Like most elitist politicians, outgoing Governor Mike Easley feels it is his duty to try and "stimulate" the economy. The arrogance of politicians who believe the economy is something they can control and manipulate better than the millions of producers and consumers freely engaging in mutually beneficial exchanges never ceases to amaze – and depress – me.
Now we have Easley jumping on the "stimulus" bandwagon by rushing into more than $700 million in debt financed public works projects. The selling point, as always, is that government spending will "create" new jobs.
Government spending can not create any new jobs. Politicians and the public need to understand this. The money for these jobs must come from somewhere. In this case, the public works will be debt-financed. As the state issues debt to finance government projects, less investment financing is available to the private sector. Thus, the government projects crowd out private sector jobs.
In the future, these government projects will have to be repaid plus interest. The added burden of growing debt will therefore most likely be financed by increasing taxes – sapping money from the private sector and costing jobs.
In either scenario, no net new jobs are created, and we are left figuring out how to pay for an increasing debt.