almost all the private sector jobs lost under Bush. The current unemployment numbers represent mostly the loss of jobs in the public sector. Cities and counties and states have laid off thousands and until the public sector can step up again, the unemployment will remain high.

Oct. 18 2012 01:19 PM

Government spending... isn't that where money goes to some American businesses? Does that create or maintain American jobs?

Oct. 18 2012 01:18 PM
Larry Fisher from Brooklyn, N.Y.

If we had lost five million jobs, the President would have been blamed. If we gain five million jobs the President should be praised. End of story...

Oct. 18 2012 12:59 PM
SAK from Waban, MA

The government DOES create jobs when we hire teachers for our schools as well as the construction personnel that make the roads come up to meet our feet and wheels?

Oct. 18 2012 11:17 AM
Josh from Nashville, TN

Mitt was arguing the _entire debate_ that he was going to create more jobs than Obama and we should vote for him because he'll create so many jobs as President. Then near the end he got frustrated with Obama and said "Government doesn't create jobs!"

I can't believe more people aren't raking him over the coals for this two-faced nonsense. And people say the media is liberal. smh...

Oct. 18 2012 11:11 AM
Jason from Atlanta

When Mitt was saying that Gov't doesn't create jobs, he was referring to the fact that gov't spending doesn't create jobs. Now, of course, it can create 'some' jobs, but just not very efficiently. Typically, it's temporary jobs building roads or administrative stuff.

Long term higher paying jobs are done through the private sector...on a massive scale.

Now, (Mark from Gansevoort, ny) when he said he wants to 'create jobs' he was referring to doing things that make it easier for jobs to be created in the private sector. Anyone that watched the Republican primaries knows that Mitt hit that idea over and over again. Currently, the gov't is in the way of more private sector job hiring. Mitt wants to help the gov't get out of the way of people's business so they can grow their business.

Obamacare adds to the cost a business has to pay. The corporate taxes are the highest in the world. Obama says he wants to lower them, but hasn't in 4 years. Regulation is fine, but some of it has stunted growth. The first debate highlighted this fact and Obama had no answer for how a 'verified mortage' didn't even have a definition.

Oct. 18 2012 10:30 AM
Roseanna from oklahoma

I think both ancient Rome and Greece did have running water. the agua ducts?

Oct. 18 2012 10:26 AM
Mark from Gansevoort, ny

In the last debate Romney said "Government doesn't create jobs!" emphatically, three times. And he wants to become President. Why does he want to become president? He said he wants to become president to create all of these jobs. He said that over and over, he wants to become president to create jobs. But if Government doesn't create jobs then why does he have to become president in order to create jobs? By all accounts, he's a 'great businessman.' If government really doesn't create jobs shouldn't he be able to figure out how to do it without becoming president? This great businessman is spending millions of his own money to become president and he says it's to do something that he goes on to say the government doesn't actually do. Seems maybe he actually has a reason for becoming president that he is not telling us?

Oct. 18 2012 09:59 AM

Did political games with the debt ceiling begin with Pelosi and Obama refusing to raise it in 2010 along with raising taxes and deliberately leaving it for a Republican House and causing a crisis for political gain?

It is amazing how this false debt ceiling narrative is peddled by the left without challenge.

Does Noah ignoring that Obama ignored the Simpson/Bowles commission that the President called for while deriding Ryan for rejecting it count as political games?

This sounds like a classic case of projection. Accuse others for what your side does itself which is playing political games.

Oct. 18 2012 09:20 AM
Dennis Maher from Lake Luzerne NY

NO! The statement that "every dollar government spends is a dollar taxed" is rarely true. This is money invested for the common good. There are only 3 parts of economy: the private sector, consumers, and government. Businesses do not hire because there is no demand. Government must spend in order to pull the private sector and consumers out of the ditch.

Oct. 18 2012 09:18 AM

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