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Trevor Stone's Journal
Those who can, do. The rest hyperlink.
The Yin and Yang of Job Creation 
7th-Nov-2012 11:16 am
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During Mitt Romney's concession speech, as he was thanking all his classes of supporters, he euphemistically said "job creators." Something about the way he said it gave me a flash of insight:

The political dialog about how to grow the economy and reduce unemployment has been largely focused around people who hire other people. But a political economic policy which focuses only on employers ignores the balance of economic activity. You can give all the corporate tax breaks and hiring incentives you want, but if there's no demand for the company's products, they're not going to create any jobs. In order to create American jobs, we need to foster an environment of a demand for products and services that Americans are best fit to provide.

Romney engaged in a lot of anti-China economic grandstanding during the election. Instead, China's vast stockpile of dollars could be a boon to American job creation if we can start selling more things that China wants to buy.

Both parties positioned themselves as in favor of private sector "job creators." Yet government has an immense role to play in job creation. Most directly, government hires a lot of people. The Department of Defense is the world's largest "job creator" with over 3 million employees and probably hundreds of thousands of indirect contractors. Government also creates jobs indirectly. Changes in regulation can increase or decrease demand for products and services. Strong public health leads to more productive people with more disposable income. Transportation projects help get products to places where people want to buy them. Taxes and government regulation can get in the way of economic growth and job creation. But so can reckless cuts to taxes (and therefore government activities) and regulation. When you consider the balance of supply and demand, even prisoners are job creators: by locking up millions of our citizens, we create jobs for tens of thousands of prison guards.

There's a final irony in the focus on job creation. The default political view is that the United States is no longer a manufacturing leader. In fact, the U.S. makes and exports more stuff than any other country in the world, including China. But in the last 40 years or so, American manufacturing has become very automated. A couple people and a few complicated machines today do the work of a thousand factory workers in the 1960s. Neither a hiring incentive nor a corporate tax break will lead to the factory rehiring all 1000 people: there wouldn't be enough for them to do. In many industries, "job destruction" has led to major gains in productivity and profit.

The contradiction of modern America is that we're an incredibly prosperous nation with an uncomfortably high unemployment rate. Our first challenge is to find a new way to productively engage millions of people. Our second challenge is to structure society such that you don't have to keep busy just to keep alive. In the 20th Century we learned that everyone can eat even if most people aren't farmers. In the 21st Century we need to learn how to help everyone thrive even if robots and programs do most of the work.
Comments 
8th-Nov-2012 04:24 am (UTC)
I think one of the issues with US unemployment is automation, and that's going to be difficult to address. More generally, I suspect we have a serious challenge in finding enough stuff for people to do because I don't think there is space between our economy and our increasing technology, to have as much job growth as population growth. I hope I'm wrong...
8th-Nov-2012 01:25 pm (UTC)
I think that automation is less of an issue than how employers view employees. Many of the service jobs now treat service employees as interchangeable cogs and both treat them and pay them poorly.

While there may have been a path for someone in the mailroom to eventually become CEO one day, many corporations have cut meaningful training for fear of losing people to other companies.

This type of nonsense needs to stop. People need to be treated as such. Even the lowliest service employee should be able to have some sort of reliable schedule so that they can take care of other things especially if that employee is a member of a two income household with children. It is hard to find child care for an arbitrary schedule.

Service is helpful. If there are people in the grocery store who will show me where to find what I am looking for, that is amazing. Instead I waste a long time wandering around aimlessly. In Chicago, I am told that stores have hostesses who will guide you around and help you find everything on your list, and I could really use that type of service.

Some people are not highly self-motivated, but they will learn things if you put them in an environment where they can learn things. Expecting high turnover and not investing at all in training will result in a lot of turnover.
22nd-Nov-2012 11:20 pm (UTC)
Hey Trev, good post.

Its a tough paradigm to shake. Could we loop around the spiral of human evolution and eventually make products on our own without giant conglomerates or corporate entities to appease? I hope so.

That future looks very interesting to me. I make an album and set it loose on the internet. I need a new bass, and go to the internet. In the world where we still use "dollars", I get a kickstarter and generous people who like my work donate into the pool until I have enough units to purchase a sweet bass, presumably to make more music for "free" that people like.

Or in the future where greenbacks are eschewed, maybe Tom the woodcarver likes my music and carves a sweet mahogany body. Franz knows doodads and offers to hook up the electronic sitch. Barry makes cases. Through the internets, they all pitch in and the thing gets done.

Who we don't hear from in this scenario are the package carriers, the material suppliers, who have no stake in my continued existence as an artist. Presumably they all barter for their goods and services, and somehow things get done and people continue to thrive and survive.

Whatever future we have, two things we know : Uninterrupted internet continues to be a tool to bring humans together; and we cannot continue life in a meaningful way if greed is allowed to fester unchecked.
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