I know the secret to creating jobs in this down economy.

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You may think all I do is dream about iced tea and carp about the darker side of today’s technology. However, I do know the secret to saving the economy and creating jobs:

The answer? You can’t.

Not really, anyway. There’s a great article in the New York Times Magazine by Adam Davidson titled Can Anyone Really Create Jobs? The answer, unfortunately, is no.

The fact is that creating [jobs] in a far-too-sluggish economy is practically impossible in our current capitalist democracy. No corporate leader is rewarded for hiring people who aren’t absolutely required. Most companies hire only when its workforce can no longer keep up with the demand for its products.

If you’re not familiar with Adam Davidson, I highly recommend checking out his Planet Money podcasts. He does a great job of explaining complicated financial issues and their ramifications in an unbiased way. I often turn to these podcasts when I want to learn about issues like toxic assets, the mortgage crisis, why we bailed out banks, etc.

Okay, so there’s two schools of thought on how we create jobs, and while you may favor one over the other depending on your political view, the truth is that neither one does much good.

Many on the Democrat side champion the Keynes’ view that the government can create jobs by spending a boatload of money. The problem with that, as Davidson states, is:

The stimulus…has to be borrowed, and it has to be really, truly huge — probably something like $1.5 or $2 trillion — to fill the gap between where the economy is and where it would be if everyone was spending at pre-recession levels. The goal is to goad consumers into spending again. And President Obama’s jettisoned $400 billion jobs package, hard-core Keynesians argue, is nowhere near what it would take to persuade them.”

The Republicans obviously champion a more fiscally conservative view that says that a Keynesian stimulus can’t grow jobs or fix the economy — only time can, and that any meddling we do only delays the recovery. Davidson points out the irony of this viewpoint:

It’s a puzzle of modern politics that Republicans have had electoral success with a policy that fundamentally asserts there is nothing the government can do to create jobs any time soon.

Of course, I wouldn’t expect Romney, Perry, Cain or any GOP candidate to shout, “Just sit tight, we’ll get through this!” In fact, many of the “jobs creation” ideas proposed by the Republicans like tax cuts and loosening of regulations are at odds with this wait-it-out philosophy.

So is there any hope? Davidson closes the piece with his opinion:

An economy is truly healthy only when its people know how to make and do things that others will pay them a decent amount for. Jobs, in other words, are not the cause of a healthy economy; they’re the byproduct. And that’s another thing most national politicians know but will never say. So perhaps instead of (or, at least, in addition to) arguing over plans that aren’t going to happen, we should focus on what almost certainly will come true. The economy that emerges from this recession is going to be different. Without the distortion of a credit bubble, it is clear that far too many Americans don’t know how to do anything that the world is willing to pay them a living wage for. No economic theory offers them easy salvation. We don’t need to become a nation of app designers. An economic downturn is a great time to learn things — carpentry, say, or aerospace engineering — that others will eventually pay for.

 

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About Tony Rosato

Tony Rosato, Alstin's Vice President, Client Development, is the most well-traveled member of our team and one of the nicest guys we know. Sharing his 20 years of industry experience with prospective clients everywhere, Tony's Type A personality is powered by premium iced tea (but never chocolate).