How To Create a Job
This is the title of this week’s This American Life episode, where they turned over the program to NPR’s simply amazing Planet Money Team. What is fantastic about this bit of financial reporting, is that Planet Money listens to the platitudes and Conventional Wisdom about job creation and goes off to see if any of it is true. They talk to employers (getting tax credits), politicians (taking credit for or promising jobs), economic development professionals, and folks trying to get the underemployed ready to get employed. These are the high profile ways that government promises to create jobs and this group gets well beyond the usual wisdom here to try to show how these policies work (or don’t). Act One (the tax credit one) is especially good — featuring multiple employers talking about how these tax credits actually get used. Which isn’t really for hiring unless you are doing so at some scale.
The Planet Money crew is doing some of the best financial reporting in the US right now — they aren’t burdened (mostly) by the typical financial narratives and they’ve been creative in getting explanations of why or why not things work in compelling fashion. Their interest is in how these things actually work — not in how someone with a vested interest wants you to think it works. Their interest is in making all of these abstractions that financial and business people like to throw about in an intimidating fashion and make them concrete. Top that with a bunch of genuinely curious reporters with excellent storytelling skills and you get financial reporting that you can’t turn away from. And that makes sure you know where your interests are in the story.
You can listen to How to Create a Job right from the web here. At that link, you can listen to each section as you want, rather than listing to all of it at once. You can also download an mp3 of the program at iTunes for free for the week — after this week, you can download it for .99.
Go give this a listen and hear what genuinely information-rich reporting sounds like. And every one of these stories should make you think about how we spend taxpayer funds (and how politicians position themselves) for *job creation* here in Delaware.
Tags: jobs, This American Life
The idea that government can create a job is pure nonsense.
Perhaps the clearest example was written by Frederic Bastiat. Bastiat wrote the Parable of the Broken Window in 1850 and it was expanded upon by Henry Hazlitt in his book “Economics in one Lesson” http://www.amazon.com/Economics-One-Lesson-Shortest-Understand/dp/0517548232
There is no clearer example of the fallacy of government creating jobs.
http://jim.com/seen.htm
In order for government to create a job it MUST subtract one (in some instances more than one) from another segment of the economy, or create it at the expense of a future job.
If a President, Congress or a Governor boasts that they will create an X number of jobs by investing in building Highways, Military Spending, or Green Energy they must do so by either borrowing (Congress) or raising taxes (Congress-Governor).
If we drive down RT. 1 and see workers installing all the new guard rails, we might say “look at all the jobs the Stimulus has created”. That is the Seen Bastiat refers to. What we don’t see are the items that were not purchased (computers, vacations, televisions) and the jobs that were lost. The Government simply transferred the job from one person to another.
“If a President, Congress or a Governor boasts that they will create an X number of jobs by investing in building Highways, Military Spending, or Green Energy they must do so by either borrowing (Congress) or raising taxes (Congress-Governor).”
I hate to interrupt the genius at work, but government usually hires private companies to do the work, at least in the construction and energy sectors (I’d just as soon not allow the privateers in military areas, thankyouverymuch). So it goes right back into the private economy. Highways, at least, benefit business more than they cost business.
John Galt assumes that revenue used by the government to create jobs deprives private investors and business owners of capital to create jobs on their own. What makes this one of many free market fantasies is the assumption that the only motivation that private investors and business owners can have is investment in expansion resulting in job creation. But that is simply not true on empirical grounds. Often investors and business owners don’t invest in expansion. Instead, they engage in increased profit taking, even engaging in retraction (e.g. layoffs)to maximize increased profit taking for the purposes of increasing their personal wealth. For that reason and others government needs to become the source of job creation.
Often investors and business owners don’t invest in expansion. Instead, they engage in increased profit taking, even engaging in retraction (e.g. layoffs)to maximize increased profit taking for the purposes of increasing their personal wealth.
True… but if a job can be done cheaper with fewer people, generally it should be.
The way to stop gouging is through the government bid and procurement process. If a business can create savings through efficiencies, government should take note and insist on lower prices next time so the savings are shared by the taxpayers. If vendors will not lower its prices, closing a few RFPs with a “no award” status ought to motivate them.
Geezer is right that alot of what counts as job creation by the Government happens in the private sector. Just take a drive around the DC beltway (and the Dulles Toll Road and I 270 north of DC) to see the buildings full of private sector workers doing work for the Government. You can watch the Feds procure services and goods via Fedbizopps and there is certainly no lack of competition from the private sector to be a part of this process. Firms like SAIC or Booz Allen would not exist in their present form if not for the Government.
But instead of coming here to lecture us on some libertarian bullshit that you can’t make sense of, you could just listen to the program I linked to and learn something for a change.
Galt named himself after a character in a wackjob manifesto posing as fiction, so I guess it is fitting that his favorite book is a wackjob manifesto posing as an economics text.
Nothing more silly than to compare economic systems of the 1850s to our modern day
Galt opened his mouth and removed all doubt…
This American Life is a great show brought to you through Soshulizm!
Check out the one on the mortgage crisis – absolutely stunning!