Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“Censorship reflects a society's lack of confidence in itself.”     Potter Stewart

July 14, 2009

Make-Work Projects Don’t Create Prosperity

by tarran

The purpose of society is to help people satisfy their needs. A major means used to satisfy needs are economic activities such as production, trade, and the performance of services.

In a complex economy, it is easy to lose sight of this, and people begin to believe the fallacy that the purpose of an economy is to provide employment to people. And we get absurdities like the make-work projects of Roosevelt’s NRA.   French lawmaker and economist Frederic Bastiat eloquently explained the futility of this practice in the 19th century:

But Mr. Lamartine has advanced one argument which I cannot pass by in silence, for it is closely connected with this economic study. “The economical question, as regards theatres, is comprised in one word—labor. It matters little what is the nature of this labor; it is as fertile, as productive a labor as any other kind of labor in the nation. The theatres in France, you know, feed and salary no less than 80,000 workmen of different kinds; painters, masons, decorators, costumers, architects, etc., which constitute the very life and movement of several parts of this capital, and on this account they ought to have your sympathies.” Your sympathies! Say rather your money.

And further on he says: “The pleasures of Paris are the labor and the consumption of the provinces, and the luxuries of the rich are the wages and bread of 200,000 workmen of every description, who live by the manifold industry of the theatres on the surfeit of the republic, and who receive from these noble pleasures, which render France illustrious, the sustenance of their lives and the necessities of their families and children. It is to them that you will give 60,000 francs.”

Yes, it is to the workmen of the theatres that a part, at least, of these 60,000 francs will go; a few bribes, perhaps, may be abstracted on the way. Perhaps, if we were to look a little more closely into the matter, we might find that the cake had gone another way, and that those workmen were fortunate who had come in for a few crumbs. But I will allow, for the sake of argument, that the entire sum does go to the painters, decorators, etc.

This is that which is seen. But whence does it come? This is the other side of the question, and quite as important as the former. Where do these 60,000 francs spring from? and where would they go, if a vote of the legislature did not direct them first toward the Rue Rivoli and thence toward the Rue Grenelle? This is what is not seen. Certainly, nobody will think of maintaining that the legislative vote has caused this sum to be hatched in a ballot urn; that it is a pure addition made to the national wealth; that but for this miraculous vote these 60,000 francs would have been forever invisible and impalpable. It must be admitted that all that the majority can do is to decide that they shall be taken from one place to be sent to another; and if they take one direction, it is only because they have been diverted from another.

This being the case, it is clear that the taxpayer, who has contributed one franc, will no longer have this franc at his own disposal. It is clear that he will be deprived of some gratification to the amount of one franc; and that the workman, whoever he may be, who would have received it from him, will be deprived of a benefit to that amount. Let us not, therefore, be led by a childish illusion into believing that the vote of the 60,000 francs may add anything whatever to the well-being of the country, and to national labor. It displaces enjoyments, it transposes wages—that is all.

This fallacy is again being advanced by proponents of continued construction of the F-22 fighter, an aircraft that is so expensive and unreliable that it has never been risked in a combat sortie, and aircraft that was designed to combat a Soviet air force that disintegrated long before the aircraft got off the drawing board. Barack Obama wants to stop purhcasing these aricraft in order to redirect the revenues in a different direction.   Numerous lawmakers in whose districts components of the aircraft are built are trying to preserve cosntruction arguing that large numbers of people are employed making the aircraft.

Of course, the proponents are missing a major point: the people building the aircraft are wasting their time making something for which there is little consumer demand.  As a result,  the materials, the man hours, the factories all are diverted from making something for which there is greater consumer demand.  These people could be making better DVD players, or cheaper TV’s, or flying cars or better MRI’s.  Instead they produce an aircraft which is ineffective at its primary purpose, blowing things up.

If the proponents of continuing F-22 manufacture really want to improve the lot of the workers who make the aircraft, they should be allowing this uneconomical weapons system to be abandoned and allow the workers to look for work making things that people actually want.  Via the price system and the evolution of the free market, all of the resources idled by such a move would be rapidly repurposed to more profitable forms of production, and the workers would find sustainable jobs rather than depending on good will from lawmakers to keep their jobs going.

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3 Comments

  1. After 150 years, the ruling class still promotes what Bastiat called a “childish illusion.”

    Perhaps we should start calling it a “useful illusion” instead. While it does not in any way improve the economy, it clearly does wonders for those public servants crafty enough to use it.

    Comment by Ben Rast — July 15, 2009 @ 3:59 am
  2. At this point we could probably go back to some Vietnam-era F4′s with updated electronics. There just isn’t anyone to fight with all of that super-fancy stuff anymore.

    Comment by tfr — July 15, 2009 @ 6:21 am
  3. I think the F-22 is probably a big waste of money too.

    However, and I don’t know this for certain, but I would expect, if asked, that the guys who flew combat sorties in Iraq in 91 and 2003, as well as the guys who are currently cruising off the coast of e.g., Korea or Taiwan, not knowing what tomorrow may bring, would firmly state that they are glad they were then, or are now, flying F-14′s, 15′s, 16′s and 18s, rather than some gussied up version of an 1960 F-4 Phantom.

    Even if we would adopt what some posters here advocate – which is to essentially disarm ourselves so that we can no longer ever have any sort of overseas military engagements, and just maintain a bare-bones continental self defense force….If my son volunteered, I would still want the air defense aircraft he flew in, to be higher tech and superior to the next most advanced platform made anywhere else, by either friend or foe.

    Just my opinion.

    Comment by southernjames — July 15, 2009 @ 9:37 am

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