Signs of the Apocalypse

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I watch C-SPAN while getting dressed in the morning. Callers address comments and questions to an official or expert in some field. The listener gets fascinating insight into the state of economic understanding in this country, ranging from good down to aggressively ignorant. Some callers are articulate; others irrelevantly pad their ramblings with bits of autobiography.

Today (July 27), the guest was Transportation Secretary Ray LaHood. One caller asked him whether it is appropriate to spend government money on political advertising, specifically on signs along highways celebrating federal “stimulus” as paying for the construction work. LaHood replied that the signs are not compulsory on local authorities, that precedents for them exist, and, especially, that making the signs provides jobs in local businesses. Really! Jobs, the all-purpose justification! One might as well advocate government monitoring of right-wing talk shows on the grounds that it would create jobs for censors.

Jobs are not desirable for their own sake, or because they use up human effort and creativity. Jobs are an aspect of the great process whereby people specialize in producing particular goods and services to exchange them away for the products of other specialists. Production of some things constitutes demand for others. These exchanges take place, however, not by barter but through the intermediary of money and credit. When the money and credit system malfunctions, exchange, production, consumption, investment, and employment suffer.

Since, for good or ill, government dominates the money and credit system, it has a responsibility to understand and if possible remedy the malfunctioning. Nowadays, uncertainty and fear about government policy prompt business firms, banks, and even consumers to hang onto their money rather than invest, lend, and spend it. This disruption to the money and credit system and so to the great process of exchange is what requires understanding and remedy. To glorify, instead, the ad hoc creation of jobs is pathetically superficial.

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