There’s a lot of talk about the importance of “job creation” these days. How do you create a job?
The easy answer is that you find someone willing to work, and pay them for their time. That’s not really “job creation,” though. It’s just a simple description of the mechanics of employment.
A job is actually “created” by demand. If carpentry is needed, carpenters are hired. However, jobs only form in response to demand when the work can be done at a profit. If the cost of labor is too high, there may not be a way to meet demand at a price the customer is willing to pay. There might be plenty of demand for carpenters if they charge $20 per hour, but few of those customers may prove willing to pay $75 per hour.
Maybe it’s foolish to allow profit considerations to dictate the marriage of demand and labor. Wouldn’t it make more sense to “create jobs” by assigning people to respond to demand? Instead of waiting for customers and carpenters to agree on a mutually satisfactory price, the State could direct carpenters to address the woodworking needs of the populace, compensating them in a “fair and just” manner for their labor.
Of course, when you talk about “assigning” people to jobs, you are talking about compulsion. The quality of compulsory labor tends to be poor. The sting of the lash is a poor substitute for ambition.
Jobs created by government fiat are, invariably, temporary, because there is no underlying demand to sustain them. The job lasts precisely as long as the government subsidies that forced it into existence. This is what happened with the jobs “created or saved” by Barack Obama’s wasted “stimulus” program. When the stimulus money ran out, the illusory jobs disappeared.
Why not “create jobs” by forcing people to adopt more labor-intensive means of production? Technology tends to reduce the number of man-hours needed to complete any given task. A farm that would once have required the labor of hundreds of farmers can now be tended by a few people with industrial farming equipment. If we simply outlawed such equipment, wouldn’t many jobs be suddenly “created” on those farms? The same would be true of factories and assembly lines. Ban the robots and put flesh-and-blood people back to work!
It would be folly to do such a thing, because it would diminish the overall wealth of society. Wipe out farm equipment to “create jobs,” and you’ll dramatically increase the price of food. Boot the robots out of our factories, and you’ll reduce production. Entire industries founded on the productive power of modern technology would be wiped out, taking their highly desirable jobs with them.
The best way to reduce unemployment while protecting the wealth of our society is to create an environment where the demand for labor can most easily connect with supply. Not everyone is capable of doing every job. Some jobs are so difficult or unpleasant that many people will not consider accepting them. Others require unique talents or a high degree of training. Some are dangerous.
Meanwhile, some employees are burning with energy and ambition, while others prefer less demanding occupations. Some people have great natural talent for jobs they have no interest in performing. There are people who will work hard at a job they dislike because the money is good. Others will accept lower compensation to do work they really enjoy.
No central authority will ever be able to efficiently match millions of citizens up with their ideal careers. The State can never hope to compute the value of labor, or the importance of demand, as quickly or precisely as market forces. Jobs the government manufactures will never last as long as those which form naturally, in response to demand. The money and liberty appropriated by the State when it sets about “creating jobs” undermines the real jobs that would have been created by free people, if they had been allowed to find each other and join in voluntary commerce. Taxes and regulations increase the cost of labor, and make it harder for businesses to form at all.
How do you create jobs? By making the government smaller.
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