Here’s Geoff Lawrence today on the “Nevada Jobs Fund” scheme, under which legislators want to commit as much as $1 billion for construction projects:
Sen. Horsford claims that for every 100 new construction jobs financed by the state, the increase in demand will create an additional 88 jobs in services, mining and other industries. Using a similar line of thinking, the construction lobby claims that its proposals would generate $3.7 billion in total “economic activity” and create 100,000 jobs.
What this flawed analysis ignores is that if the construction lobby receives $1 billion today, that amount of money must first be taken from taxpayers and private capital markets. As the higher tax burden would take money from taxpayers over the coming years, consumer demand in the private economy will decline – leading to the destruction of jobs and a negative “multiplier effect” that will more than off-set any proclaimed positive “multiplier effect.”
Read Geoff’s full commentary here.