There is a fungus in the forest floor of eastern Oregon spanning 2,200 acres; it is known as the world’s largest living organism in terms of area. But there is a growing body of research showing that Armillaria ostoyae has a contender: Governmentus Americanus. This parasitic organism is growing exponentially, and it seems nothing can stop it – not an eroding productive sector, a shrinking tax base, declining revenues, trillion-dollar wars, recession, inefficiency, nor higher operating costs – it appears to shun all dynamics that scientists believe should halt, if not at least stunt, its growth.
A USA Today report provides a cursory glance at the leviathan: While our productive sector continues to shrink, government keeps growing. In the current recession, businesses have cut back 286,000 jobs in Q1 2008, while federal, state, and local governments have added 76,800 jobs.
If your household income is dropping, would you increase your spending? If you were running a business and your revenues were in decline, would you hire more employees? The answer is of course not on both counts. This simple logic escapes government officials.
When 286,000 productive people are out of work, revenues fall. If government spending even stays the same with declining revenues, it must be funded either by extracting more taxes from those still working, or running up more debt. But this situation is worse – they’re adding more cost, more programs, more people.
A Keynesian economist views this as an offsetting effect, softening the loss of jobs and helping to keep the economy out of recession:
“Government jobs are an important cushion for the economy when the private sector falters,” says North Carolina State University economist Michael Walden.
Michael Walden must answer the question: How will the government pay these new hires? It must extract more taxes from the productive, or run up more debt. And this is somehow good for the economy?
State and local governments have run deficits for the last nine months, the Commerce Department reports. Tax collections went flat in the middle of 2007, but spending has continued to rise.
Government jobs add nothing to the economy, they place a further burden, a drain on the economy. Governments create nothing, they leech from the productive private sector. And as long as people believe that government hiring is a good thing in the face of a declining jobs base, we are in a perilous spiral.