While I am no economist or economics major, I have started reading a book titled "Economics in One Lesson" by Henry Hazlitt because learning about economics is something I find very valuable. I have not finished reading the entire book; however, having some type of understanding of basic economics is very important because it impacts one’s daily life.
Economics, the branch of knowledge concerned with the production, consumption, and transfer of wealth, can be used to understand and explain many important aspects of life.
One important part of the book that I would like to touch on is the public works fallacy. A certain amount of public works are quite essential for the good of our society; roads, tunnels, police and fire departments are all needed for the smooth flow of our communities. However, the problem arises when the government finds places where works, such as bridges, can be built rather than where they need to be built, in the name of ‘creating more jobs’.
If a bridge is necessary to connect two parts of a city, there are no grounds in which to refute the construction of this. If this bridge is more necessary than what taxpayers could have bought individually with the money that had not been taxed away, then this bridge is productive for all those members of the community. But, when the purpose of building public works is for employment, this is simply taking money from taxpayers unnecessarily.
While this bridge will employ, say, 500 people for around a year, it is assumed that these jobs would not have come into existence otherwise. Let us assume that to build the bridge, it takes around $10 million dollars. Those $10 million do not merely appear out of thin air -- it comes from taxpayers. Every public job that this bridge creates takes away a private job somewhere else. While there are more bridge builders, there are fewer television technicians, farmers, clothing workers. Those $10 million dollars taken from taxpayers to build the bridge could have been invested into private sectors of the economy, thus the unbuilt televisions, the ungrown and unsold food, and the unmade items of clothing are never seen. It is quite easy to see the fruits of their labor while the bridge is being constructed and once it is finished, but in order to see the unmade products, it takes a bit of an eye for imagination because these possibilities were never allowed to come into existence.
The problem with public jobs subsidized by the government is that they are without consequences for an unproductive department of the government. In contrast, in the private sector, if a product or business as a whole is unproductive, it goes out of business. Because there is no mercy, this drives the economy to be the best and most productive it can be. However, with the government, the bureaucracy inhibits productivity and thus any harsh decisions that need to be made regarding efficiency.
Economics is not a simple subject to study nor to understand although I hope that this principle of public works is slightly more clear. I think it is important to understand the impact that our taxpayer dollars have on sectors of the economy. Additionally, I think it is important that taxpayers have the liberty to invest their money into any sector of the economy and in turn providing more private jobs rather than coming together collectively to create a false sense of security.
