People focused only on economic macro indicators like GDP and unemployment claim job loss at the state and local government level is “hurting [economic] recovery.” Indeed Government cutbacks are bad news for those who only think in these terms. Government purchases—like hiring more workers—add directly to GDP, and if extra government hiring drew at all from the ranks of the unemployed, it would also reduce the measured unemployment rate.
So it would seem that in order to get GDP up and unemployment down Government could merely hire all unemployed people at whatever price it takes to induce them to “work”. The higher the pay the better. Of course, anyone with a lick of common sense would ask, who is going to pay them and what are all these Government workers going to do: Dig holes and fill them in again?
Pundits who lament the declines in government employment fall for one of the classic blunders in economics: looking only at the short-run effects of a policy on some people, but ignoring the long-term effects on everybody else. See Henry Hazlitt’s Economics in One Lesson.
Economic health is not simply the percentage of people drawing a paycheck, and the dollar value of total “production.” What matters is this: Are people doing the best they possibly can with their limited time, talents, and resources to serve the limitless wants of their fellow human beings? If not, how do things need to change? What impedes people’s ability to do great things?