Notes Book

Jobs, Jobs, Jobs

Jobs are not the solution, jobs are the problem, and the more jobs we have the worse the economy will get.

Look at the Chinese communist experiment for an extreme example. The commissars took the land from the people and gave them jobs farming the land that used to be theirs. The result was mass starvation and poverty. When the Chinese communist government gave back some freedom to the Chinese people, the economy starting booming.

The only thing jobs do well is to make it easy for the government to collect a maximum amount of taxes with a minimum amount of effort. As far as making the economy better, jobs are a complete bust.

Jobs are an artifact of the income tax. A W-2 employee is a sitting duck for taxes of every kind, so naturally the short-sighted, foolish government wants everyone to be an employee.

Just because someone has a job is far from a guarantee that she will make a positive contribution to the economy. What if her employer is a fool who tells her to do things that won't turn a profit. What if she hates her boss and her job but just shows up to do as little as possible and collect the paycheck. What if she is a soldier, cop, lawyer, or bureaucrat who's principle function is creating destruction and chaos so the ruling elite can profit. These situations are far from rare. And even if she and her boss are trying to do it right, they are operating at a tremendous disadvantage. To be efficient, you need to be honest and open, and being honest and open can quickly lead to political problems in a corporate environment.

Just because someone doesn't have a job doesn't mean they are not making a contribution to our economy. An apple grown in someone's back yard is just as much a contribution to the economy as an apple grown and distributed by state-certified W-2 employees, and the back yard apple smaller carbon footprint.

Most economists in the USA are subsidized by the government in one way or another. Many are teachers in the the government controlled education system, many work directly for government, and many are employed by corporations that are branches of the government masquerading as free enterprise institutions. It's true there are economist of the Austrian school who make a living as independent journalists, but even most Austrians seem not to question the assumption that more jobs create a better economy.

The more centralized the decision making becomes, the worse the decisions will be for large groups of individuals. The President, like most of us, probably spends a large part of his day looking at screens with 2 million pixels or so. The population of the USA is about 309 million. That means every pixel the president looks at represents about 150 people. But when an individual turns on her own screen, each and every one of those two million pixels will be devoted to her problem. Which of the two will make a better decision?

If all the government did was to use it's propaganda resources to encourage people to think of jobs as the only way to make money, that would be bad enough, but the government also uses licenses and permits and other regulations to make it nearly impossible for individuals to make money other than from a job. When I was a kid in the late 40's and early 50's, my mother used to buy raw milk from her neighbor. Neither she nor the neighbor ever thought of asking the government's permission for that transaction, much less having to get a license. But today in the USA it is illegal to sell raw milk. Sometimes raw milk can cause problems, but it never did and never will, cause as many problems as the government. If problems do occur, they can be solved by market participants faster and at less cost than they can be solved by government.

Jobs delay, degrade, and often destroy price feedback. If an employee is not making money for the company, it may take years for the company to realize that, or it may never happen. If a person is engaged in the free market, she will know if she is not being productive a long time before her corporate cousin, and it will be much easier for her to switch to another activity.

The boss/employee relationship suffers from the same defect as the master/slave relationship. It is not fair, it is not an equal playing field, and it sets up an adversarial relationship with severely misaligned incentives. The job relationship requires a state certified ceremony at the start of the relationship and at the end. There could be a lot more flexibility in making and remaking economic decisions if the heavy-hand of the state were not attempting to micromanage every aspect of our economic lives. A bureaucratic economy is very slow to respond to change, and change is coming faster and faster.

In a commodity markets, people pay for finished goods. In a labor market people pay for promises of performance. Finished goods are much easier to price than promises of performance. A promise of performance comes with greater risk since it relies on the ability of the provider to predict the future, and her willingness to adapt to changing circumstances. So if a task could be performed by either a market for finished goods, or by a labor market, the finished goods market will always provide quicker and more accurate price discovery, and therefor will operate more efficiently. But the government wants everyone to have a job. Economic transactions with the least uncertainty promote a healthy economy. It is much easier to price the work someone has done than the work that they hope to do.

Jobs are not work. We need to be measuring our economic success by how much useful work is being done, and that often has no correlation, or even a negative correlation to how many jobs the system supports. The critical economic question is how much useful work is being done, and does the reward that people receive correlate well with the useful contributions they are making to society.

A free market without licenses and restrictions can provide better and faster price discovery for labor and commodity markets than bureaucratic systems. Licensing occupations, permits for construction, the income tax, the sales tax, public education, and many other government rackets cost the society much more in lost efficiency than the government takes in in revenue. Such policies are short sighted and destructive.

The irony is that if the authoritarians who control our society had been being honest and polite all along, they would be much richer than they are now, and they would not be threatened by social chaos caused by their rude, selfish, and counter productive behavior. The sooner they realize the error of their ways and renounce their coercive activities, the better their chances of maintaining some of their wealth in the coming economic and social crisis.

Even for the very rich: Freedom works. Slavery sucks.