The Myth of Job Creation

Our board member Mark Lange is a former presidential speech writer, and in fact wrote the George H.W. Bush’s 1991 state of the union address.  In today’s Christian Science Monitor, he writes about last night’s speech in an article entitled Obama and the myth of job creation.

Here are some highlights of Mark’s article:

Redefine our idea of a “job.” The labor market already has, ever since the employment “contract” began to change forever back in the 1980s. Particularly for white collar workers – disproportionately affected in this recession – the prospect of contract work and free agency has never been easier. And by doing something of value, the résumé expands and the long grind (and potentially paralyzing shame) of joblessness is eased.

Re-tool, quickly and regularly. Small businesses looking to expand are finding more independent contractors for Web design, programming, marketing, videography, and similar work. Focus on areas of employment in healthcare and education, where there’s growth.

Reconsider unemployment benefits. Rather than make unemployment insurance an all-benefits-for-no-work proposition (which discourages any work and earnings at all), states should apply the same kind of incentive that worked with the Earned Income Tax Credit – as beneficiaries earn a little more, they receive a little less in benefits, but their net take-home is higher.

Welcome free trade. For seven decades, America’s economic and political leadership has told the rest of the world to open up trade. They did – and we and the global economy prospered. The irony of our closing down trade now makes no sense. It’s our responsibility to mitigate the negative consequences of global trade for the vulnerable (that’s something government can be good at). But to drive living standards up, we need more and freer trade, not less.

Recognize immigration for the competitive advantage it is. Our great secret, relative to Europe and much of Asia, has always been our ability to assimilate and engage the most ambitious people from around the world. This applies as much to the PhD student here from Asia or India as it does to the guy with the leaf-blower. We need to find better ways to enlist them here, not erect paper walls of visa requirements.

Innovation is no abstraction. In fact, all innovation is local – it applies to the payables clerk who comes up with a more readable spreadsheet, or the line manufacturing employee who tweaks and improves a machining process. There’s nothing exotic about “knowledge work” – we all work with our brains. Some of us use them to run our mouths. Others, our hands – on paint brushes, keyboards, school chalk, machine tools – but we all use our brains. And we can all use them better, starting tomorrow.

The economy and unemployment remain burning issues for most of us as this recession marches on worldwide.  What do you think about the role of the government vs. the role of individuals and organizations in creating new jobs?

3 thoughts on “The Myth of Job Creation

  1. Despite the seemingly self-evidentness of the simplistic models economists teach us in university, I think it is something of a miracle that ‘the system’ is often able to find ways to productively employee the vast majority of people who want to work.

    Of course, in many place the system is not able to work this miracle. South Africa, Argentina, some might even say France, have high unemployment as a permanent outcome.

    I don’t believe economists really know what it takes to create consistent full employment. Sure Obama should create jobs, but there is no one who understands this complex political-economic system well enough to devise effective measures. Maybe it is simply not possible.

    Nor am I optimistic that unemployment will fall anytime soon. The system is reeling under huge financial shocks as well as the likelihood of high and volatile oil prices. I don’t see why we should expect the system to be able to work the miracle of finding jobs for most people in the face of so much structural change.

    I think Mark provides good advice. Perhaps my main point is that I feel people should prepare for a long hard slog and not expect things to improve to the point that finding employment gets much easier. They need to work with the hand reality has dealt, not wait for a better one.

    Let’s hope that my caution is unwarrented and certainly the system might find its way back to better times even in absense of any clever moves by the government. But lets keep in mind that the last 50 years in North America have been strangely blessed and while an economist might be optimistic I’m not so sure a historian would be.

  2. Yeah, you’re right. If only those pesky American workers would stop their whining and just magically retrain. It’s that easy, so why don’t they stop the whining? I mean – all you do is just go to college for four years in your early-50s while trying to raise your three children and send them off to college too. Additionally, who’s to say if the job you are re-training for won’t be off-shored by the time you’ve “retrained”? But hey – that’s just those pesky workers whining again. If that happens, just double-down and retrain again. With what money you ask at that point? Since trillions of the public’s taxpayer dollars have been given away to rich bankers who failed miserable, that’s a good question. Really though – stop complaining. You can’t stop the race to the bottom …. er…. uh …… I mean, free trade. So instead of complaining about China’s slave labor, lazy Americans should be offering to give up their remaining few benefits they receive. That pretty much means giving up any and all breaks, including lunch. And those pesky labor laws? If American workers really want to compete in the global economy they should want to repeal all of them. Stop complaining about such cost-intensive items such as a safe workplace. It’s just whining that hurts you in the end.

    I could go on, but I think the author summed it up well. Everything is the American worker’s fault and it’s time we recognized that. The sooner the American worker finally admits that their life must be a cradle-to-grave struggle to stay one step ahead the better.

    Enough with the whining.

  3. The point that resonated the strongest with me was the need to stop viewing employment as an “all or nothing” proposition. Aspects of the social safety net such as unemployment benefits and healthcare should not be set up so people loses money as a result of accepting a job. For example, if someone loses a $100,000/year job they should be able to take a job at a much lower salary (say $20,000) without having to totally forfeit their unemployment benefits – at least not immediately. They should not be punished for wanting to work. Conversely, people who choose not to work should get less income than those who don’t mind doing work that might be considered “beneath them”.

    Creating a system that makes it easier for people, especially those who are mid-career saddled with kids, morgages ,etc to work part-time or take lower paying jobs so they can move into new careers would do a lot to free up our labor market so people can gradually move from dying parts of our economy to growing areas. We need a system that helps prevent people from getting trapped in dead end careers due to an inability to quit and pursue something else. A 45 year old Detroit auto worker in 2000 might have known that their gravy train was slowing down and would soon stop, but he/she had no way to gracefully move off that train and onto another one that was picking up speed (e.g., biotech) without a significant risk of falling on the tracks between the two moving trains.

    What we don’t need is a government that thinks it can “create jobs”. For the most part I’d argue that government will never be able to drive long-term sustainable job growth directly. It needs to create an economic environment that allows for job creation.

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