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"I know you want to be hired full time by me. And I want to be doing my part. But please understand: I’m running a business. I want to make profits. And th

"I know you want to be hired full time by me. And I want to be doing my part. But please understand: I’m running a business. I want to make profits. And these tools are letting me make more profits by employing people only when I need them rather than carrying them on my payroll." This is why every time I hear a politician talk about "creating jobs," I grimace. A business will hire someone if and only if they think that person's output will make more money than it will cost to employ them. Period. Government cannot create jobs. It can make the cost of doing business less expensive by lowering taxes, or it can make the profits of a business higher by providing incentives. But for your average small business, those kinds of changes add up to much less than one person's salary, so it makes very little difference. Government can create a good climate for businesses to exist, with laws, infrastructure and education. But those are long-term investments. Short-term, anything the government does to affect the economy is a shell game. You can't sign a law and magically make workers productive.

Splines 15y ago
There's a great podcast about this exact topic by Planet Money: http://www.npr.org/blogs/money/2011/04/05/135151990/the-tuesday-podcast-how-do-you-create-a-job http://www.npr.org/blogs/money/2011/04/05/135151990/the-tues...
- georgieporgie 15y ago
  One of the best Planet Money episodes I've heard. Summary (from memory): the one and only way government can create jobs is to invest in infrastructure. Everything else is hot air.
ZachPruckowski 15y ago
>Government cannot create jobs. It can make the cost of doing business less expensive by lowering taxes, or it can make the profits of a business higher by providing incentives. But for your average small business, those kinds of changes add up to much less than one person's salary, so it makes very little difference. It can also use monetary and fiscal policy to stimulate demand, increasing the amount of work that needs to be done and resulting in more hiring.
- timwiseman 15y ago
  It can also use monetary and fiscal policy to stimulate demand, increasing the amount of work that needs to be done and resulting in more hiring. A government can certainly use monetary and fiscal policies to stimulate demand and create more work, but that does not necessarily result in more hiring. For one thing, when there is a surplus of goods (and there frequently is late in a recession and shortly thereafter) the initial demand will be met by that surplus rather than any additional production. Even when that surplus is exhausted, additional demand may be met through through automation. Also, if an industry as a whole thinks that this demand will be short lived, it may choose to either raise prices or simply permit some of that demand to go unmet rather than make large capital expenditures to increase production. Also, normally when a country is trying to "create jobs", its goal is to create jobs for its own citizens. In an increasingly global economy, stimulating demand may increase imports without increasing jobs in the target economy. So, while increasing demand may help create jobs, it also may have limited impact and that impact may take a substantial amount of time to be felt.
  - yummyfajitas 15y ago
    Even when that surplus is exhausted, additional demand may be met through through automation. This is exactly what happened in our current recession. http://research.stlouisfed.org/fred2/series/GDP http://research.stlouisfed.org/fred2/series/GDP http://research.stlouisfed.org/fred2/series/PAYEMS http://research.stlouisfed.org/fred2/series/PAYEMS http://research.stlouisfed.org/fred2/series/DGORDER http://research.stlouisfed.org/fred2/series/DGORDER http://research.stlouisfed.org/fred2/series/IPDCONGD http://research.stlouisfed.org/fred2/series/IPDCONGD http://research.stlouisfed.org/fred2/series/DMANEMP http://research.stlouisfed.org/fred2/series/DMANEMP
- billybob 15y ago
  If I do some work and grow some food from seeds, I have created actual value by my work. Monetary and fiscal policy does not do this. It creates or destroys currency, thereby either diluting or concentrating the value of dollars, creates temporary incentives to borrow or lend, which will be offset by the inevitable bounce-back. The end result is just a temporary fluctuation.
angrycoder 15y ago
> Government cannot create jobs. This is nonsense. The government can fund projects that create jobs. Do you have any idea how many small businesses out there make their money solely from servicing government contracts? Just as an example, I worked at a small software consulting firm during the middle/end of the dot com boom. We were a project shop. The contracts we worked on for the state allowed us to stay in business and weather the dot com bust. In the process, we brought in and trained about a dozen 'blue collar' type workers to do project management, account representation, and basic html and coding. As a result of that government money, those people got a new career path and ten years later the bulk of them are working at other companies making 6 figure salaries. Tell me the government didn't receive a huge return from their investment on that.
- tsotha 15y ago
  >> Government cannot create jobs. >This is nonsense. The government can fund projects that create jobs. There's no evidence this is a net creator of jobs, though. There's a lost opportunity cost to take into account here.
  - thisuser 15y ago
    There's also no evidence that keeping taxes low (the opportunity cost) creates jobs. Just look at our employment performance over the last decade
    - tsotha 15y ago
      Where are taxes low? Certainly not where I live.
deleted 15y ago
[deleted]
diminium 15y ago
>Government cannot create jobs. It's the government, it can create any job it wants to because it is the government. If your looking form a useful or productivity or economic standpoint, that's a whole different story but jobs in itself - the government can create as many of those as it wants. Look at Cuba where everyone has a job and unemployment is low. If the government wants to, it can open positions for 10,000,000 computer typists to type "Hello World" for 12 hours a day. Since our government prints money, all it needs to do is just print more money to pay them. In fact, after those 10 million people are hired, it can create another 100 million jobs to twist wire from dusk to dawn should they desire. The government has the ability to create as many jobs as it desires because it's the government. Now whether the people are better off or not because they have a "job" that's another story. Either way, jobs are easy to create.

Splines 15y ago

There's a great podcast about this exact topic by Planet Money: http://www.npr.org/blogs/money/2011/04/05/135151990/the-tuesday-podcast-how-do-you-create-a-job http://www.npr.org/blogs/money/2011/04/05/135151990/the-tues...

georgieporgie 15y ago
One of the best Planet Money episodes I've heard. Summary (from memory): the one and only way government can create jobs is to invest in infrastructure. Everything else is hot air.

ZachPruckowski 15y ago

>Government cannot create jobs. It can make the cost of doing business less expensive by lowering taxes, or it can make the profits of a business higher by providing incentives. But for your average small business, those kinds of changes add up to much less than one person's salary, so it makes very little difference. It can also use monetary and fiscal policy to stimulate demand, increasing the amount of work that needs to be done and resulting in more hiring.

timwiseman 15y ago
It can also use monetary and fiscal policy to stimulate demand, increasing the amount of work that needs to be done and resulting in more hiring. A government can certainly use monetary and fiscal policies to stimulate demand and create more work, but that does not necessarily result in more hiring. For one thing, when there is a surplus of goods (and there frequently is late in a recession and shortly thereafter) the initial demand will be met by that surplus rather than any additional production. Even when that surplus is exhausted, additional demand may be met through through automation. Also, if an industry as a whole thinks that this demand will be short lived, it may choose to either raise prices or simply permit some of that demand to go unmet rather than make large capital expenditures to increase production. Also, normally when a country is trying to "create jobs", its goal is to create jobs for its own citizens. In an increasingly global economy, stimulating demand may increase imports without increasing jobs in the target economy. So, while increasing demand may help create jobs, it also may have limited impact and that impact may take a substantial amount of time to be felt.
- yummyfajitas 15y ago
  Even when that surplus is exhausted, additional demand may be met through through automation. This is exactly what happened in our current recession. http://research.stlouisfed.org/fred2/series/GDP http://research.stlouisfed.org/fred2/series/GDP http://research.stlouisfed.org/fred2/series/PAYEMS http://research.stlouisfed.org/fred2/series/PAYEMS http://research.stlouisfed.org/fred2/series/DGORDER http://research.stlouisfed.org/fred2/series/DGORDER http://research.stlouisfed.org/fred2/series/IPDCONGD http://research.stlouisfed.org/fred2/series/IPDCONGD http://research.stlouisfed.org/fred2/series/DMANEMP http://research.stlouisfed.org/fred2/series/DMANEMP
billybob 15y ago
If I do some work and grow some food from seeds, I have created actual value by my work. Monetary and fiscal policy does not do this. It creates or destroys currency, thereby either diluting or concentrating the value of dollars, creates temporary incentives to borrow or lend, which will be offset by the inevitable bounce-back. The end result is just a temporary fluctuation.

angrycoder 15y ago

> Government cannot create jobs. This is nonsense. The government can fund projects that create jobs. Do you have any idea how many small businesses out there make their money solely from servicing government contracts? Just as an example, I worked at a small software consulting firm during the middle/end of the dot com boom. We were a project shop. The contracts we worked on for the state allowed us to stay in business and weather the dot com bust. In the process, we brought in and trained about a dozen 'blue collar' type workers to do project management, account representation, and basic html and coding. As a result of that government money, those people got a new career path and ten years later the bulk of them are working at other companies making 6 figure salaries. Tell me the government didn't receive a huge return from their investment on that.

tsotha 15y ago
>> Government cannot create jobs. >This is nonsense. The government can fund projects that create jobs. There's no evidence this is a net creator of jobs, though. There's a lost opportunity cost to take into account here.
- thisuser 15y ago
  There's also no evidence that keeping taxes low (the opportunity cost) creates jobs. Just look at our employment performance over the last decade
  - tsotha 15y ago
    Where are taxes low? Certainly not where I live.

deleted 15y ago

[deleted]

diminium 15y ago

>Government cannot create jobs. It's the government, it can create any job it wants to because it is the government. If your looking form a useful or productivity or economic standpoint, that's a whole different story but jobs in itself - the government can create as many of those as it wants. Look at Cuba where everyone has a job and unemployment is low. If the government wants to, it can open positions for 10,000,000 computer typists to type "Hello World" for 12 hours a day. Since our government prints money, all it needs to do is just print more money to pay them. In fact, after those 10 million people are hired, it can create another 100 million jobs to twist wire from dusk to dawn should they desire. The government has the ability to create as many jobs as it desires because it's the government. Now whether the people are better off or not because they have a "job" that's another story. Either way, jobs are easy to create.