Comment on "job creators"

I posted the following as a comment to the Coffee Party's Facebook posting of "7 Ways to Support the Real Job Creators".
I highly recommend slogging through the 1000+ pages of 18th Century English that are Adam Smith's "Wealth of Nations".

Would you believe that he is more sympathetic to the workmen than the masters? That he thinks banks should be regulated? That taxes are necessary? That we have to co-operate with and assist one another? That talents come from our experiences? That he doesn't believe in giving 110% to employers? That the rich get rich at the expense of the poor? That governments are needed to enforce contract law? That merchants complain that high wages affect the economy but say nothing of how high profits affect the economy? That honorable professions are underpaid? That regulations are needed to prevent abuse? That he doesn't think much of corporations controlling government? That corporations are not concerned with the public interest? That although he complained it was illegal for workers to unite to raise wages but legal for masters to unite to keep wages down, he didn't think much of labor unions? But that regulations in favor of workers were just but those in favor of the masters were unjust?

Those are only some of the comments with which I annotated the first 150 pages of my Project Gutenberg copy of "Wealth of Nations".

Fable about a king's palace

A fabulously rich king decided to build a fabulously magnificent palace. He got his privy council to agree because he argued that doing this project would create many jobs for the five years it would take to build it and for the years beyond that to maintain the palace.

For starters, he took by eminent domain 10,000 acres of prime farmland by the river. People said it would reduce the food the country could grow to feed itself. The king replied that the project would create jobs.

He had 10,000 acres of prime forest cut down to supply the lumber for his palace. People said it would decrease wildlife habitat and increase flooding. The king replied that the project would create jobs.

He hired 1,000 workers to build his palace. People said it would decrease the number of workers to build and repair houses. The king replied that these workers would be paid high wages.

He had a million gallons of water per day diverted from the river to supply all the fountains, to water his extensive lawns, and many other uses. People said it would practically dry up the river reducing the water downstream for drinking, washing, and irrigation. The king replied that the project would create jobs.

He built no sewage treatment system to handle the garden runoff or the flushing of 1,000 toilets. He said it would cost too much money. People said sewage would make the river downstream unsuitable for drinking and washing, and irrigation. The king replied that the project would create jobs.

And so it came to pass that many people were hungry because there was insufficient farmland to feed them.

And so it came to pass that many people became homeless as the cost of existing houses skyrocketed because no new house were being built.

And so it came to pass that many people became sick because of the lack of clean drinking water.

And so it came to pass that many people migrated to lands where there was plenty of farmland and clean water.

And so it came to pass that tax revenues dwindled because there were fewer people to pay them.

And so it came to pass that the banks foreclosed on the king's palace because he couldn't pay back all the loans he had taken out to build the palace.

And so it came to pass that after an unusually heavy rain, a mudslide from the former forest buried the partially built palace.

What's the point of this fable? It can't happen here. Oh, but we are a nation populated by people who immigrated from lands that did not have good governance. Will we follow as we lack the foresight to rein in the indulgences of the wealthy as they create short-sighted projects using jobs as a justification without regard to all the other costs?

Job creation in the strangest places

A pickpocket is a job creator?  A pickpocket takes someone's wallet and spends the money at a liquor store, at a barber, at a grocery store, and at a gas station, each transaction helping to at least sustain jobs.  What was the wallet owner going to do with his money?  Buy a necklace for his girlfriend?  And was the wallet owner a pickpocket in different way?  "Sign here, it's a standard form."

Where's Grover Norquist when we need him?

I find it amazing that the Republicans are not up in arms about no new taxes for the Vikings stadium in Arden Hills.  We certainly don't hear them talking about greedy players and owners.

Hey folks, a much better investment in Minnesota is schools and colleges.  It's not the rich that create jobs, but the well-educated.

Are buzz words fuzz words?

Buzz words!  Sometimes they can capture a powerful thought in a phrase.  Too many other times, they complicate a simple thought or they obscure a complex thought.

An example of complication is using an "-ize" verb when simpler more direct forms are more appropriate.  Prioritize and conceptualize are a couple of these.

Politics is where buzz words obscure more complex and nuanced thought - fair share, live within means, compromise, job creation, exporting jobs, business-friendly government.  Let's examine some of these.

Fair share - this seems to be a mantra of Democrats meaning the wealthy should pay more taxes.  End of discussion.  But what is fair share?  Is it the total amount of taxes they should pay, is it a greater percentage than they pay now?  I have yet to see a clear definition or justification.

Whatever the definition, some of us cannot pay a "fair share" for the public goods we use.  That is one of the reasons for public education.  Consider that where parents must pay for their children's education, literacy is far less than where there is free public education.  And a whole host of private and public problems accompany illiteracy.

On the other hand, the higher the level of education for everybody, the more wealth is generated.  The CEO of an innovative corporation cannot become wealthy without a large pool of creative people.  What is a "fair share" of taxes for this CEO who benefits so much from the public good of free public education and subsidized state universities?

Compromise - this used to mean negotiation to reach an agreement that would be acceptable to most of those involved.  Now it means taking a very rigid position and expecting the opposition to give up anything that does not conform to that position.

Job creation - almost no public policy can be proposed unless it is going to create jobs.  Sometimes it seems the proponents are willing to spend one million dollars for each job that will supposedly pay $50,000 for ten years.  Conversely, others are willing to forgo one million dollars in taxes to create one job that will pay $30,000 for eight years.

Exporting jobs - this has been going on for a very long time.  English textile mills "took" jobs from Indian weavers.  Cheap power in New England (and stolen plans) took jobs from English textile workers.  Cheaper power from TVA (and cheaper labor) took jobs from New England textile workers.

Sometimes the criticism of exporting jobs is way off the mark.  For some corporations, it is ridiculous to use only U. S. labor around the world.  Wal-Mart is not going to move U. S. citizens to China to staff its stores.  Fed-Ex is not going to move U. S. drivers to India to deliver packages.  Yet, some critics look at the world-wide employment of large corporations, look at the proportion of U. S. workers, and assume that each of those jobs was "exported".

I would say that anyone who uses simple terms to describe complex situations is incapable of dealing with those complex situations.

If you really want to create jobs…

The President claims the stimulus created x jobs.  Republicans claim tax cuts will create y jobs.  Developers claim waiving the zoning rules for their mega-projects will create z jobs.

They all miss the point.  Many jobs are gone forever because of productivity gains, automation, and changing product and service mix.  A stimulus is not going to reverse productivity gains.  Tax cuts may only decrease jobs because of investment in productivity.  Mega-projects may create jobs for a year or two, but then there will have to be another controversial mega-project to hire those laid off after the previous mega-project.

If you want to create jobs in the short term, here's what you'll have to do.  And few will be happy about it.

Take out all self-service machines.  More bank teller jobs will be needed without ATMs.  More pump-jockey jobs will be needed without self-serve pumps.  More elevator operators will be needed without automatic elevators.  Take out all drink and food dispensing machines.  Replace them with staffed snack bars.  Cut off direct dial calls.  Operators will be needed to place calls outside the immediate area.  Ban email and online payment.  Mail carriers have delivered letters, bills, and payments successfully for decades.

We will all lose a lot of convenience and pay more for goods and services.  But, what the hey!  We won't have to pay the taxes for unemployment benefits.

But if we keep the taxes the same, maybe we can use the savings to create even more jobs.  Let's run all bus routes ten minutes apart from five in the morning until one the next morning, seven days a week.  That will save us the costs of a car.  Let's give 24-hour service on pothole repair.  That should also save us a lot on auto repair.  Let's increase traffic enforcement.  The increase in enforcement will save us on insurance, generate some funds to pay for the enforcement, and save on health costs with reduced road rage.

I think only two systemic changes are going to bring about real job growth – free quality health care and free quality education from pre-school to university.

Our health care expectations give a double whammy to job creation.  First, employees expect health care insurance and employers need to provide health care insurance to attract employees.  This increased cost reduces employers willingness to hire.  Second, people who want to quit their jobs and start a new business are reluctant to do so because they will lose their health care insurance.  It would be interesting to see what percentage of entrepreneurs have a spouse with a job with health care insurance.  And if an entrepreneur needs employees…

Many jobs are going begging because there are not enough qualified people to fill them.  These jobs often require education well beyond high school.  But the rising costs of college education discourage many from even considering college.  Ironically, those who think tax cuts will create jobs don't consider that tax cuts reduce the future number of job creators.

A quality education from pre-school through university can produce creative people who will create a dynamic economy in the future.  Creative people are not created through standardized tests; they are created by active stimulation of their imaginations.  This means they have to have teachers who can personally interact frequently with each student; they have to access to books, labs, and workshops to gain and try a wide variety of ideas.  Those who have difficulties may need social workers who have the time and resources to understand and ameliorate those difficulties.  Laying off teachers and others is only eating our seed corn.

Until we have a majority of politicians who fully understand that lack of these two basic needs is standing in the way of job creation, we are going to have one half-baked solution after another offered up, sometimes from the so-called liberals and sometimes from the so-called conservatives.

Until we can break out of the habit of having to vote for one or the other "major" party, we are going to be stuck with polarized politics.  We need some leaders with the courage to take us in a new direction.  We aren't going to get those leaders until they feel they have a good chance of being elected under a new banner.

Have good-paying jobs really been exported?

The mantra of "good-paying manufacturing jobs going overseas" never seems to be questioned.  But I wonder if this "common wisdom" is really true.

There's no question that many hire-and-train jobs are now done in other countries.  Simple assembly, clothes manufacture, operation of simple automatic machines, and on and on.  But have all the jobs of skilled machinists gone overseas, have all the jobs of process designers gone overseas.

I think not.  What has happened is that the skills required for these jobs have become more demanding and the productivity of people performing these jobs has skyrocketed.  Higher productivity leads to a lot fewer people needed to produce the same number of goods.

My father's grandfather was a machinist and my mother's uncle was a machinist.  I doubt that either could get a machinist job now with the skills they had then.  It takes a good eye and a steady hand to produce parts exact to the thousandths of an inch.  But now manufacturers have numerically-controlled tools that can do the same thing time after time.  The operator sets the job up and may be free to work on something else.

Once upon a time a teen-ager with a tool box could be an auto mechanic.  Now auto mechanics use a wide array of electronic gadgets to check and adjust many systems in a car.

My father was a dental prosthetic technician with his own business specializing in crowns.  He could afford a lot of big boy toys, bowling, golfing, and betting on the ponies.  I have a folder full of testimonials from dentists praising the skill and timeliness of his work.  Now dentists design a crown while you watch, push a button, chat with you for a few minutes, go downstairs to pick up the crown, and put it in your mouth with a nearly perfect fit.

And even if these old style jobs were still available, would anybody hire a kid off the street, train him in the basics, give him some simple jobs, and guide him in the development of a higher skill level.  I doubt it.  Many companies want new employees with experience.  And often quite specific experience.  If you know all about the model 21 machine, but a company has model 22 machines, fuhgedaboudit!

If any state or national government wants to solve the "jobs" problem, they should stop trying to create the unneeded jobs and start training people for the needed jobs.  And even if they do that, will the needed jobs of today become the unneeded jobs of tomorrow?

Stop creating jobs and start creating Jobs!

Politicians measure their success by their claims of creating jobs. But is that how we should measure our success as a society, how many people have a 9-5 job with benefits?

If so, maybe we should ban push-button elevators and bring back elevators run by a full-time operators. The push-button elevator destroyed lots of jobs. If we measure success by jobs, maybe we should ban direct dialing. Direct dialing greatly reduced the need for live operators to place long-distance calls. If we measure success by jobs, maybe we should legislate how long buildings may be used. The demolition of old buildings and the construction of new buildings will create jobs.

The real question is what are the true costs of creating jobs. Are we creating a better, safer, healthier environment or are we merely doing the same old, same old over and over again? And as we do so, are we training people to keep looking for the same old, same old jobs rather than looking for new opportunities.

Instead shouldn't we be looking to create more Steve Jobs, entrepreneurs with ideas for change? Not every innovator is going to become a billionaire or even a millionaire, but a society which promotes innovation by individuals will be "wealthier" than one that just seeks to create jobs.

I think there is at least one major impediment to creating entrepreneurs and others who will create a society with beneficial change.

The desire for benefits keeps many people from starting something by themselves. Health insurance is one of the top reasons people prefer a regular job to going out on their own. If someone has a great idea, he or she may not mind a low cash flow for awhile, but many do not want to spend a day without health insurance. Note in the articles about people who do start businesses how many of them have a spouse with a full-time job, with benefits.

See also "If you really want to create jobs…" and "Where have all the jobs gone?"