How balanced budgets destroy jobs

Here’s the problem with focusing on balanced budgets.

Balanced budgets rarely come with increased revenue, which means they must be accomplished with decreased expenses. And decreased expenses always means job losses. Because, as I’ve discussed before, everything the government spends money on creates jobs.

Sure, spending cuts means fewer government jobs in ministries, in service departments, and in legislative support (or parliamentary support). Sure, it means fewer doctors, fewer nurses, fewer teachers, and fewer admin support in education and health care.

But it means fewer jobs in the private sector, too.

If spending cuts mean delaying road construction, then the private companies who would’ve built those roads won’t be hiring workers to build them. If spending cuts mean delaying hospital or school construction, then the private companies who would’ve built those hospitals or schools won’t be hiring workers to build them.

And that’s just the direct jobs.

If public servants have their wages cut by 2%, nurses have their wages cut by 3%, and paramedics have their wages cut by 5%, it means they have less money to spend. Less money to spend on groceries, on gas, on clothing, on entertainment, on school supplies, on everything they normally spend money on. If these workers are spending less, it means the economy is producing less, and an economy that produces less requires fewer jobs.

Cutting spending destroys jobs.