Government Does Not Create Jobs — But It Can Help or Hurt

Government does not ultimately create jobs, as government programs must rely on capital taken from the economy, preventing it from being utilized by more efficient private market forces. However, government policies certainly do impact job creation, sometimes positively, but more often negatively. Examples of job-killing policies abound at all levels of government. The U.S. Environmental Protection Agency's war on energy through a proliferation of rules aimed at putting coal-fired power plants out of business is driving up energy costs, with the effect of taking money out of consumers' pockets and leading to fewer jobs. The latest assault on coal-fired power plants is an EPA rulemaking so strict in limiting mercury emissions that it will likely result in the shutdown of many coal-fired power plants around the nation.

Not to be outdone by the federal government, state lawmakers have also passed legislation that undermines competition in the utility sector and mandates more costly electricity through alternative energy requirements. Local government often negatively impacts job creation by excessive ordinances and zoning regulations. One of the latest examples of local government activism is the Lansing city council proposing that certain retail establishments that want to expand or build be required to provide bicycle racks. I talked to a small business owner in Rockford who had to close his business — he cited city officials' refusal to allow him to erect a sign as a contributing factor.

All news coming out of the halls of government is not bad. State lawmakers have passed several bills that put limits on the state’s regulatory regime — a good move that will encourage job providers to invest in the state. Rep. Tom McMillan has proposed innovative legislation that would sidestep the silly federal government ban on traditional light bulbs by allowing their sale in the state by a Michigan manufacturer. If Rep. McMillan’s idea becomes law, it seems likely that an entrepreneur would take advantage of the Michigan market.

Government officials at all levels should take a pledge to “do no more harm” to the economy and job creation. Proposed laws, regulations and ordinances should be evaluated on their impact on job creation — and if they hurt job creation, they should be killed.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.