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Obama Says More Job Losses Coming

2 November 2009 3 Comments

Obama made some statements today saying that he expects more job losses coming.  It was an ordinary statement, except one thing jumped out at me.  He said the private and public sectors must do a better job at creating jobs.  Private sector, yes.  Public sector?  Not so much.

This is a huge problem in our country.  People view public sector jobs as the same as private sector jobs.  Here’s the main difference.  Public sector jobs, when created, suck capital and resources out of productive means.  Private sector jobs, when created, allocate resources toward productive means.  One grows the economy, the other restricts the economy.

Yes, some public jobs are necessary, and we must allocate some capital for these functions.  But, the goal should be to keep these at a minimum and keep as many of our resources as possible in the private sector to increase our productive capacity and grow our economy.  Keeping them at a minimum is not what Obama is saying.  He says we must create more!

Here’s the deal… we CAN create more public sector jobs.  It just requires out dumb leaders to call for it to happen.  They can raise revenue and allocate it towards more jobs.  Whether this is a good thing or not is another story (it’s not a good thing).  Sadly, our President hasn’t figured this basic economic principle out.  I guess we can’t expect the majority of our country to figure this out if our leaders haven’t.

In a nut shell, our government’s actions in the economy will end up slowing our recovery where if they got out of the way completely, the recovery would speed up big time. This includes public sector jobs, stimulus and bailouts.

3 Comments »

  • Daniel said:

    It sounds like creating more public sector jobs is not in the best interest of our economy. As a recent college graduate, is it bad that I'm rooting against the market (in the short term)? Wouldn't it be advantageous for me if the market stayed stagnant for a year until I have some savings to invest? Sure, my $300 a month could be earning 20% this year if the market improves. But it will improve eventually, so why not have thousands in the market at that time?

  • 20smoney (author) said:

    Theoretically, all young people should want the stock market to tank. Why? Because (with regards to long term investing) you are in an ACCUMULATION phase early in your life. While accumulating stocks you want low prices. Now, you also have to factor in job security and a low stock market usually means a crappy economy. But if you have a secure income, yea, you should want low stock prices for a long time so you can accumulate as many shares as possible for as long as possible.

    You want high stock prices in a Selling phase which would be retirement years. Obviously this only applies to retirement accounts, so extend this to your specific time line. But it is interesting and is something I mention to friends of mine that are in their 20s that root for the stock market to go up so their 401k balance can go up… I remind them, you can't touch this money for 40 years or so… why do you want high stock prices???