The economy gained 162,000 jobs for the month of March and the President, of course, has attributed this success to his stimulus package. He was in Charlotte, North Carolina today discussing the economy at a manufacturing company that received $50 billion in stimulus money to expand one of its facilities and open another elsewhere in the State. Regarding the future of the economy, the President said:

Government can’t reverse the toll of this recession overnight, and government on its own can’t replace the 8 million jobs that have been lost….The true engine of job growth in this country has always been the private sector. What government can do is create the conditions…for companies to hire again.

Just how government can create these conditions for companies to hire again is left unsaid. I seriously doubt the nationalization of the banking sector and the government takeover of GM are favorable conditions for the private sector. In fact, if Robert Higgs is correct about regime uncertainty, these government actions create unfavorable circumstances for investors. Investors who are unsure that their private property rights are going to be respected in the future are loathe to invest in any long term-projects. If the government is willing to take over an entire sector of the economy by passing such legislation over a weekend, clearly investors would be fearful that the government might takeover any sector it wishes in the future. This lack of real investment means that there will be less jobs in the future and ultimately less consumer and producer goods. Our standard of living will fall. …

Government Action Means ViolenceRead More »