By Igor Karbinovskiy Every administration wants to create jobs. There can never be too many jobs, if you ask them, so they're always interested in making more, even in times of low unemployment. Every administration, therefore, proposes its own jobs bill. Last year, for example, President Obama spent some time touring the country to promote his own jobs bill as a way to address the deepening economic crisis. This seems like a no-brainer. After all, jobs are clearly and unambiguously a good thing, right?
Suppose I write an article on the economy that no one wants to read, much less pay me for. Now suppose that the government pays me for it anyway — as part of a jobs bill. Presto! A new job has been created; a person who was previously unemployed is now working. Better yet, that person is me! This job certainly increased my standard of living. But what have I produced? What have I contributed to the economy? Because no one wants my article, the value of my contribution to the economy is zero. The time I've spent in writing, and the money the government paid me, have been wasted. Worse, because this money allows me to consume things that I (and other people) want — things like food and shelter — the net effect on the economy is negative: zero value in, positive value out. This, then, is an example of a "bad" job.
On the other hand, if someone wanted the article I'd written, at the price I was charging for it, then the situation would be quite different. My contribution to the economy would be positive; its value is determined by my customers, who prefer my work to the money they paid for it. I obviously gain the money, which I value higher than my labor. In this latter example, I was productive. In the former, I was not. This, then, is the difference between a productive job and an unproductive one: whether or not someone freely decides that its output is worth buying… (Read more)
Source: Mises.org
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