Thursday, September 08, 2011
A Real Jobs Plan for the US
So supposedly the President is going to give another big "jobs speech" tonight, emphasizing the need for businesses to create employment for people so that the economy won't be so bad three years into his term. Obviously this is a ploy to keep voters reminded that the White House remains intensely "focused" on the economy and how bad it remains, that he feels people's pain, and that he wants to do all he can to salvage re-election in 14 months.
This near-sighted focus on "jobs" at any cost is misplaced (and, let's be fair, some in the GOP are just as guilty: "jobs, jobs, jobs" has been the rallying cry for both parties during the past year). The fact is that jobs are the means, not the ends, of economic activity. The goal of the capitalistic economy is to produce goods and services that people can use, not just to feel good because you have "somewhere to go" for 8 hours per day.
A prime example: many on the left like to claim that World War II "got us out" of the Great Depression. And if you looked only at GDP and the unemployment statistics, that's true. The problem, however, is that GDP and unemployment are macroeconomic figures invented by Keynsians that don't tell the whole story. So while it's true that spending rose and lots of jobs were created after Pearl Harbor, all the jobs and spending were on tanks, bullets, and battleships. We can't eat any of those things. We can't use them for anything that makes our lives easier. They don't make us any better off than we were before, and with all of the brutal rationing rules that were imposed on families and the private sector because of the war effort, I would even argue the economy was worse off during the war, not better. Keynsian stats don't capture this though; they simply confirm their own bias towards government spending. I like the line from the recent Hayek-Keynes video, where Hayek claims we could easily solve unemployment tomorrow by drafting everybody into the army or the peace corpse, but that we'd also starve to death because there would be no food.
The truth is that the US has steadily gotten wealthier over the past 200 years by producing more stuff with less jobs, not more. So the goal of public policy should be to allow for the creation of productive, private sector jobs that create more value than what they cost. Taxing consumption instead of investment and income would be a start. Reforming entitlements and reducing public sector spending would boost private sector spending. With youth unemployment near all-time highs, lowering the minimum wage would finally help teens and college kids get their feet in the door. Stopping the printing presses and ending quantitative easing programs would end inflation, allow interest rates rise to where they ought to be, and encourage true savings and investment in the economy.
Unfortunately we won't hear anything remotely resembling these proposals tonight. Instead it will just be more federal spending, more temporary quick-fixes and suspensions, exemptions, write-offs provisions, and other tax code tweaks that in no way incentivize long-term planning and growth or inspire confidence for businesses, more tax cuts for people that don't even really pay taxes in the first place so that they will go out and hopefully consume more stuff, etc. If Obama will not come to his senses, it is incumbent on the GOP to fill the void. Romney and Perry talk a good game but I'm still not convinced either truly gets it.