Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  

  • Other news: News from PR Newswire
| More

JOBS and Government Policy

Tue, Nov 6, 3:32 PM ET, by Bob McTeer

(My previous post examined for students the anatomy or pathology of the October jobs report. This post continues with some policy philosophy or suggestions related to jobs.)

At the national macro-economic or policy level, having higher levels of employment and lower levels of unemployment are highly desirable. Having more people pulling the wagon and fewer people riding in the wagon makes the wagon move along a lot easier and faster.

In my opinion, the role of government related to jobs is to promote a healthy economic environment so that the demand for workers, primarily by the private sector, will accommodate all those who are able, willing and want to work. But jobs for jobs sake, is probably not a proper goal of government policy.

Jobs should not be the primary goal of public policy, but the by-product of other desirable goals. Jobs should be the means to an end, and not the end itself. Let me illustrate what I mean by extreme examples, using Frederic Bastiat's technique of reductio ad absurdum.

You can increase the number of jobs by outlawing heavy construction equipment and requiring construction workers to use shovels. You can get even more jobs by substituting spoons for shovels.

Large hurricanes, like Sandy, can create clean-up jobs and stimulate GDP growth, although, as Bastiat pointed out in his Broken Window Fallacy, much of the spending will be diverted spending rather than net new spending. Nevertheless, in a slack economy with high unemployment, I would expect some net stimulus.

Government can increase employment by hiring the unemployed to dig ditches on Monday Wednesday and Friday and fill them in on Tuesday and Thursday. All these things will create jobs, but they are obviously not good ideas. I'm not recommending them.

They are not good ideas because better ideas are much more plentiful than the workers available to execute them. There is always more worthwhile things to do than people available to do them. That scarcity problem is largely what economics is about. I repeat: the shortage is not in our needs, but in the workers available to fulfill those needs.

Governments can save jobs by discouraging new technology or outlawing labor-saving devices like automatic elevators and automated telephone service. Think of all the elevator operators and telephone operators we've lost in recent decades, but we are better off for losing them because those people moved on to do other jobs that machines can't do so well.

Think of all the farm jobs lost to tractors and other farm equipment, and all the factory jobs lost to labor-saving technology, equipment, and computers. Think of the lowly bar code that makes the lines go faster at the check-out counters, raises the productivity of the check-out girls and boys, and relieves them of the need to do arithmetic. Someone ought to write an ode to the lowly bar code.

You get the point.

I'm reminded of what they used to call the factory of the future a few years ago: The factory of the future had only 2 employees: a man and a dog. The man was there to feed the dog, and the dog was there to keep the man from touching the computer. My point is not to count jobs, but to make jobs count.

Actually, and this sounds very counter-intuitive, you can probably measure national economic progress more by the jobs destroyed, than by the jobs created.

It once took about 90 percent of our population to grow our food. It now takes about 2 percent of our people to grow more and better food. Do we bemoan the farm jobs lost or celebrate the productivity gains that they represent?

The farm workers, or more likely their children, got to go to the factories and mills for good, higher-paying manufacturing jobs. But over time, manufacturing jobs gave way to service-sector jobs—because of invention and innovation on the factory floor. This job churn hasn't been abrupt, but it has been unrelenting.

Do we try to turn the clock back and regain those farm and factory jobs, or do we educate and train ourselves for the new higher value-added jobs of the future. The most impressive young people I've run across lately have been the young people working behind the genius bars at Apple stores. Come to think of it, apples to Apple might be a good metaphor for our economic progress over the decades.

Good guidelines for government policy on jobs might be: Don't try to protect jobs made obsolete or unproductive by technology or trade (domestic or international). Don't try to protect jobs by tolerating or creating inefficiencies. Go ahead and accept the productivity enhancements in one area and let the lost jobs migrate to other areas. Instead of trying to save particular jobs or groups of jobs, the government should encourage a vigorous private sector so that aggregate demand will be able to absorb those caught up in creative destruction or the job churn.

What causes wages to increase in real terms and what ultimately causes increases in our standards of living are productivity gains—increases in output per hour worked. Ironically, such productivity gains that improve the lot of workers are based on acceptance of new technology, including labor-saving technology. Workers benefit from more output per worker, not more workers per task.

So, you students get your job security through education and keep your job security through lifelong education—and not necessarily in the classroom. If you listen to Prairie Home Companion on the radio on Saturday afternoons—which you probably don't, but should—you would be familiar with the ad for power-milk biscuits. They give you the strength to get up and do what needs to be done.

Let's do what needs to be done, and the jobs will come.




SDI Glossary: "GDP" Definition
This Article's Word Cloud:   Jobs   They   Think   about   available   because   been   better   code   decades   economic   equipment   factory   farm   future   gains   good   government   higher   ideas   increase   jobs   labor   levels   lost   more   much   needs   other   people   policy   private   probably   productivity   saving   sector   should   spending   technology   telephone   than   that   them   they   those   wagon   what   will   with   workers

| More

The Trans-Pacific Partnership: Are We Up To The Challenge?
Wed, Oct 7, 5:11 PM ET, by Bob McTeer

" What protection teaches us, is to do to ourselves in time of peace what ...

Did the Weak September Jobs Report Derail a 2015 Rate Hike?
Sat, Oct 3, 10:51 AM ET, by Bob McTeer

Probably. It wasn't just the weaker-than-expected gain of 142,000 payroll jobs in September that disappointed, ...

An Obvious Point About Fed Transparency: They Can't Signal What They Don't Know
Thu, Sep 17, 1:41 PM ET, by Bob McTeer

(I'm writing this before today's FOMC decision is announced, because my point has nothing to ...

Can Nudges Improve Government?
Wed, Sep 16, 3:32 PM ET, by Donald Marron

Behavioral "nudges" can increase college enrollment by low-income students, boost health insurance take up, encourage ...

A $15.00 Minimum Wage in New York State Would Be A Self-Inflicted Wound
Fri, Sep 11, 1:51 PM ET, by Bob McTeer

Governor Cuomo's proposal for a $15.00 minimum wage in New York is bolder than most, ...

The Employment Report - Not Bad Enough To Derail Fed Action
Fri, Sep 4, 12:11 PM ET, by Bob McTeer

Like Wagner's music, the August jobs report is better than it sounds. Not great, but ...

Todays Retail News Reel
Mon, Aug 17, 10:31 AM ET, by

Here is what we are paying attention to in today's news:Time To Get Into Dollar ...

The Yuan and the Dollar
Thu, Aug 13, 5:31 PM ET, by Bob McTeer

In March 2003, I was in China making the rounds of universities, government agencies, and ...

Reflections on the Greek Tragedy
Fri, Jul 17, 3:51 PM ET, by Bob McTeer

(This was written on July 8, 2015.) In the late 1980s, I spent about 16 ...

Everything You Should Know about Taxing Carbon
Thu, Jun 25, 10:42 AM ET, by Donald Marron

Climate change is hot. From the popes encyclical to the upcoming United Nations conference in ...

The Fed Should Act on July 29
Mon, Jun 15, 3:41 PM ET, by Bob McTeer

I agree with the consensus view that September 17 is the most likely date for ...

Trade Is Not About Counting Jobs; It's About Making Jobs Count
Fri, Jun 12, 12:41 PM ET, by Bob McTeer

I view the House vote today on trade-promotion authority, a necessary prelude to an important ...

Monetary Freedom
Fri, May 29, 12:31 PM ET, by Bob McTeer

Okay, I confess. I usually drive under the speed limit to avoid getting stopped for ...

Return of the Cicadas
Tue, May 26, 9:42 AM ET, by Donald Marron

The worlds most fascinating insects live in the eastern United States. Periodical cicadas spend most ...

Our Weakening Economy Is Getting Harder To Ignor
Sat, May 16, 2:21 PM ET, by Bob McTeer

We had two decent GDP quarters in mid-2014, and that's about it. The 4th quarter ...

Productivity Is Down: Are U.S. Workers Slacking Off?
Mon, May 11, 12:41 PM ET, by Bob McTeer

U.S. labor productivity fell at a 1.9 percent annual rate in the first quarter, the ...

The FOMC's Cacophony
Sat, Apr 11, 12:51 PM ET, by Bob McTeer

When Buddy Holly was little, he insisted on getting on the stage with his uncle's ...

More on the Euro-Dollar Exchange Rate
Fri, Mar 13, 6:21 PM ET, by Bob McTeer

Nineteen countries now use the Euro as their currency. Fifty states use the Dollar as ...

Dollar-Euro Parity? Let the Market Figure It Out
Wed, Mar 11, 3:11 PM ET, by Bob McTeer

In recent years, in response to those who complained about our "weak" dollar and longed ...

Let 'Er Rip, Janet; Let's Get It Over With
Sat, Mar 7, 3:11 PM ET, by Bob McTeer

"Let 'er rip, let it fly; Come on baby, say it, do you think I'm ...

Three Things You Should Know About Dynamic Scoring
Fri, Feb 27, 10:12 AM ET, by Donald Marron

The House recently changed the rules of budget scoring: The Congressional Budget Office and the ...

Current Monetary Policy: A Keynesian Distortion
Wed, Feb 18, 4:31 PM ET, by Bob McTeer

One amusing thing about watching financial TV these days is that no analyst wants to ...

Todays Retail News Reel
Wed, Feb 18, 9:21 AM ET, by

Here is what we are paying attention to in today's news:Time To Get Into Dollar ...

Tax Policy and Investment by Startups and Innovative Firms
Mon, Feb 9, 2:32 PM ET, by Donald Marron

Our tax system includes many provisions to boost business investment, particularlyby startups and innovative firms. ...

Inflation Targeting or Deflation Avoidance?
Sun, Feb 8, 4:11 PM ET, by Bob McTeer

. ...

A Strong Dollar Doesn't Attract Foreign Capital - Expectation of a Stronger Dollar Does
Wed, Feb 4, 7:51 PM ET, by Bob McTeer

Whether the dollar is strong or weak matters for our exports and imports because their ...

Fourth Quarter GDP Reverts to the Weak New Norm
Sat, Jan 31, 4:21 PM ET, by Bob McTeer

Real GDP increased at only a 2.6 percent annual rate from the third to the ...

Congratulations to Congress on the Pipeline
Thu, Jan 29, 5:19 PM ET, by Bob McTeer

. ...

Are All QE's the Same?
Mon, Jan 26, 12:11 PM ET, by Bob McTeer

. ...

Is a Strong Dollar a Good Thing or a Bad Thing?
Sat, Jan 24, 5:31 PM ET, by Bob McTeer

You are probably way ahead of me on this, but I'll say it anyway: It ...

Fri, Jan 16, 6:11 PM ET, by Bob McTeer

She promised us patience in 2015 No premature rush to tighten So, I’ll be patient ...

Rolexes Just Got More Expensive - Or, You Can't Keep A Good Currency Down
Thu, Jan 15, 8:41 PM ET, by Bob McTeer

The Swiss National Bank, Switzerland's Central Bank, surprised the world this morning by removing its ...

New Year's Eve in Terlingua (12/31/03)
Wed, Dec 31, 1:41 PM ET, by Bob McTeer

Another year has come and gone, We're back to New Year's Eve. Getting ready for ...

Give Me Liberty Or Give Me Whole Grain Bread
Thu, Dec 25, 5:11 PM ET, by Bob McTeer

We've come a long wayunfortunatelysince our founding fathers wrote our constitution and tried to sort ...

Five Percent Growth - Wow!
Tue, Dec 23, 6:14 PM ET, by Bob McTeer

Usually when a pretty good GDP number is released, I check to see how much ...

Reserves Won't Save the Russian Ruble
Tue, Dec 16, 8:21 PM ET, by Bob McTeer

What I try to do in these posts is to comment on contemporary issues and ...

Currency Confusion
Fri, Dec 5, 8:11 AM ET, by Bob McTeer

Thursday's WSJ had a front page article titled "Dollar's Rise Causes Pain in Europe, Asia." ...

Productivity is Key for Good Economic Performance
Wed, Dec 3, 3:11 PM ET, by Bob McTeer

Third quarter productivity was revised to 2.3 percent growth in the third quarter, up from ...

Super Mario and the Euro
Sun, Nov 30, 1:11 PM ET, by Bob McTeer

There was a central banker named Mario Who promised to save the Euro. But he ...

No Matter Who Was in Charge, Just Blame the Fed
Fri, Nov 21, 2:41 PM ET, by Bob McTeer

When I was SVP in charge of the Richmond Fed's Baltimore branch and attended Maryland ...

Spin Alert: DOE Loans Are Losing Money, Not Making Profits
Mon, Nov 17, 11:42 AM ET, by Donald Marron

The Department of Energy snookered the media last week with a report that seems to ...

Perception versus Reality - the Median versus the Mean
Wed, Nov 5, 12:21 PM ET, by Bob McTeer

The post-election analysis on TV this morning included a brief discussion of the "disconnect" between ...

Good Bye QE
Wed, Oct 29, 3:11 PM ET, by Bob McTeer

I retired from the Fed on November 4, 2004, which will be 10 years ago ...

A "Normal" Budget Isn’t Really Normal
Mon, Oct 20, 10:22 AM ET, by Donald Marron

Treasury closed the financial books on fiscal 2014 last week. As my colleague Howard Gleckman ...

The $300 Billion Question: How Should Congress Budget for Federal Lending Programs?
Mon, Sep 29, 12:52 PM ET, by Donald Marron

Lending programs create special challenges for federal budgeting. So special, in fact, that the Congressional ...

More Investment and Exports in Second Quarter GDP - Just What We Needed
Sat, Sep 27, 11:31 AM ET, by Bob McTeer

The writer, Gore Vidal, is reported to have said that he didn't have much to ...

Four Myths about Entrepreneurship
Wed, Sep 17, 4:42 PM ET, by Donald Marron

Spoiler: 20-somethings make headlines, but founders in their 30s and 40s are more important. (Disclosure: ...

The Timing Is About Right for King Dollar
Mon, Sep 15, 5:11 PM ET, by Bob McTeer

Earlier in the recovery from the Great Recession, Larry Kudlow and most of his TV ...

"Ignore the Low Inflation and Strong Dollar. The Experiment Isn't Over Until Things Turn Bad."
Sat, Sep 13, 3:11 PM ET, by Bob McTeer

One of my favorite newspaper clippings is an op ed piece in the WSJ by ...

Does the Export-Import Bank Make or Lose Money?
Wed, Sep 10, 12:12 PM ET, by Donald Marron

Suppose your aunt decides to start a business making pizza ovens. She will design and ...

  More articles:  1 2 3 4 5 6 7 next »


JOBS and Government Policy | Self Directed Investor | Copyright © 2008 - 2015, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: -- a subscription-based online social networking forum of serious individual investors. | -- videos appearing on SDI are produced by Market News Video. | -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.