Jeff Neal for C.U.R.E. - Certain Unalienable Rights Endowment

Job Creation Fallacies

In Economics, Opinion on March 6, 2011 at 1:27 pm

Some months ago, Congressman Kucinich proposed encouraging early retirement to make room for newly hired employees who will cost less.  He said it would create one million jobs.  And not one of the brains on multiple news programs could find any of the dozens of fundamental flaws with that idea.

One of the commentators even said, “If the money comes from returned TARP funds, then it’s cost neutral, right?”  Are you kidding me?  Another said that it might sound like a good idea, but it would actually cost more to hire and train someone new than to keep the older person on the job.  Maybe that’s true, but it’s not relevant, is it?

So, euthanasia is next?  When we decide that Grandpa has taken someone else’s spot on ACME Inc’s payroll, we’re going ask him to ‘volunteer’ to retire.  What will stop us when we decide he’s eating someone else’s meal; we’ll ask him voluntarily to go on a ‘diet.’   And, when Grandma’s taking up someone else’s time on the mammogram; tell her to take a pill?

How does this (or any other government ‘stimulus’) idea “create” any thing new?  Does it reduce the amount of food we need to exist tomorrow?  Does it create a new task or product?  Does it increase the output of the economy?  Does it in any way ADD anything to anything?

And one of the Republicans’ counter-proposals that Mr. Obama seems to approve is a $5,000 tax credit for a new hire – is that a good idea?

When I ran a company, I never hired a new employee because I thought it was my responsibility to ‘create a job’, because I wanted that person to have a job, so that person could afford health care, so Obama could get more votes in his reelection campaign, or so John Boehner could be Speaker instead of Minority Leader.  I ONLY did so whenever I had something for him to do that was productive and valuable to me.

And I sure as hell didn’t fire one person to make room for another, no matter how old my CFO might have been, or even if the government was willing to ‘pay’ 10% of the new-hire’s salary – I would still be stuck with the other 90% for a gal who would stand around looking for something to do.

When we BUY something (hiring a new person is buying more labor) we buy it because we need it, not because a door-to-door salesman told us it was the best vacuum cleaner ever made and it is 10% off today, and today only.  And it’s even better than that old Hoover in the closet, too!

Would telling everyone they get a 10% rebate from the government encourage someone without the means to do so to buy a new Jaguar convertible?  Of course not.  Nor will $5,000 encourage any employer to hire someone he otherwise would not hire.  It affects economic behavior, if any, only on the margins, bridging the gap between what the employer and employee think is the fair wage.

Want new jobs?  Here’s the answer.  Repeal all laws that breach the Federal government’s constitutional limits on power, or short of that, leave the federal law books alone and take a five-year break from making any new laws.  Adjourn Congress, subject to national security emergency declaration by President Obama, so that businessmen can figure out how to be productive even when weighed down by the tens of thousands of pages of rules and regulations that purport to control and improve economic behavior.  In five years, America will have out-innovated even the most energetic regulator, and for a generation or so not even Congressman Waxman will be able to catch-up to turn off the wealth creation machine.

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