Dean Baker gives it to Robert Samuelson
Washington Post columnist Robert Samuelson is outraged today that the New York Times could possibly suggest the government is capable of creating jobs, calling it a purveyor of a “primitive” “flat earth theory of job creation”. The argument coming from our modern day Galileo boils down to this:
What the Times omits is the money to support all these government jobs. It must come from somewhere — generally, taxes or loans (bonds, bills). But if the people whose money is taken via taxation or borrowing had kept the money, they would have spent most or all of it on something — and that spending would have boosted employment.
Economist Dean Baker gives it to him pretty good today but I can’t help writing a few words as well. What I’d add is that Samuelson is doing (at least) three extremely primitive things: he’s wasting time with a meaningless tautology, he’s ignoring the real state of the world as it relates to productivity and jobs, and he’s confusing the costless act of job creation with taxation and debt.
Here’s the tautology: if everyone on our (round) globe is working, i.e. we have a full employment economy, then net new jobs (either government or private) cannot be created. In other words, you can’t have an unemployment rate less than zero. This “claim” of course is so trivial it requires barely a third grade education.
Not only is Samuelson making a ridiculously unimportant point here, it has absolutely nothing to do with the great current and historical crisis of un/under employment. Outside of war, the world has hardly ever witnessed a time of approximate full employment; environmental issues aside, it’s almost always operating far below capacity. Ignoring the glaring reality of poverty, unemployment, and under-employment, Samuelson descends from the great heights to tell us flat-earthers the scientifically proven truth that, if we indeed did have full employment, the government could not add further to it. Thank you Robert.
He goes on to confuse the costless act of job creation with taxes and debt. This is a grave error as it wrongly assumes we live in a zero sum world and that the additional consumption of a newly hired person must necessarily have a cost to someone else. It doesn’t in our world of extremely high productivity. Unless we were bordering on full utilization of our resources, which we never are, there’s absolutely no cost to bringing somebody new into economic society.
But Samuelson does hypothesize a cost by making yet another third grade level assertion: taxes will reduce somebody’s consumption. Everyone of course agrees with this, but if there is no cost in bringing somebody into the economy (again assuming our vast productivity and unused resources), why would anyone seek to impose one in the form of taxation or debt? It makes no sense – the two aren’t linked unless we live already in a world of full employment. Samuelson clearly needs to do some brush up work with Abba Lerner and MMT.
Samuelson, like so many well seated pundits in our society, speaks nonsense. But, critically, the nonsense he speaks is in the service of power. He and his ilk, like the mythological flat-earthers of old, seek to maintain a universe in which the Sun and all creation revolve around a fully privatized Friedmanian flat Earth. The only real question is when this ancient oligarchic vision will be destroyed by the light of day.