George Rebane: Misunderstanding job creation
October 7, 2011
This column has long argued that the American worker is at a distinct disadvantage when compared to workers in emerging economies, and especially when compared to what the American demands as compensation to maintain his “right” to a high standard of living.
The left has fastened onto the premise that it is the failure of markets that has caused the current glut of workers and high unemployment rate. This failure must be fixed by more government flexing its muscles to tax, regulate, and spend (sorry, “stimulate”) to create jobs. Supply side economics is anathema to the crowd in Washington, and we are back to government attempting to create jobs through demand side (Keynesian) policies.
This didn’t work during the Great Depression. FDR’s 17.1 percent unemployment rate in 1939 was the same as the one he inherited in 1933. It was the dynamic trio of Hitler, Stalin, and Tojo who showed how to work the demand side of Keynesianism; after September 1939 everyone was able to find government jobs.
Earlier this week I woke up to an NPR interview of a venture capitalist and a fellow of the Competitive Enterprise Institute. Lynn Neary, the liberal interviewer, wanted to know what was wrong with the Occupy Wall Street crowd’s belief that (government) creating jobs would lead to “growth and prosperity.” In vain, Bill Frezza of CEI attempted to convince NPR that the popular notion of “first jobs, then prosperity” was a myth.
As those who have operated companies know, you don’t go into business to create jobs. Jobs are an outgrowth of a well-managed business. And if you “create” too many jobs too fast, you go out of business.
Neary pressed Frezza hard about what to her seemed like a foregone conclusion – the prime purpose of a business was the social objective of creating jobs. She and so many millions like her are incredulous that jobs are counted as a cost to a business, and that businesses are started to provide goods and services to customers in exchange for revenues that might contain a profit. Her unsupported point was that businesses have a higher social responsibility than serving their customers and making a profit.
Frezza patiently explained that successful businesses create jobs as a laudable social byproduct, but not as their reason for existence. And the more successful businesses there are, the more jobs are created for people, but never forget that the prime responsibility a business has is to its customers and owners (shareholders). None of this made sense to the NPR lady.
She is not alone in her disillusionment in how businesses work in an economy. Today this ignorance starts at the top and spreads far and wide across the countryside. President Obama and the socialist crew he has assembled have no experience in doing anything other than cashing government checks. They don’t know how the “millionaires and billionaires” come by their cash. All they know is that these greedy and selfish people are the enemy, and that they must be taxed back to some acceptable level of corrigibility.
So as the government does everything possible to derail a recovery, the frustrated, ignorant, and miseducated are predictably beginning to gather in the streets to once more protest capitalism and demand something that they can’t yet quite put their arms around. Rushing to these little fires with buckets of gasoline are the Michael Moores and Van Joneses bringing old “solutions” that have cost tens of millions of lives and ruined hundreds of millions more.
Van Jones, the self-declared communist and former administration “Green Czar,” has put together a conference of progressives called “Rebuild the Dream” designed to foment “a real middle class uprising.” These people simply cannot accept an economic recovery in America. Their whole movement will fall apart. No one will assemble in the streets if they have jobs to go to, and no one will want to work for the “fundamental transformation” that Obama promised us. These agitators will then have to either get a real job, or wind up in some backwater NGO begging for government grants with which to plan their next revolution.
In the meantime, most of the country is fervently hoping that the self-serving politicians and bureaucrats in Washington will settle down and stop trying to create jobs using ideas and tools that have never worked, and have only caused grief for those who know how a real job creating economy works.
George Rebane is an entrepreneur and a retired systems scientist in Nevada County who regularly expands these and other themes on KVMR and Rebane’s Ruminations (www.georgerebane.com).