
Can Anyone Really Create Jobs? - mdariani
http://www.nytimes.com/2011/11/06/magazine/job-creation-campaign-promises.html?_r=1&hp
======
FD3SA
Interesting that none of these articles ever address the root causes of
structural unemployment. Globalization combined with rapidly advancing
technology are allowing an ever shrinking pool of extremely talented people to
satisfy the world's demand for products. This is a reality that can no longer
be ignored. It is not just the majority of Americans that are unemployable,
but the majority of the world's population.

Technology's leveraging power has become so severe that a company like Apple
can reasonably expect to supply the entire world market with smart phones.
Another example is SpaceX, which is pioneering the future of space flight with
a team of only 1300 employees.

Globalization depresses wages for traditional labor, while technology
facilitates an extreme leverage for talent. These two forces are enough to
obviate the vast majority of the domestic work force. As long as this reality
is ignored, the discussion of potential solutions is futile.

Further reading: <http://www.thelightsinthetunnel.com/>

~~~
DevX101
You're absolutely right. And I think the reason people don't talk directly
about the issue enough, is because we really don't know what to do about it.

There are many jobs that are now obsolete, or will be due to technological
progress. Not only are many 'labor' jobs being rendered obsolete, but so are
many 'mundane' white collar jobs.

Toll-booth operators are obsolete (or will be)

Bookkeepers are obsolete (or will be)

Many back-office support-services can be automated or re-located

All cashiers could potentially be made obsolete

Many retail sales could be made obsolete (as people shop online)

Where do all these people go? During the last technological revolution, there
was a relatively smooth transition from farming to manufacturing. But I
honestly don't see how large swathes of the population that don't have
specialized skills will fit in in the new economy.

Most of the people reading this comment will do just fine. But we face the
really tough questions when dealing with the increasingly large number of
people who don't have skills that are in the demand. And even if they all got
the skills, employers simply wouldn't need all of them as labor becomes
increasingly leveraged.

A couple professors fro MIT just wrote an e-book called 'Race Against the
Machine' discussing this phenomena.

[http://www.amazon.com/Race-Against-Machine-Accelerating-
eboo...](http://www.amazon.com/Race-Against-Machine-Accelerating-
ebook/dp/B005WTR4ZI/ref=sr_1_1?ie=UTF8&qid=1320497913&sr=8-1)

~~~
WildUtah
Most of the manufacturing jobs are already gone -- even as manufacturing
production rises -- and yet just a few years ago in the developed world nearly
everyone who wanted to work could find a job.

In fact, developed nations in Europe and the Americas are importing vast
numbers of low wage workers to do low value per hour jobs where humans are
still better than machines. It continues in the face of a prolonged severe
recession.

So the emerging problem of no available work to do does not seem to be
materializing. In fact, it's hard to imagine. Does every public park and
private garden in your city look as clean, inviting, and pretty as it could
possibly be? Is every street paved smooth without cracks and potholes? Does a
bumper crop of fruit never go bad for lack of harvesters? Is every home clean
and freshly scrubbed all the time and is a freshly cooked meal always waiting?
Does every corner have a crossing guard during school hours?

There's a lot of intellectually undemanding work to be done in a utopia if we
want to pay for it.

Right now, we import foreign workers to do cheap labor but we could take
unemployed citizens and subsidize their wages to have our own do those jobs
instead. The unemployed citizens are living on private or public welfare and
social insurance today but they could be working. We could kick in public
money to make it possible to pay a legal wage with benefits for the jobs
undocumented workers do and the employers would prefer to stay legal by hiring
citizens. We could even document the undocumented and add enough subsidies to
employ them too.

Economic change driving social change is disruptive. But let's remember that
technological productivity is a positive change that makes us wealthier.

Unemployment that follows from energy shortages or global climate change, if
those ever get serious, would be a much bigger worry.

~~~
bdunbar
_Most of the manufacturing jobs are already gone -- even as manufacturing
production rises -_

That seems to be the trend, long-term. But you can't say 'most', not yet.

There are still many manufacturing jobs available in the US. My employer has
an open reqs out for our six manufacturing sites in the States. We're not the
only ones in our industry.

Why does this myth persist? It might be that these jobs are no longer in
traditional manufacturing areas. A decaded ago we had two sites in traditional
blue-collar areas: one in Mass, one in Washington. We closed them down and
relocated the work to existing sites in Idaho and Wisconsin, expanded there.

Because the labor and other costs in the old sites were higher than the drive-
past states.

So ... a guy in Mass sees a shuttered factory. A guy in Wisconsin sees new
construction. Perhaps the guy in Mass needs to move to where the jobs are.
We're hiring.

------
calibraxis
I think one bizarreness needs to be pointed out, lest it seems too strange for
some people who are used to a slightly more rational universe — all this talk
of "job creation" is a lunatic side-effect of our economic system. One might
think that millions of homeless and unemployed people represent a huge
untapped demand for goods and services; they're humans like any other. But of
course, our system doesn't work that way.

The notion of systematic unemployment is bizarre. (No matter what
justifications were invented to paper over its absurdity with.) It represents
idle hands which have nothing to do. The US could have enormous productive
output. The infrastructure and know-how is there; it's not like someone
dropped bombs all over the place and reduced it to a 3rd world nation. But as
a society, we choose not to use these resources, nor do we allocate much of
our output to the "lower classes" of people.

~~~
yummyfajitas
_The notion of systematic unemployment is bizarre. (No matter what
justifications were invented to paper over its absurdity with.) It represents
idle hands which have nothing to do...But as a society, we choose not to use
these resources..._

"As a society", we choose nothing. If you believe their output is useful, why
don't you hire some of them?

Structural theories of unemployment are merely theories which claim that you
have no idea what job they can profitably perform, and they have no idea what
jobs to bother applying to. Or, alternately, there are barriers preventing
them from taking such a match (e.g., some people may consider unemployment
benefits + leisure superior to a marginally higher paying job).

~~~
bjelkeman-again
As swombat says [a] “straightforward way that politicians can create jobs: by
spending money on big infrastructure projects.”

That is indeed a way that the society you live in choose to spend money to
create jobs. Other ways of spending money to create jobs are, for example to
increase the size of the military, which may or may not be as useful for a
nations economy as creating infrastructure, depending on the state of your
infrastructure and the size of your military.

~~~
yummyfajitas
Big infrastructure project don't work in this day and age. The recession would
be long over before the environmental impact reports are even submitted, and
you'd need to repeal Davis-Bacon to make things affordable.

But some variant of the New Deal approach would be possible. For instance,
instead of paying people not to work for 99 weeks (as we currently do), we
could pay people wages equal to unemployment benefits for jobs that would
otherwise be done by a unionized government employee. For instance, unemployed
skilled workers could become DMV clerks and unemployed unskilled workers could
become DMV janitors.

Such an approach would allow us to both create jobs and cut spending.
Strangely, we don't go down that route. It's almost as if our elected
officials and unelected bureaucrats aren't looking out for our best interests.

~~~
exit
what would the ex unionized government employees do then?

~~~
skylan_q
Get jobs that actually help the economy. The government can't add jobs to help
the economy by definition, because they don't work in the realm of
profit/loss. This is called the economic calculation problem. We've ignored
this problem, and that's why we keep creating jobs from stimulus while losing
twice as many as created.

~~~
rwl
Huh? Aren't government employees paid in the same currency as employees in the
private sector? Don't those employees spend that currency largely in the
private sector? If those people wouldn't otherwise be employed, how are their
jobs not "helping the economy"?

~~~
mhb
You are propounding the Broken Window Fallacy. To discover the flaw in your
reasoning see:

<http://bastiat.org/en/twisatwins.html>

~~~
rwl
It looks to me like this is only a fallacy on the assumption that government
employees are like glaziers fixing broken windows: absorbing value that, but
for a loss, could otherwise be put to another use. It is that assumption that
I meant to question, though I see I did not express the point adequately.

~~~
yummyfajitas
If you wish to question such an assumption, you need to show that government
employees _produce_ something of value, not that they _consume_ something of
value.

~~~
drewrv
I think the people at the DMV produce something of value. They limit who's
allowed to drive making the roads safer. That is extraordinarily valuable.

------
DanielBMarkham
I found it humorous that the writer announces his bias by identifying other
biases and then doing the same thing himself.

 _The current economic downturn has been called a housing crisis, a financial
crisis and a debt crisis, but the simplifying logic of the political season
has settled on what is really more a result than a cause. We are now,
according to nearly everyone running for office, in a jobs crisis._

Jobs are like money -- they are the end of the process. They are the socres on
the scoreboard, but you don't play the game by watching the score. These are
metrics of results, not causes. I don't open a business with a chair and a big
sign that says "give me money," even though money might be the way I judge
success. Likewise, and for exactly the same reasons, you don't sit around
trying to "create jobs" Jobs are the result of somebody creating value, they
are not a goal in themselves.

I hate to say it, but this was a really bad article. I had a premonition of
this when I looked at the title "Can Anyone Really Create Jobs?" It's yet
another in a long line of political commentary that takes whatever the current
problem is and announces that it is insolvable. This reached ludicrous levels
in 2008, with lots of articles asking "Is this the end of capitalism?" I don't
know how many of these you have to consume before you finally figure out that
no, whatever is happening right now, it's not the end of something that's been
going on for thousands of years.

Americans need to start getting honest about their economic situation, no
matter what their politics. If you drop hundreds of billions of dollars paying
for government workers that the government cannot afford, you are not
simulating anything. Money is just continuing to be spent in the same patterns
as before. Likewise, if you cut taxes for the rich, and they continue to spend
their money in the same way, you are also not doing anything except to run up
the debt. If you are living a house you cannot afford, no matter how much we
help you, you are probably still stuck in a house you cannot afford, and the
rest of us are much poorer. Simply because an idea sounds good to your
political party doesn't mean that it accomplishes anything but buying votes.
These facts sound cruel, and I apologize, but some of this commentary is
beginning to sound like dispatches from somebody's fantasy land. People are
smarter than that.

~~~
ap22213
Did you read the second page? Because, the author essentially says a similar
thing. In fact, the last paragraph is pretty blunt. (but, I can't get to the
text anymore, to verify)

~~~
kaybe
Here's the last paragraph for you:

"When this crisis ends, we’ll also be faced with other deep problems. Our tax
code is a complex mess; we need a more effective education system; it’s hard
to picture a healthy United States in 2050 without some major change in health
care. Unlike the short-term jobs crisis, these are areas where we can find
compromise. Let’s not do what we usually do by spending the bad times arguing
over things that won’t happen and the good times ignoring the things that
should. "

~~~
ap22213
Thanks for posting. But it must have been the 2nd to last or 3rd to last
paragraph. Basically, I suggest reading both pages. :-)

------
swombat
I didn't read the second page, because the first page seemed to miss the point
so badly.

 _The most popular types of jobs programs involve state tax breaks or
subsidies that seek to seduce a company from one state to another. While this
can mean good news for “business-friendly” states like Texas, such policies
don’t add to overall employment so much as they just shuffle jobs around._

Such subsidies can also seduce people from one country to another. And in that
sense, they would indeed create jobs.

The same argument applies to the industry-specific legislation he mentions
later.

Finally, he doesn't mention, on the first page, the very straightforward way
that politicians can create jobs: by spending money on big infrastructure
projects. Those certainly do create jobs, and they have been a common method
to do so in a recession.

To top it off, lumping politicians in with "everybody else" seems unfair. As
argued above, even politicians can and do "create jobs", but it is ludicrous
to argue that the founders of Google or eBay or Paypal didn't create jobs.
They created tens of millions of jobs that people live off of, in the US and
in other parts of the world.

~~~
DasIch
Big infrastructure projects have the problem that they cost a lot of money and
time. Another disadvantage is the inherent problem all Keynesian ideas have,
they very much depend on timing. If you start such a project too late you
severely harm a recovering economy, start it too early and it won't help at
all or even have a negative impact.

~~~
skylan_q
Also, there is no way to show whether a government project is profitable or
not. This means we can't tell whether the project actually helped or hurt the
economy.

~~~
DasIch
Infrastructure projects don't have to be profitable that is neither the goal
nor does anyone care. The goal is to create a lot of jobs and a lot of income
relatively fast to increase demand which helps the economy.

------
yummyfajitas
This article makes a very strange factual error: _...permanent cuts in taxes
and regulation. These policies may (or may not) make the economy healthier in
5 years or 10, but the immediate impact would require firing a large number of
America’s roughly 23 million government workers._

This is not true. You could cut taxes and reduce compensation for 23 million
government workers.

~~~
gahahaha
It would probably be an even worse idea to cut government wages than to cut
government jobs (also a very bad idea). It is true that people are unhappy if
their wage increases don't keep up with the rate of inflation--if inflation is
4% and you get an only 1% wage increase, you're unhappy. But people are
furious if your boss cuts your wages--if inflation is 1% and they cut your
wages by 2%, you're not just unhappy, you're enraged. There's something about
cutting the number of dollars that you're going to be paid for doing the same
work in the American psyche that gets people really angry, and makes them
really unwilling to put in the effort to be good workers.

And so, because each company know that cutting people's wages is a way to
guarantee that they'll do a lousy job, businesses are overwhelmingly unwilling
to cut people's wages at all. They would rather fire more people.

~~~
yummyfajitas
Businesses tend to fire people because cutting wages is likely to cause
adverse selection - the good people (with options) quit, the bad people (no
options) stay. This is why during the recession, jobs were cut, but comp (per
worker) actually increased.

<http://research.stlouisfed.org/fred2/series/ECICOM>

Regardless, the government could cut overall comp without cutting any
individual's comp and therefore never making anyone mad. They could simply
freeze wages (rather than raising them, which they did during the recession)
and apply the lower pay scales only for new hires/promotions.

I.e., a current G6 makes $30577 (ignoring COLA). When he upgrades to G7 under
the current pay scale, he gets $33979. If all pay scales were lowered by
$2500, the individual would continue making $30577 for as long as he is a G6.
When he transitions to G7, his pay would only go up to $31479. No individual's
pay is ever cut, but compensation for government workers as a whole is
reduced.

<http://www.fedjobs.com/pay/pay.html>

------
ck2
Why doesn't the USA charge full rate taxes on individuals and corporations
with extremely high incomes - and THEN deduct based on the number of new
domestic hires they've done that have stayed for at least a year.

Seems super simple enough and then the REAL job creators get the credits they
are demanding. The fakes then have no excuses.

~~~
steins
Every tax creates distortions. If the tax break was high enough it would
encourage people and corporations with extremely high incomes to hire people
for 366 days and then fire them and hire another domestic replacement.

~~~
ck2
Then just subtract terminations. It's not complicated - net jobs, period.

~~~
steins
So if a company is efficient and has to terminate people they will have to pay
more taxes?

Smart businessmen (with smaller businesses) would just start a new company
every year and move the profit from 1 to another. It isn't a very big
accounting challenge to change which one of the companies you control shows a
profit.

~~~
ck2
Yes if a company makes higher profits by eliminating workers then they should
lose the savings from their taxes.

If they moved the profit and terminated the workers, that year they would
still have to pay full taxes. The new company would not have people for a year
so no credits - they also wouldn't have profits to pay taxes on either. There
is no way to game the system, you cannot shuffle workers because you lose
credits.

Why is this so complicated to appreciate? A large corporation's worth to
society is not to ship jobs overseas but to create domestic jobs. How else do
you encourage them to not ship jobs overseas and get slave labor for pennies?

~~~
yummyfajitas
Why should we encourage a corporation not to ship jobs overseas? Why do you
intrinsically want to favor Priscilla over Poonam? Is a brown girl who speaks
Marathi somehow less worthy of a job than a white girl who speaks English?

Personally I don't think so. But perhaps that's because to me, Poonam is a
real girl, very short, who makes frowny faces in google chat and real life
when I tease her. Maybe I'd think differently if Poonam was a faceless foreign
devil.

(Note: The girl is real, the name is not.)

Also, you are simply wrong that a corporation's value is creating jobs. It
isn't. A corporation's worth is the consumer surplus their products create. If
my company helps a woman find a dress she values at $100 and she pays $80 for
it, she gains a consumer surplus of $20. How much of that $20 we are
responsible for is dependent on what her NBA would have been.

~~~
ck2
What if that woman is unable to get a job because all the jobs are shipped
overseas and cannot buy a new dress at all?

What is that corporation's worth to society that it is not generating any
domestic income and only extracting dollars from a society?

~~~
yummyfajitas
_What if that woman is unable to get a job because all the jobs are shipped
overseas and cannot buy a new dress at all?_

Then she will lower the cost of her labor until her prices become competitive,
and people will then choose to hire her.

 _What is that corporation's worth to society that it is not generating any
domestic income and only extracting dollars from a society?_

Corporate value to society = consumer surplus generated - cost of printing
green pieces of paper

(This assumes the corporation takes delivery of green pieces of paper rather
than electrons, in which case it's value is even higher.)

Also, you still dodged the question of why your white girl deserves this job
more than my brown girl. Is my girl simply less of a human being than your
girl?

~~~
pmiller2
Your "white girl vs brown girl" scenario is a pure straw man. It does not
deserve to be answered.

------
skylan_q
It was only about 10 years ago that we understood how to allow the economy to
create jobs and operate properly: keeping a steady monetary base, cutting
taxes, loosening regulation and ending wasteful gov't programs that crowd out
private investment.

It's a shame that 1921 and the post-war boom have been buried under theories
that tow the line for the managerial-state.

~~~
skylan_q
Just for clarification, this isn't trolling. It's true. In the last few years
we've blamed the free market for these problems. I don't consider the federal
reserve (a monopolist on money) to be a free-market institution. I don't
consider government-guaranteed mortgages to be a free market program. I don't
think forcing banks to give loans to people unworthy of credit is how a market
should operate.

But with all that meddling causing the current crisis, we look for yet more
government involvement to solve the problem. I look at history and theory and
see that the injection of government involvement throughout the economy
doesn't work. Ask the people who tried to hop over the Berlin wall!

~~~
xsmasher
It sounds like you're blaming the Community Reinvestment Act for the mortgage
crisis. The downvoters probably consider that a GOP talking point with no
basis in reality. I know I do, but I'll reply instead of downvoting.

