Author Topic: Global Economics  (Read 10294 times)

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Offline runawayjimbo

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Re: Global Economics
« Reply #15 on: September 02, 2011, 09:37:05 AM »
Zero jobs. None.



http://www.bloomberg.com/news/2011-09-02/employment-in-u-s-unexpectedly-stagnated-in-august-jobless-rate-at-9-1-.html

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Employment in U.S. Stagnated in August; Jobless Rate at 9.1%

Employment in the U.S. unexpectedly stagnated in August and the jobless rate held at 9.1 percent as American employers became less confident in the strength of the recovery.

Payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was less than initially estimated, Labor Department data showed today in Washington. The median forecast in a Bloomberg News survey called for a rise of 65,000. Hourly earnings and hours worked both declined. The August data included a 48,000 drop in information industry jobs, mostly reflecting striking Verizon Communications Inc. (VZ) workers.

Political squabbling over the budget and mounting fear of a default in Europe caused the Standard & Poor’s 500 Index to plummet 17 percent from July 22 to Aug. 8, prompting companies and consumers to cut back. The lack of hiring is one reason Federal Reserve Chairman Ben S. Bernanke last week said the central bank still has tools available to stimulate growth.

...

Obama this week agreed to delay by one day to Sept. 8 a presentation of his jobs agenda to a joint session of Congress after House Speaker John Boehner, a Republican, delivered an unprecedented rebuff to his request to speak a day earlier, when a Republican presidential debate is scheduled. The bickering may foreshadow further gridlock when a joint deficit-cutting committee begins meeting this month.

...

Among the provisions Obama has been considering for his jobs agenda are more infrastructure spending, tax incentives to spur hiring, a reduction in the employer portion of the payroll tax and changes to unemployment insurance to subsidize worker retraining, according to people familiar with discussions.

Offline gah

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Re: Global Economics
« Reply #16 on: September 02, 2011, 10:36:25 AM »
^^^  Are you surprised?
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Offline gah

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Re: Global Economics
« Reply #17 on: September 03, 2011, 01:53:35 PM »
Zero jobs. None.


It's beyond ridiculous at this point.

http://www.washingtonpost.com/politics/no-new-jobs-as-washington-remains-divided/2011/09/01/gIQA4tS4wJ_story.html

Quote
Instead, Republicans argued for less spending. Democrats argued for stimulating the economy. Congress agreed on almost nothing.

---

This week, in anticipation of Congress’s return from its August recess, both parties have laid out new plans for increasing U.S. employment. For now, the new plans look a great deal like the old plans — the ones that Congress has fought about for eight months already.

---

“I’m not going to be able to work with the progressive liberals. I’m just not,” Rep. Michael Grimm (R-N.Y.), a freshman from New York’s outer boroughs, when asked about the upcoming jobs debate. Grimm said would not work with Democrats who believe increased government spending is the solution to the jobs problem. “I’m so diametrically opposed to their views,” Grimm said in a telephone interview. “I can’t compromise with what I consider to be a lack of reality.”

---

But the simple math of divided government is this: It will take both sides to make any solution work, and the prospect of that kind of effective cooperation seems as distant now as it did the first 1,236 times somebody said “create jobs” on Capitol Hill.

For instance, on Thursday freshman Rep. Joe Walsh (R-Ill.) said he wouldn’t even attend Obama’s speech — which was rescheduled from Wednesday after a tiff with Boehner.

“I don’t want to participate in that. I don’t want to be a prop,” Walsh said. Walsh said he would hold a town-hall meeting in that night in Illinois, believing Obama was not likely to unveil any substantive new ideas. “I know I’m going to get some flak for it. But I refuse to let him deliver another one of these speeches. We’re past speeches.”


 :frustrated: (<- doesn't even come close to expressing how frustrating this sort of thing is)
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Offline Guyute

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Re: Global Economics
« Reply #18 on: September 15, 2011, 10:55:05 PM »
The jobs bill that was just proposed is really, really poor.   It gives the appearance of creating jobs at $460 billion, but in reality it is a band aid to lower unemployment until the election.

Here is some analysis:
Most of the job creation is in infrastructure.    This is actually good for us as a country because the infrastructure needs some desperate help.  What it does not do is help the economy other than short term.   These are short to mid-term jobs.  Once the govt stops spending these jobs go away, hence the band aid.  These jobs also are just a reallocation of tax dollars so no new wealth is being created, again, not lasting effect.

The bill will require a tax increase.  There has never been a time when a tax increase has helped the economy, why would it now when investment is so far down.  You want these people making $200k to invest that money in corporations who will create jobs which grow the economy and create wealth through corporate growth.  Private industry has always been much more efficient at this than the govt.

The tax cut isn't.   There is a tax cut for small companies who add jobs.  The problem is that the income limit is so low that all but the smallest of companies are not included.

The whole thing feels like another Obama miss, just like Obamacare, it is will create more of a drain on the economy than the good.

I am really upset, I had very high hoped for Obama and I feel like he continuously lets me down.

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Offline runawayjimbo

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Re: Global Economics
« Reply #19 on: September 16, 2011, 11:32:47 AM »
Nice analysis, Guyute. If I may add...

Most of the job creation is in infrastructure.    This is actually good for us as a country because the infrastructure needs some desperate help.  What it does not do is help the economy other than short term.   These are short to mid-term jobs.  Once the govt stops spending these jobs go away, hence the band aid.  These jobs also are just a reallocation of tax dollars so no new wealth is being created, again, not lasting effect.

Not only that, but only $21.8B of the original stimulus (less than 0.5%) has actually been spent on infrastructure. Obama himself has admitted that shovel-ready projects were harder to come by than they thought. Why will it be different this time?

Further, a preliminary study from 2 George Mason economists paints a very different picture of what Stimulus 1.0 actually did. Interviews with businesses who received stimulus dollars reveal the actual amount of jobs "created or saved" is likely very different than what the gov't reports. Also, it did little to increase economic output because oftentimes workers hired for stimulus-related projects were not the unemployed but workers who switched jobs from other firms. Then there's this funny little story:

Quote
Sometimes it was hard for recipients to put a finger on just what was wrong, but their years of experience told them something was amiss. One federal contractor who installed tile in government buildings said that he had planned to install some typical four-inch white tile, the kind he had used in countless government projects beforehand—the very tiles specified in the architectural renderings. But a revised project specification issued by the contracting agency required him to use a smaller, more intricate set of colored tiles. The contractor told our team that installing the smaller tiles would increase his labor costs alone by 50 percent and the only reason he could see for using the smaller tiles was to move the money out the door on the ARRA schedule.

In other words, the value added is less than the billions of dollars spent.

The bill will require a tax increase.  There has never been a time when a tax increase has helped the economy, why would it now when investment is so far down.  You want these people making $200k to invest that money in corporations who will create jobs which grow the economy and create wealth through corporate growth.  Private industry has always been much more efficient at this than the govt.

Wait, you mean aggregate demand won't increase if people have less money to spend? How can that be? (Although if I have to hear the GOP say "job creators" one more time I might punch a kitten)

The whole thing feels like another Obama miss, just like Obamacare, it is will create more of a drain on the economy than the good.

I am really upset, I had very high hoped for Obama and I feel like he continuously lets me down.

The jobs bill is not a bill. He knows it is DOA in its current form. Even Democrats are even coming out against it: Mary Landrieu refuses to vote for a bill that ends tax breaks for oil companies; Bob Casey thinks the one-size-fits-all approach is a mistake; Peter DeFazio says no more tax cuts. The bill is simply a strategical play to give Obama some soundbites for his re-election campaign.

But don't worry, Bernanke will announce QE3 soon which will continue to temporarily support over-inflated asset prices and provide a short term fix to our long term problem. Lost decade here we come!

Offline slslbs

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Re: Global Economics
« Reply #20 on: September 16, 2011, 12:47:54 PM »
I've heard lots of experts come on TV and explain why this bill won't work.
ok.

I've yet to hear one person explain what will work. Lowering taxes alone won't do much beside raising the deficit. We already have had historically low tax rates for the past 10 years.

Investing in infrastructure sounds good, but how (or when) will be pay for it?
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Offline runawayjimbo

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Re: Global Economics
« Reply #21 on: September 16, 2011, 02:44:09 PM »
Actually, lowering taxes would make a difference due to a very simple concept: if people and corporations have more of their money, they will spend/invest more of that money. And let's not pretend lower taxes created this recession; the tax rates had absolutely zero relation to the housing bubble that was intentionally created to replace the dot-com bubble.

You're right it would explode the deficit, further undermining confidence in the dollar and pushing out foreign investment. Which is why spending also needs to be drastically cut, starting with the war/defense budget.

Other unlikely/unpopular alternatives:

Repeal ObamaCare - employers simply cannot bring on more permanent workers because they have no idea what the costs of these new (and existing) workers will be. The law will do very little to "bend the cost curve" as Obama was so fond of saying so premiums for providing healthcare to workers will continue to increase. Will it be cheaper to dump the healthcare and just pay the taxes? No one knows because HHS has yet to spell out the regulations they were supposed to roll out in April (shocking). This can be extended to other over reaching and ineffective regulation (e.g., Dodd-Frank, Sarbanes-Oxley, etc.)

Lower or eliminate capital gains tax - ok, you pay taxes on your income. You pay taxes when you buy things. You pay taxes for using your cell phone and to get a marriage license and for a permit if you want to put in a new bathroom in your home that you "own". After all that, you save some money and make the responsible decision to invest it to save for the future and then if your investment has any gains during the year you have to pay more taxes on that?! (BTW, cap gains are more than just investments, e.g., house) Soon they'll be taxing us to die (oh wait...). Also, it would facilitate the elimination of the carried interest loophole that is so flagrantly abused. (In fact, revamping the entire tax code is long overdue, but I'm not holding my breath on that one)

Reduce corporate tax rate - what happened in Ireland when the corporate tax rate was reduced? The economy surged as companies poured money into the country. They've obviously had problems since then due to over promising on benefits (sounds familiar) but a lower corporate tax rate would encourage investment to flow into the country. The cost of this could be offset by closing loopholes granted by various administrations to favored industries. This would still result in a net tax decrease, allowing companies to invest and grow. That's the real multiplier effect. It would also reduce costs for business paying an army of accountants to comply with or circumvent the letter of the law while reducing their tax burdens as much as possible. They could then reallocate their skills to a more productive line of work.

Unemployment benefits - while we shouldn't be blind to the misfortunes of others, extending unemployment benefits to 3 yrs make no sense to me whatsoever. Don't we want people to find a job? Simple changes to the program would remove the disincentive for people to work. The formula could be scaled back over time, putting more pressure on the unemployed to find something. It could be block granted to the states, allowing each state to determine the best way to temporarily provide support to the unemployed. Jonathan Alter had an interesting idea (a liberal? gasp!) that you could convert a portion of the benefits to vouchers to companies who hire workers. The fact is there are jobs people can find, but they don't want to accept anything less than what their prior salary was. If you try to sell your house or car or anything else and don't have any takers, you eventually realize you have to lower your asking price. People need to extend this basic methodology to the price of their labor.

Gov't cannot create jobs/growth, only the conditions to allow the private sector to flourish.

Offline runawayjimbo

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Re: Global Economics
« Reply #22 on: September 16, 2011, 02:49:01 PM »
More greatness from Taibbi on the UBS "rogue trader"

http://www.rollingstone.com/politics/blogs/taibblog/the-2-billion-ubs-incident-rogue-trader-my-ass-20110915

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The $2 Billion UBS Incident: 'Rogue Trader' My Ass

The news that a "rogue trader" (I hate that term – more on that in a moment) has soaked the Swiss banking giant UBS for $2 billion has rocked the international financial community and threatened to drive a stake through any chance Europe had of averting economic disaster. There is much hand-wringing in the financial press today as the UBS incident has reminded the whole world that all of the banks were almost certainly lying their asses off over the last three years, when they all pledged to pull back from risky prop trading. Here’s how the WSJ put it:
Quote
The Swiss banking giant has been struggling to rebuild trust after running up vast losses in the original financial crisis. Under Chief Executive Oswald Grubel, the bank claimed to have put in place new risk management practices, pulled back from proprietary trading and focused on a low-risk client-driven model.

...

But the reality is, the brains of investment bankers by nature are not wired for "client-based" thinking. This is the reason why the Glass-Steagall Act, which kept investment banks and commercial banks separate, was originally passed back in 1933: it just defies common sense to have professional gamblers in charge of stewarding commercial bank accounts.

...

Nonetheless, thanks to the Gramm-Leach-Bliley Act passed in 1998 with the help of Bob Rubin, Larry Summers, Bill Clinton, Alan Greenspan, Phil Gramm and a host of other short-sighted politicians, we now have a situation where trillions in federally-insured commercial bank deposits have been wedded at the end of a shotgun to exactly such career investment bankers from places like Salomon Brothers (now part of Citi), Merrill Lynch (Bank of America), Bear Stearns (Chase), and so on.

These marriages have been a disaster. The influx of i-banking types into the once-boring worlds of commercial bank accounts, home mortgages, and consumer credit has helped turn every part of the financial universe into a casino. That’s why I can’t stand the term "rogue trader," which is always tossed out there when some investment-banker asshole loses a billion dollars betting with someone else’s money.

They’re not "rogue" for the simple reason that making insanely irresponsible decisions with other peoples’ money is exactly the job description of a lot of people on Wall Street. Hell, they don’t call these guys "rogue traders" when they make a billion dollars gambling.

The only thing that differentiates a "rogue" trader like Barings villain Nick Leeson from a Lloyd Blankfein, Dick Fuld, John Thain, or someone like AIG’s Joe Cassano, is that those other guys are more senior and their lunatic, catastrophic decisions were authorized (and yes, I know that Cassano wasn’t an investment banker, technically – but he was in financial services).

In the financial press you're called a "rogue trader" if you're some overperspired 28 year-old newbie who bypasses internal audits and quality control to make a disastrous trade that could sink the company. But if you're a well-groomed 60 year-old CEO who uses his authority to ignore quality control and internal audits in order to make disastrous trades that could sink the company, you get a bailout, a bonus, and heroic treatment in an Andrew Ross Sorkin book.

In other words, "rogue traders" are treated like bad accidents and condemned everywhere from the front pages to Ewan McGregor films. But rogue companies are protected at every level of the regulatory structure and continually empowered by dergulatory legislation giving them access to our bank accounts.

...

Offline qop24

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Re: Global Economics
« Reply #23 on: September 16, 2011, 03:20:57 PM »
Actually, lowering taxes would make a difference due to a very simple concept: if people and corporations have more of their money, they will spend/invest more of that money.
......................

You're right it would explode the deficit, further undermining confidence in the dollar and pushing out foreign investment. Which is why spending also needs to be drastically cut, starting with the war/defense budget.

..............................

Gov't cannot create jobs/growth, only the conditions to allow the private sector to flourish.


First, it's pretty absurdly obvious that lower corporate taxes (for the huge companies) leads to the higher-ups pocketing the savings. I'm sorry but that's the flat out truth and don't even try to say that doesn't happen nearly everywhere. Them's the facts.


I totally agree with the second thing I quoted up there, especially that we need to do some SERIOUS war/defense budget work.

And for the last part, yeah you are mostly right, infrastructure is 100% necessary and I think it should be done, but it is only a temporary fix (which is still way fucking better than doing nothing, so why not do it godammit).


My stance is that tax cuts on corporations backfires horribly when applied to large companies (why the fuck doesn't exxon pay taxes?????)

Focus on the small business sector since they tend to be more honest people who will actually use tax savings to hire employees, not fucking Wall Street, Oil, and countless other sectors/companies.
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Offline Hicks

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Re: Global Economics
« Reply #24 on: September 16, 2011, 03:58:11 PM »
Holding up Ireland as an example of what we should do. . .



LOL

Stop the handouts to douchebags who are sitting on all of the money.

/fucking duh
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Offline runawayjimbo

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Re: Global Economics
« Reply #25 on: September 16, 2011, 04:56:07 PM »
First, it's pretty absurdly obvious that lower corporate taxes (for the huge companies) leads to the higher-ups pocketing the savings. I'm sorry but that's the flat out truth and don't even try to say that doesn't happen nearly everywhere. Them's the facts.

Do you have any evidence to support this claim or do you expect to make an argument based on "them's the facts"?

My stance is that tax cuts on corporations backfires horribly when applied to large companies (why the fuck doesn't exxon pay taxes?????)

A common misconception. Exxon actually does pay taxes: their avg effective income tax over the past 6 yrs is 29%. The reason it is lower than the 35% corporate rate is because it is lowered through deductions and other provisions granted by the feds.

Offline qop24

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Re: Global Economics
« Reply #26 on: September 16, 2011, 05:05:36 PM »
First, it's pretty absurdly obvious that lower corporate taxes (for the huge companies) leads to the higher-ups pocketing the savings. I'm sorry but that's the flat out truth and don't even try to say that doesn't happen nearly everywhere. Them's the facts.

Do you have any evidence to support this claim or do you expect to make an argument based on "them's the facts"?

My stance is that tax cuts on corporations backfires horribly when applied to large companies (why the fuck doesn't exxon pay taxes?????)

I work very closely with these guys - save save save is the motto, not "oh look we can use our tax savings to spend and hire people."

And no, I'm not going to waste my time posting a spreadsheet, I'm almost certain that this point was made earlier in this or a similar thread - something to the effect of BUSH TAX CUTS HAVENT GIVEN ANYONE A JOB.


I'm done, this is futile. I'm gonna do my part and not be a selfish asshole who loves to oppress the vast majority of the population, think nothing of it, and claim they are saving the world by hiring people ,which doesn't happen.
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Offline twatts

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Re: Global Economics
« Reply #27 on: September 16, 2011, 06:43:14 PM »
Actually, lowering taxes would make a difference due to a very simple concept: if people and corporations have more of their money, they will spend/invest more of that money.

First, it's pretty absurdly obvious that lower corporate taxes (for the huge companies) leads to the higher-ups pocketing the savings. I'm sorry but that's the flat out truth and don't even try to say that doesn't happen nearly everywhere. Them's the facts.

Do you have any evidence to support this claim or do you expect to make an argument based on "them's the facts"?



His statement has as much merit as yours, in that both are true, to an extent.

Gov't cannot create jobs/growth, only the conditions to allow the private sector to flourish.

Of course Gov't can create jobs.  NCDOT is preparing to lay-off 400 workers.  Those jobs must have had to been created at some point. 

YMMV,

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Offline Guyute

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Re: Global Economics
« Reply #28 on: September 18, 2011, 11:28:26 PM »
Probably a good time to explain the whole corporate tax rate and companies not paying taxes thing as there is a huge misconception.

It is ACCURATE that many companies pay almost no corporate tax or a greatly reduced tax rate.  It is not accurate that they aren't paying those taxes at all, they are just paying them to someone else.  That is why the Ireland example is actually a good one.  You think Ireland is bad now you should see what it could be like.

The U.S. has the second highest corporate tax rate of any industrialized nation in the world.  The problem is that these companies all over the world don't have such high tax rates.  Many of them are in the 12-17% range rather than 35% like the U.S.   U.S. companies recognize this and moved large parts of their companies to other nations and in many cases made them the final shipping point for products or the housing point for computer code.  They then declare that headquarters.   Since the products are actually from another nation the U.S. govt can't tax the profits on them and these companies enjoy the lower tax rate of the other nation and that county enjoys the tax dollars and the increase in employment.

Go to Ireland and see the Microsoft office, Cisco, EMC, Google, Oracle, Yahoo, and many others.  Go to Switzerland and see oil giants, consulting firms (create all final docs there), investment firms, etc.  I have seen estimates from $1.3-1.8 trillion dollars currently offshore in corporate profits.  That doesn't account for the jobs that needed to be established with them.

Interviews with Chambers from Cisco and Balmar from Microsoft have them both saying that the corporate tax rate is the reason those jobs and tax dollars are in those 2 nations.  That if the rate was even close they would have them in the U.S. because of the reduction in overhead of the oversea locations (management, travel, time loss due to time zones).   

You tell me, would it make more sense to tax a lot more money at a lower rate or tax much less at a higher rate?  By lowering the rates and offering an amnesty to onshore the money in the mid to long term tax revenue would increase and you would help employment.  The problem is that the sound of lowering corporate tax rate will create such a frenzy with the Dems base that they could never support it, despite the logic.

On ObamaCare.   Interesting side effect.   Microsoft had a cadillac plan that gets a surecharge on it under ObamaCare because a company has chosen to provide top of the line health care for employees.  Some amazing logic here, a company is willing to spend more money to ensure their employees get the best healthcare possible so they are required to pay a fee for doing so.  Oh, and did I mention that Microsoft takes $0 out of employees checks to cover it.  MS picks up the whole tab. What is the net effect of the surcharge?  There are 2 ways this is playing out.  Companies like Microsoft are now going to pass that on to the employees and they will need to contribute to the healthcare costs.  Others are waiting for the ObamaCare base plan and will drop their coverage and buy into that plan or a lesser plan to avoid the fee.  Holy sh#t, he actually found a way to provide healthcare and either lower disposable income in a faltering economy or create a health plan that will decrease the healthcare some people receive and the plan has such holes in it that many will still be left with no coverage as they make too much money.
I am fortunate, my employer does the same thing, my family has the best healthcare available and nothing comes out of my check for it.  Mine hasn't decided how they will handle the surcharge, but I can say that if I starting having a couple hundred a month out of my paycheck that is simply money that I won't be spending to boost the economy.

I am baffled at the level of economic stupidity I am seeing right now.
« Last Edit: September 18, 2011, 11:31:02 PM by Guyute »
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Offline runawayjimbo

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Re: Global Economics
« Reply #29 on: September 19, 2011, 11:52:46 AM »
Guytue with another solid analysis. The only issue I take with it is that you seem to assume logic and politics are symbiotic, when we all know they are diametrically opposed to each other. +k

Also, a higher tax rate encourages political corruption as powerful corporations and individuals lobby control politicians to write in more and more loopholes in an increasingly complex tax code. So not only does it restrict investment in this country, but it also perpetuates the political back scratching and abuse that everyone acknowledges is a major part of the problem.

Re Microsoft's cadillac tax, I'd imagine they got a waiver along with the unions and other allies favored by Dems, right?

Of course Gov't can create jobs.  NCDOT is preparing to lay-off 400 workers.  Those jobs must have had to been created at some point. 

Since 1940, the split public to private employment split has averaged 80%/20%; before the current recession, that was closer 90%/10%. Of course gov't can create jobs, just not enough to sustain an economic recovery and certainly not enough to provide the growth that would increase standards of living for all.