What is the best way to encourage job creation?

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Get ready for Obama's Stimulus Package which will create huge numbers of new government jobs and an expansion of the reach of government.

What is the best way to "stimulate" the economy? Increase the size of Government? Increase taxes? Increase the ability of the private sector to create jobs?

Professor Douglas Houston points out, government stimulus packages are more politically driven than economically driven: PDF

"Government spending programs like these are political grab-bags whose successes are predicated on satisfying political interest groups, not on creating value and growth in a market economy; these government spending programs then often become embedded 'entitlements,' crowding out the flow of funds to private investments in a free marketplace."

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Douglas Houston

Professor, School of Business, University of Kansas

What is the best way to encourage job creation?

"During recessions, unemployment rationalizes a role for government in creating jobs. But there is no reason these jobs should be directly working for the government: nothing about a recession justifies larger government. If we are worried about too few jobs, it makes sense to subsidize private employment (for example, by temporarily lowering payroll taxes or creating a new tax subsidy for new hires)."

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Glen Weyl

Junior Fellow at the Society of Fellows and Post-Doctoral Fellow in the Department of Economics, Harvard University

Does anyone doubt his point?

"Government spending does not create incentives for labor, innovation and investment. Instead of spending $1 trillion in Washington, let Washington forgive $1 trillion in tax revenues to create incentives for millions of individuals and firms to get the economy going again, one dollar at a time."

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Donald Luskin

Chief Investment Officer, Trend Macrolytics LLC

"Governments make lots of a bad policy during times of economic stress. A spending package that approaches $1 trillion is a case in point. Do we really trust the Congress and the Executive Branch to spend such vast sums wisely, especially after all the bumbling around and ill-advised bailouts this year? Does the government really have a long list of well-thought-out, cost-effective projects that will help our economy? I do not think so."

Scott Bradford

Associate Professor, Brigham Young University

This so-called "stimulus" will in fact mostly stimulate a permanent expansion of government at all levels.

This "stimulus package" means the era of huge government is back and on steroids. Its passage means an economic sea change for this country, and not a positive one either.

"A spending stimulus will only delay the needed restructuring of the U.S. economy to remain internationally competitive. Tax cuts will facilitate that restructuring far better than spending and job creation by the government."

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Stacie Beck

Professor, University of Delaware

Gene Smiley gives you the probable - and lamentable - outcome of its passage:

"An 'economic stimulus' program will do nothing to correct the serious price and resource misallocations that currently exist and are stopping the economy from moving back toward 'full-employment.' In fact, they will likely retard the recovery. They will divert resources from the private sector to the government sector moving us further away from a free-enterprise economy."

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Gene Smiley

Emeritus Professor of Economics, Marquette University

Pelosi and Reid are promising passage of a stimulus package by February. Obama is promising a deficit of 1.2 trillion. There is a good way to keep from piling up that debt - defeat this stimulus package and insist on tax cuts as the primary means toward recovery. Then get government the heck out of the way.

Unfortunately that's not at all what I think will happen. And the result - a repetition of something we've already seen but seem determined to ignore:

"Japan's federal expenditures, following their 1989 stock market crash, have had little to no effect on their recovery. Japan has been left with a huge government debt per GDP ratio and nearly 20 years of little to no growth. Why on earth would the U.S. want to follow in Japan's footsteps?"

Gary Quinlivan

Dean of the Alex G. McKenna School, St. Vincent College