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Job Creationism – again

Job creation

On both sides of the Atlantic the traps are being set. The bait? Jobs.

The rise in unemployment – 9.1% (14 million) in America and 7.9% (2.5 million) in the UK – is causing concern and delaying economic recovery. Growth is the mantra, growth is the answer to stagnation, economic depression, social problems and deficit reduction. The medicine – job creation.

President Obama has just announced a $447bn (£282bn) plan of tax cuts and spending plans aimed at creating jobs and infrastructure projects in an attempt to jump-start the economy. America will build or upgrade roads, airports and bridges while here we will build railways and houses. HS2 will allegedly create 40,000 new jobs, whilst a house-building boom linked to a controversial reform in the planning system will generate 200,000 new jobs. Problem solved.

Final touches are being made to the magic formula that will be released to create these thousands of jobs out of thin air to get the economy moving again.

But both the US and Britain have huge budget deficits, so where is the money coming from? And who, at the end of the day, will be the main beneficiaries?

We have no need to remind visitors what improvements to the infrastructure do to the economy. Yes, they provide better services and facilities and help to make our lives easier. But they also increase the value of land, allowing landlords to increase rents and making housing ever more expensive. So as humble taxpayers we are conned into thinking we get a benefit while in reality we pay for the infrastructure from taxation and pay again for the improved facilities in higher land prices and rents.

It is not the government’s responsibility to create jobs. It is the government’s responsibility to examine the cause of unemployment. Until we understand this basic economic principle we must continue to take the consequences of a system that takes taxes from those who work and create wealth, while providing unearned income for those few – including the banks – who do not create wealth but put the value of land created by the community into their own pockets.

The duty of good government is to collect the annual rental value of land created by the community and use this natural fund for public services and infrastructure. Until this is understood we will go on allowing governments to take what is rightfully ours from our wages and allow unemployment and a shortage of housing to blight society.

Harsh may be, but true.