Govt does not create jobs, really

THE EDITOR: It is only natural that politicians make promises as election time draws near. What voters must do is determine whether such promises are feasible or not.

In the case of Opposition Leader Kamla Persad-Bissessar’s promise to create 50,000 jobs, the economist will immediately classify this as an empty statement. This is because a government does not create any job, in the real sense of the term.

A job is provided by an employer because the employee adds value to whatever business the employer runs. “Adding value” means contributing to a product or service that is in demand by other people. If that demand is sufficient, the employee’s salary is covered by the profits generated by the business. If no profits are generated, the employee loses his job when the business closes down.

In government, however, an employee’s salary is not paid for out of profits or even revenues generated by state activity. Instead, public service salaries are paid out of taxpayers’ money or from rents collected by the Government, as in the case of the oil and gas companies.

In other words, all “jobs” created by a government are really just posts which do not pay their way but which depend on forced contributions from people and organisations with real (ie profit-generating) jobs. This means that government jobs actually take away wealth from the economy.

It may be argued that government functions in security, education, health and utilities help generate wealth. But it is not at all a settled question that the untrammelled market might not provide these services better than the State. In this context, the Opposition’s promise is one which, if fulfilled, would further undermine the national economy.

ELTON SINGH, Couva