11 ms·

Can Anyone Really Create Jobs?

60 points by mdariani 15y ago

swombat 15y ago
I didn't read the second page, because the first page seemed to miss the point so badly. The most popular types of jobs programs involve state tax breaks or subsidies that seek to seduce a company from one state to another. While this can mean good news for “business-friendly” states like Texas, such policies don’t add to overall employment so much as they just shuffle jobs around. Such subsidies can also seduce people from one country to another. And in that sense, they would indeed create jobs. The same argument applies to the industry-specific legislation he mentions later. Finally, he doesn't mention, on the first page, the very straightforward way that politicians can create jobs: by spending money on big infrastructure projects. Those certainly do create jobs, and they have been a common method to do so in a recession. To top it off, lumping politicians in with "everybody else" seems unfair. As argued above, even politicians can and do "create jobs", but it is ludicrous to argue that the founders of Google or eBay or Paypal didn't create jobs. They created tens of millions of jobs that people live off of, in the US and in other parts of the world.
- DasIch 15y ago
  Big infrastructure projects have the problem that they cost a lot of money and time. Another disadvantage is the inherent problem all Keynesian ideas have, they very much depend on timing. If you start such a project too late you severely harm a recovering economy, start it too early and it won't help at all or even have a negative impact.
  - skylan_q 15y ago
    Also, there is no way to show whether a government project is profitable or not. This means we can't tell whether the project actually helped or hurt the economy.
    - DasIch 15y ago
      Infrastructure projects don't have to be profitable that is neither the goal nor does anyone care. The goal is to create a lot of jobs and a lot of income relatively fast to increase demand which helps the economy.
FD3SA 15y ago
Interesting that none of these articles ever address the root causes of structural unemployment. Globalization combined with rapidly advancing technology are allowing an ever shrinking pool of extremely talented people to satisfy the world's demand for products. This is a reality that can no longer be ignored. It is not just the majority of Americans that are unemployable, but the majority of the world's population. Technology's leveraging power has become so severe that a company like Apple can reasonably expect to supply the entire world market with smart phones. Another example is SpaceX, which is pioneering the future of space flight with a team of only 1300 employees. Globalization depresses wages for traditional labor, while technology facilitates an extreme leverage for talent. These two forces are enough to obviate the vast majority of the domestic work force. As long as this reality is ignored, the discussion of potential solutions is futile. Further reading: http://www.thelightsinthetunnel.com/ http://www.thelightsinthetunnel.com/
- DevX101 15y ago
  You're absolutely right. And I think the reason people don't talk directly about the issue enough, is because we really don't know what to do about it. There are many jobs that are now obsolete, or will be due to technological progress. Not only are many 'labor' jobs being rendered obsolete, but so are many 'mundane' white collar jobs. Toll-booth operators are obsolete (or will be) Bookkeepers are obsolete (or will be) Many back-office support-services can be automated or re-located All cashiers could potentially be made obsolete Many retail sales could be made obsolete (as people shop online) Where do all these people go? During the last technological revolution, there was a relatively smooth transition from farming to manufacturing. But I honestly don't see how large swathes of the population that don't have specialized skills will fit in in the new economy. Most of the people reading this comment will do just fine. But we face the really tough questions when dealing with the increasingly large number of people who don't have skills that are in the demand. And even if they all got the skills, employers simply wouldn't need all of them as labor becomes increasingly leveraged. A couple professors fro MIT just wrote an e-book called 'Race Against the Machine' discussing this phenomena. http://www.amazon.com/Race-Against-Machine-Accelerating-ebook/dp/B005WTR4ZI/ref=sr_1_1?ie=UTF8&qid=1320497913&sr=8-1 http://www.amazon.com/Race-Against-Machine-Accelerating-eboo...
calibraxis 15y ago
I think one bizarreness needs to be pointed out, lest it seems too strange for some people who are used to a slightly more rational universe — all this talk of "job creation" is a lunatic side-effect of our economic system. One might think that millions of homeless and unemployed people represent a huge untapped demand for goods and services; they're humans like any other. But of course, our system doesn't work that way. The notion of systematic unemployment is bizarre. (No matter what justifications were invented to paper over its absurdity with.) It represents idle hands which have nothing to do. The US could have enormous productive output. The infrastructure and know-how is there; it's not like someone dropped bombs all over the place and reduced it to a 3rd world nation. But as a society, we choose not to use these resources, nor do we allocate much of our output to the "lower classes" of people.
- yummyfajitas 15y ago
  The notion of systematic unemployment is bizarre. (No matter what justifications were invented to paper over its absurdity with.) It represents idle hands which have nothing to do...But as a society, we choose not to use these resources... "As a society", we choose nothing. If you believe their output is useful, why don't you hire some of them? Structural theories of unemployment are merely theories which claim that you have no idea what job they can profitably perform, and they have no idea what jobs to bother applying to. Or, alternately, there are barriers preventing them from taking such a match (e.g., some people may consider unemployment benefits + leisure superior to a marginally higher paying job).
  - bjelkeman-again 15y ago
    As swombat says [a] “straightforward way that politicians can create jobs: by spending money on big infrastructure projects.” That is indeed a way that the society you live in choose to spend money to create jobs. Other ways of spending money to create jobs are, for example to increase the size of the military, which may or may not be as useful for a nations economy as creating infrastructure, depending on the state of your infrastructure and the size of your military.
yummyfajitas 15y ago
This article makes a very strange factual error: ...permanent cuts in taxes and regulation. These policies may (or may not) make the economy healthier in 5 years or 10, but the immediate impact would require firing a large number of America’s roughly 23 million government workers. This is not true. You could cut taxes and reduce compensation for 23 million government workers.
- gahahaha 15y ago
  It would probably be an even worse idea to cut government wages than to cut government jobs (also a very bad idea). It is true that people are unhappy if their wage increases don't keep up with the rate of inflation--if inflation is 4% and you get an only 1% wage increase, you're unhappy. But people are furious if your boss cuts your wages--if inflation is 1% and they cut your wages by 2%, you're not just unhappy, you're enraged. There's something about cutting the number of dollars that you're going to be paid for doing the same work in the American psyche that gets people really angry, and makes them really unwilling to put in the effort to be good workers. And so, because each company know that cutting people's wages is a way to guarantee that they'll do a lousy job, businesses are overwhelmingly unwilling to cut people's wages at all. They would rather fire more people.
  - yummyfajitas 15y ago
    Businesses tend to fire people because cutting wages is likely to cause adverse selection - the good people (with options) quit, the bad people (no options) stay. This is why during the recession, jobs were cut, but comp (per worker) actually increased. http://research.stlouisfed.org/fred2/series/ECICOM http://research.stlouisfed.org/fred2/series/ECICOM Regardless, the government could cut overall comp without cutting any individual's comp and therefore never making anyone mad. They could simply freeze wages (rather than raising them, which they did during the recession) and apply the lower pay scales only for new hires/promotions. I.e., a current G6 makes $30577 (ignoring COLA). When he upgrades to G7 under the current pay scale, he gets $33979. If all pay scales were lowered by $2500, the individual would continue making $30577 for as long as he is a G6. When he transitions to G7, his pay would only go up to $31479. No individual's pay is ever cut, but compensation for government workers as a whole is reduced. http://www.fedjobs.com/pay/pay.html http://www.fedjobs.com/pay/pay.html
ck2 15y ago
Why doesn't the USA charge full rate taxes on individuals and corporations with extremely high incomes - and THEN deduct based on the number of new domestic hires they've done that have stayed for at least a year. Seems super simple enough and then the REAL job creators get the credits they are demanding. The fakes then have no excuses.
- steins 15y ago
  Every tax creates distortions. If the tax break was high enough it would encourage people and corporations with extremely high incomes to hire people for 366 days and then fire them and hire another domestic replacement.
  - ck2 15y ago
    Then just subtract terminations. It's not complicated - net jobs, period.
    - steins 15y ago
      So if a company is efficient and has to terminate people they will have to pay more taxes? Smart businessmen (with smaller businesses) would just start a new company every year and move the profit from 1 to another. It isn't a very big accounting challenge to change which one of the companies you control shows a profit.
      - ck2 15y ago
        Yes if a company makes higher profits by eliminating workers then they should lose the savings from their taxes. If they moved the profit and terminated the workers, that year they would still have to pay full taxes. The new company would not have people for a year so no credits - they also wouldn't have profits to pay taxes on either. There is no way to game the system, you cannot shuffle workers because you lose credits. Why is this so complicated to appreciate? A large corporation's worth to society is not to ship jobs overseas but to create domestic jobs. How else do you encourage them to not ship jobs overseas and get slave labor for pennies?
skylan_q 15y ago
It was only about 10 years ago that we understood how to allow the economy to create jobs and operate properly: keeping a steady monetary base, cutting taxes, loosening regulation and ending wasteful gov't programs that crowd out private investment. It's a shame that 1921 and the post-war boom have been buried under theories that tow the line for the managerial-state.
- skylan_q 15y ago
  Just for clarification, this isn't trolling. It's true. In the last few years we've blamed the free market for these problems. I don't consider the federal reserve (a monopolist on money) to be a free-market institution. I don't consider government-guaranteed mortgages to be a free market program. I don't think forcing banks to give loans to people unworthy of credit is how a market should operate. But with all that meddling causing the current crisis, we look for yet more government involvement to solve the problem. I look at history and theory and see that the injection of government involvement throughout the economy doesn't work. Ask the people who tried to hop over the Berlin wall!
  - xsmasher 15y ago
    It sounds like you're blaming the Community Reinvestment Act for the mortgage crisis. The downvoters probably consider that a GOP talking point with no basis in reality. I know I do, but I'll reply instead of downvoting.
DanielBMarkham 15y ago
I found it humorous that the writer announces his bias by identifying other biases and then doing the same thing himself. The current economic downturn has been called a housing crisis, a financial crisis and a debt crisis, but the simplifying logic of the political season has settled on what is really more a result than a cause. We are now, according to nearly everyone running for office, in a jobs crisis. Jobs are like money -- they are the end of the process. They are the socres on the scoreboard, but you don't play the game by watching the score. These are metrics of results, not causes. I don't open a business with a chair and a big sign that says "give me money," even though money might be the way I judge success. Likewise, and for exactly the same reasons, you don't sit around trying to "create jobs" Jobs are the result of somebody creating value, they are not a goal in themselves. I hate to say it, but this was a really bad article. I had a premonition of this when I looked at the title "Can Anyone Really Create Jobs?" It's yet another in a long line of political commentary that takes whatever the current problem is and announces that it is insolvable. This reached ludicrous levels in 2008, with lots of articles asking "Is this the end of capitalism?" I don't know how many of these you have to consume before you finally figure out that no, whatever is happening right now, it's not the end of something that's been going on for thousands of years. Americans need to start getting honest about their economic situation, no matter what their politics. If you drop hundreds of billions of dollars paying for government workers that the government cannot afford, you are not simulating anything. Money is just continuing to be spent in the same patterns as before. Likewise, if you cut taxes for the rich, and they continue to spend their money in the same way, you are also not doing anything except to run up the debt. If you are living a house you cannot afford, no matter how much we help you, you are probably still stuck in a house you cannot afford, and the rest of us are much poorer. Simply because an idea sounds good to your political party doesn't mean that it accomplishes anything but buying votes. These facts sound cruel, and I apologize, but some of this commentary is beginning to sound like dispatches from somebody's fantasy land. People are smarter than that.
- ap22213 15y ago
  Did you read the second page? Because, the author essentially says a similar thing. In fact, the last paragraph is pretty blunt. (but, I can't get to the text anymore, to verify)

60 points by mdariani 15y ago

I didn't read the second page, because the first page seemed to miss the point so badly. The most popular types of jobs programs involve state tax breaks or subsidies that seek to seduce a company from one state to another. While this can mean good news for “business-friendly” states like Texas, such policies don’t add to overall employment so much as they just shuffle jobs around. Such subsidies can also seduce people from one country to another. And in that sense, they would indeed create jobs. The same argument applies to the industry-specific legislation he mentions later. Finally, he doesn't mention, on the first page, the very straightforward way that politicians can create jobs: by spending money on big infrastructure projects. Those certainly do create jobs, and they have been a common method to do so in a recession. To top it off, lumping politicians in with "everybody else" seems unfair. As argued above, even politicians can and do "create jobs", but it is ludicrous to argue that the founders of Google or eBay or Paypal didn't create jobs. They created tens of millions of jobs that people live off of, in the US and in other parts of the world.

DasIch 15y ago
Big infrastructure projects have the problem that they cost a lot of money and time. Another disadvantage is the inherent problem all Keynesian ideas have, they very much depend on timing. If you start such a project too late you severely harm a recovering economy, start it too early and it won't help at all or even have a negative impact.
- skylan_q 15y ago
  Also, there is no way to show whether a government project is profitable or not. This means we can't tell whether the project actually helped or hurt the economy.
  - DasIch 15y ago
    Infrastructure projects don't have to be profitable that is neither the goal nor does anyone care. The goal is to create a lot of jobs and a lot of income relatively fast to increase demand which helps the economy.

FD3SA 15y ago

Interesting that none of these articles ever address the root causes of structural unemployment. Globalization combined with rapidly advancing technology are allowing an ever shrinking pool of extremely talented people to satisfy the world's demand for products. This is a reality that can no longer be ignored. It is not just the majority of Americans that are unemployable, but the majority of the world's population. Technology's leveraging power has become so severe that a company like Apple can reasonably expect to supply the entire world market with smart phones. Another example is SpaceX, which is pioneering the future of space flight with a team of only 1300 employees. Globalization depresses wages for traditional labor, while technology facilitates an extreme leverage for talent. These two forces are enough to obviate the vast majority of the domestic work force. As long as this reality is ignored, the discussion of potential solutions is futile. Further reading: http://www.thelightsinthetunnel.com/ http://www.thelightsinthetunnel.com/

DevX101 15y ago
You're absolutely right. And I think the reason people don't talk directly about the issue enough, is because we really don't know what to do about it. There are many jobs that are now obsolete, or will be due to technological progress. Not only are many 'labor' jobs being rendered obsolete, but so are many 'mundane' white collar jobs. Toll-booth operators are obsolete (or will be) Bookkeepers are obsolete (or will be) Many back-office support-services can be automated or re-located All cashiers could potentially be made obsolete Many retail sales could be made obsolete (as people shop online) Where do all these people go? During the last technological revolution, there was a relatively smooth transition from farming to manufacturing. But I honestly don't see how large swathes of the population that don't have specialized skills will fit in in the new economy. Most of the people reading this comment will do just fine. But we face the really tough questions when dealing with the increasingly large number of people who don't have skills that are in the demand. And even if they all got the skills, employers simply wouldn't need all of them as labor becomes increasingly leveraged. A couple professors fro MIT just wrote an e-book called 'Race Against the Machine' discussing this phenomena. http://www.amazon.com/Race-Against-Machine-Accelerating-ebook/dp/B005WTR4ZI/ref=sr_1_1?ie=UTF8&qid=1320497913&sr=8-1 http://www.amazon.com/Race-Against-Machine-Accelerating-eboo...

calibraxis 15y ago

I think one bizarreness needs to be pointed out, lest it seems too strange for some people who are used to a slightly more rational universe — all this talk of "job creation" is a lunatic side-effect of our economic system. One might think that millions of homeless and unemployed people represent a huge untapped demand for goods and services; they're humans like any other. But of course, our system doesn't work that way. The notion of systematic unemployment is bizarre. (No matter what justifications were invented to paper over its absurdity with.) It represents idle hands which have nothing to do. The US could have enormous productive output. The infrastructure and know-how is there; it's not like someone dropped bombs all over the place and reduced it to a 3rd world nation. But as a society, we choose not to use these resources, nor do we allocate much of our output to the "lower classes" of people.

yummyfajitas 15y ago
The notion of systematic unemployment is bizarre. (No matter what justifications were invented to paper over its absurdity with.) It represents idle hands which have nothing to do...But as a society, we choose not to use these resources... "As a society", we choose nothing. If you believe their output is useful, why don't you hire some of them? Structural theories of unemployment are merely theories which claim that you have no idea what job they can profitably perform, and they have no idea what jobs to bother applying to. Or, alternately, there are barriers preventing them from taking such a match (e.g., some people may consider unemployment benefits + leisure superior to a marginally higher paying job).
- bjelkeman-again 15y ago
  As swombat says [a] “straightforward way that politicians can create jobs: by spending money on big infrastructure projects.” That is indeed a way that the society you live in choose to spend money to create jobs. Other ways of spending money to create jobs are, for example to increase the size of the military, which may or may not be as useful for a nations economy as creating infrastructure, depending on the state of your infrastructure and the size of your military.

yummyfajitas 15y ago

This article makes a very strange factual error: ...permanent cuts in taxes and regulation. These policies may (or may not) make the economy healthier in 5 years or 10, but the immediate impact would require firing a large number of America’s roughly 23 million government workers. This is not true. You could cut taxes and reduce compensation for 23 million government workers.

gahahaha 15y ago
It would probably be an even worse idea to cut government wages than to cut government jobs (also a very bad idea). It is true that people are unhappy if their wage increases don't keep up with the rate of inflation--if inflation is 4% and you get an only 1% wage increase, you're unhappy. But people are furious if your boss cuts your wages--if inflation is 1% and they cut your wages by 2%, you're not just unhappy, you're enraged. There's something about cutting the number of dollars that you're going to be paid for doing the same work in the American psyche that gets people really angry, and makes them really unwilling to put in the effort to be good workers. And so, because each company know that cutting people's wages is a way to guarantee that they'll do a lousy job, businesses are overwhelmingly unwilling to cut people's wages at all. They would rather fire more people.
- yummyfajitas 15y ago
  Businesses tend to fire people because cutting wages is likely to cause adverse selection - the good people (with options) quit, the bad people (no options) stay. This is why during the recession, jobs were cut, but comp (per worker) actually increased. http://research.stlouisfed.org/fred2/series/ECICOM http://research.stlouisfed.org/fred2/series/ECICOM Regardless, the government could cut overall comp without cutting any individual's comp and therefore never making anyone mad. They could simply freeze wages (rather than raising them, which they did during the recession) and apply the lower pay scales only for new hires/promotions. I.e., a current G6 makes $30577 (ignoring COLA). When he upgrades to G7 under the current pay scale, he gets $33979. If all pay scales were lowered by $2500, the individual would continue making $30577 for as long as he is a G6. When he transitions to G7, his pay would only go up to $31479. No individual's pay is ever cut, but compensation for government workers as a whole is reduced. http://www.fedjobs.com/pay/pay.html http://www.fedjobs.com/pay/pay.html

ck2 15y ago

Why doesn't the USA charge full rate taxes on individuals and corporations with extremely high incomes - and THEN deduct based on the number of new domestic hires they've done that have stayed for at least a year. Seems super simple enough and then the REAL job creators get the credits they are demanding. The fakes then have no excuses.

steins 15y ago
Every tax creates distortions. If the tax break was high enough it would encourage people and corporations with extremely high incomes to hire people for 366 days and then fire them and hire another domestic replacement.
- ck2 15y ago
  Then just subtract terminations. It's not complicated - net jobs, period.
  - steins 15y ago
    So if a company is efficient and has to terminate people they will have to pay more taxes? Smart businessmen (with smaller businesses) would just start a new company every year and move the profit from 1 to another. It isn't a very big accounting challenge to change which one of the companies you control shows a profit.
    - ck2 15y ago
      Yes if a company makes higher profits by eliminating workers then they should lose the savings from their taxes. If they moved the profit and terminated the workers, that year they would still have to pay full taxes. The new company would not have people for a year so no credits - they also wouldn't have profits to pay taxes on either. There is no way to game the system, you cannot shuffle workers because you lose credits. Why is this so complicated to appreciate? A large corporation's worth to society is not to ship jobs overseas but to create domestic jobs. How else do you encourage them to not ship jobs overseas and get slave labor for pennies?

skylan_q 15y ago

It was only about 10 years ago that we understood how to allow the economy to create jobs and operate properly: keeping a steady monetary base, cutting taxes, loosening regulation and ending wasteful gov't programs that crowd out private investment. It's a shame that 1921 and the post-war boom have been buried under theories that tow the line for the managerial-state.

skylan_q 15y ago
Just for clarification, this isn't trolling. It's true. In the last few years we've blamed the free market for these problems. I don't consider the federal reserve (a monopolist on money) to be a free-market institution. I don't consider government-guaranteed mortgages to be a free market program. I don't think forcing banks to give loans to people unworthy of credit is how a market should operate. But with all that meddling causing the current crisis, we look for yet more government involvement to solve the problem. I look at history and theory and see that the injection of government involvement throughout the economy doesn't work. Ask the people who tried to hop over the Berlin wall!
- xsmasher 15y ago
  It sounds like you're blaming the Community Reinvestment Act for the mortgage crisis. The downvoters probably consider that a GOP talking point with no basis in reality. I know I do, but I'll reply instead of downvoting.

DanielBMarkham 15y ago

I found it humorous that the writer announces his bias by identifying other biases and then doing the same thing himself. The current economic downturn has been called a housing crisis, a financial crisis and a debt crisis, but the simplifying logic of the political season has settled on what is really more a result than a cause. We are now, according to nearly everyone running for office, in a jobs crisis. Jobs are like money -- they are the end of the process. They are the socres on the scoreboard, but you don't play the game by watching the score. These are metrics of results, not causes. I don't open a business with a chair and a big sign that says "give me money," even though money might be the way I judge success. Likewise, and for exactly the same reasons, you don't sit around trying to "create jobs" Jobs are the result of somebody creating value, they are not a goal in themselves. I hate to say it, but this was a really bad article. I had a premonition of this when I looked at the title "Can Anyone Really Create Jobs?" It's yet another in a long line of political commentary that takes whatever the current problem is and announces that it is insolvable. This reached ludicrous levels in 2008, with lots of articles asking "Is this the end of capitalism?" I don't know how many of these you have to consume before you finally figure out that no, whatever is happening right now, it's not the end of something that's been going on for thousands of years. Americans need to start getting honest about their economic situation, no matter what their politics. If you drop hundreds of billions of dollars paying for government workers that the government cannot afford, you are not simulating anything. Money is just continuing to be spent in the same patterns as before. Likewise, if you cut taxes for the rich, and they continue to spend their money in the same way, you are also not doing anything except to run up the debt. If you are living a house you cannot afford, no matter how much we help you, you are probably still stuck in a house you cannot afford, and the rest of us are much poorer. Simply because an idea sounds good to your political party doesn't mean that it accomplishes anything but buying votes. These facts sound cruel, and I apologize, but some of this commentary is beginning to sound like dispatches from somebody's fantasy land. People are smarter than that.

ap22213 15y ago
Did you read the second page? Because, the author essentially says a similar thing. In fact, the last paragraph is pretty blunt. (but, I can't get to the text anymore, to verify)