Will “stimulus spending” by the government create a lot of new jobs?
(FAQ: Frequently Asked Questions)
Will “stimulus spending” by the government create a lot
of new jobs?
No, stimulus spending by the government will not create a lot of
new jobs for American workers.
The stimulus money will be siphoned out of our economy and sent
to some foreign country such as China to pay for imported goods.
Once the stimulus money goes to China, it will no longer be
available to recirculate within our economy, and it will not create a
sustained economic recovery.
The basic logic behind government spending during times of
recession is that there will be more money in the economy, which
causes more economic activity. And this economic activity will
create more jobs.
This happened during World War II, when the US government
spent huge sums of money buying ships, guns, bullets, airplanes,
tanks, etc. to support our war effort.
This massive spending did actually pull our economy out of the
Great Depression of the 1930’s.
The millions of American workers who were not in the military went
to work in the factories making the ships, airplanes, tanks, etc.
The factories hired workers to manufacture the war material being
bought by the government. It was a massive stimulus to the
economy by the US government.
This boom continued after the war, as millions of military men and
women returned to catch up with their lives that had been
interrupted by the war.
The decades following the war, the 1950’s and 1960’s, were very
prosperous times for American workers.
OK, the logical question is: “If government stimulus spending
worked in pulling our economy out of the Great Depression, why
won’t it work now?”
And the logical answer is that things are very different now. Our
economy is very different now from the way it was at the beginning
of World War II.
We still had many factories during the 1930’s, even if they were
only operating at half capacity or even closed.
Many of the factories were converted into making armaments, etc.
for the war effort during World War II.
After the war, the factories began once again manufacturing
consumer goods for people to buy with the money that they had
made and saved during the war.
As millions of manufacturing workers spent their paycheck on
consumer goods, such as cars, houses, radios, clothes, etc., more
factory workers were hired to meet the demand.
The economy boomed as workers spent their money buying
consumer goods, which caused more factories to be built and more
workers to be hired.
But, stimulus spending will not work today as it did in the past.
The reason is that we have sent too many factories to China.
If the government uses stimulus money to hire workers today, the
workers will buy consumer goods as they did after World War II,
but the money will not stay in our country.
When a worker takes his or her paycheck to the store and buys a
new big-screen TV, the money goes to a factory in China.
If an American worker buys consumer goods today, much of the
money will go to China and other foreign countries.
The stimulus money will not circulate very long in our economy
before it will be funneled to some foreign country, unlike it was in
Even spending money on housing and the construction industry,
which employs many illegal immigrants, will not do much to
stimulate our economy.
This is because more illegal workers will be hired, and illegal
workers send billions of dollars yearly back to their home countries.
Government stimulus money does benefit those workers who are
directly hired by the stimulus money. After the stimulus spending
stops, these workers will be without a job.
The government stimulus will not create a sustained period of
economic growth and jobs for the American economy.
It does create jobs in China, though.