Economic growth requires order

David MoonBlog

It irritates me when politicians take credit for having created jobs. As president, Joe Biden hasn’t created 15 million jobs, nor did Donald Trump create the six million he claims during his first three years in office. Governors and mayors don’t create jobs, either.

Unlike businesses – where willing buyers and sellers engage in a swap at an agreed price – governments are mostly conduits, either moving money from one group to another or spending borrowed funds that will ultimately be paid by future taxpayers. If you disagree, send me an email and change my mind. If I’m wrong, convince me.

One of those conduit functions served by government is the creation and maintenance of various infrastructures, such as highways, to accommodate private productivity. But perhaps the most important and growth-encouraging collective function provided by government is the enforcement and encouragement of order.

“Enforcing order” isn’t simply arresting people who try to steal your stuff – although that is important. If you don’t think so, ask the people of San Francisco who are now faced with a wave of store closures due to rampant theft and lawlessness. In a larger sense, however, we rely on government to protect our property rights; without such protection there would be little private investment.

Who would invest millions of dollars trying to develop a new drug to cure a disease without the legal protection of a patent? Who would build a new widget factory or apartment complex if squatters could simply move into the facility and use it? By legally protecting property rights, the patent office, copywrite office, courts, police and registrars of deeds all help create an ecosystem in which people are willing to take chances, with the prospect of an eventual financial benefit.

Of course, some people prefer chaos rather than order. Order only works when most people prefer it, and the public services that enforce that order are as important a part of our infrastructure as are highways, if not more so.

Politicians may set the playing field, but it’s the innovators and risk-takers who are responsible for job creation. By establishing rules, regulations, and protections, government creates an environment where individuals can thrive – and without those protections, a lot of economic activity stops.

Entrepreneurs take the risks, innovate, and build businesses that create jobs and drive the economy forward. They are the ones who turn ideas into reality, developing new products and services that meet market demands and create employment opportunities.

By upholding order, protecting rights, and providing essential services, the government forms part of the backbone of our economic and social infrastructure. Politicians may boast about job numbers, but their most valuable role in economic development has nothing to do with tax policy or economic theory. It is to uphold order.

David Moon is president of Moon Capital Management. A version of this piece originally appeared in the USA TODAY NETWORK.