A few days ago Grand Junction’s Free Press published an article by by dad and me about Henry Hazlitt and Frederic Bastiat. We wrote, “forcibly transferring wealth from some people to others does not in itself ‘stimulate the economy’ or ‘create jobs.'” Hazlitt reminds us to remember the unseen, the jobs destroyed by taking wealth away from those who would otherwise spend or invest it according to their own best judgment.
Senator Mark Udall needs to read Hazlitt’s classic, Economics In One Lesson. If he did, perhaps he would refrain from making idiotic statements such as following, from his July 21 newsletter:
“Abound Solar, a Loveland-based manufacturer of thin-film solar panels, received a $400 million federal loan guarantee to aid in its expansion, which will help create hundreds of new jobs to help our local economies.”
Udall points to the seen, the jobs created at the solar panel factory, but he forgets about the unseen, the jobs destroyed by sucking that wealth out of the private economy. When the federal government guarantees loans, it diverts those investment dollars away from some developments and toward others. (If the solar panel company were indeed the best investment, then it could attract those dollars without federal assistance.) What is unseen are all the businesses that will no longer be able to get loans, expand their operations, and hire people.
Furthermore, federally manipulated loans are bound to be less productive than free-market loans, because those who answer to politicians and bureaucrats are serving a political agenda, not solely a productive one. Thus, Udall’s program actively destroys wealth by diverting resources away from more-productive uses to less-productive uses.
So the next time you hear some politician such as Udall claim that he is “creating jobs” by forcibly transferring resources, remember that what he really means is that he is destroying wealth.