In his column today, Ben Shapiro earns a gold star for clearly making the point that merely “creating jobs” is not what economic policy should be about. The Soviet Union, he points out, had almost no unemployment, but also had very low productivity. That was because resources were allocated by politics, not by marketplace competition.
And that’s what we’re now doing, more and more. For reasons well known to economists (at least those conversant with public choice theory), when politicians decide how to use resources, they’re likely to be put to low-priority objectives and used inefficiently. (Low-priority from the standpoint of consumers, that is. If these grandstanding projects help politicians stay in power, then they’re high-priority for them.) Politicians focus on the short-term and they don’t personally bear the cost if projects turn out to cost more and deliver less than promised. Furthermore, no one sees the opportunity cost — the goods and services that aren’t produced in the market because resources were absorbed by whatever the politicians decided to do.
