What About Jobs?

Column 2017-2 (1/30/17)                                 

     During the 2016 campaign candidates talked much about
jobs.  After a politician speaks the first question to ask is, What
is the truth?  This is at least doubly true when politicians talks
about jobs.  There is something about jobs that causes
politicians, and others, to slip into a fantasy world that defies
reality.

     Donald Trump proclaimed that he would be the greatest
jobs president ever.  Was he talking about snow jobs?  The jury
is still out on that.  He didn't set the bar very high.  I don't
recall the last president who was great at creating real jobs. 
Anyone with access to money, his own or someone else's, can
easily and quickly create make work jobs.

     Before continuing we need to consider a simple question,
What is a real job?  Businesses don't hire employees for the
pleasure of writing pay checks.  Hiring is worth while only when
the employee produces more value than what he costs.  That cost
includes taxes, insurance, fringe benefits and all other expenses
resulting from the hiring.

     It is often impossible to determine exactly how much
value each employee contributes to production.  The total value
all employees contribute can be calculated.  For a business to be
profitable and survive total employee cost must be less than the
total value created by the employees.

     If the business pays some employees more than they
produce, it must pay others less.  Employees who are paid
substantially less than what they produce are likely to find
greener pastures elsewhere.  For any business, losing its most
productive employees is a serious problem.  Thus, businesses
have plenty of incentive to pay employees in accordance with
their value to the business.

      When minimum wage laws would force an employer to
pay more than the worker is worth to the business, the business
can't afford to hire the worker.  Thus, the least productive
workers have no jobs and no income.  For them the minimum
and maximum wage is zero.

     An honest calculation of the impact of minimum wage
laws requires including in the calculation those with no wages
because of the laws.  Of course, we can never be certain exactly
how many jobs are lost to minimum wage laws.  This leaves
plenty of room for advocates of minimum wage laws to lie.

     By trampling on freedom in the marketplace businesses
can find other options when the employees don't produce enough
to pay their costs.  Businesses ask government to protect them
from competition.

     The sugar industry is a prime example.  Thanks to
government protection of the sugar industry you pay twice as
much for sugar compared to sugar prices in most other countries. 
Among other things, government protection of the sugar industry
has pushed hard candy makers out of the US.

     If protection isn't enough, businesses plead for outright
subsidies to cover their losses.  Either way the inefficient,
wasteful production goes on.  The taxpayers and customers are
forced to pay for the losses.  Under our crony capitalism,
government interference with competition causes vast amounts of
waste that drag down our standard of living.  Various studies
find that without the government caused waste, our incomes
would be twice or more what they are.

     Should it come as a surprise that the younger generation
considers capitalism to be a dirty word?   Crony capitalism is
the only capitalism they have ever seen.  Free choice in the
marketplace is what matters.  Provide that and willing investors
will provide all the capital we need to have a vigorous,
prosperous economy.

     Presidents don't create productive jobs.  They protect
wasteful inefficient jobs.  The heart of Trump's job plan appears
to be the protection of inefficient jobs.  The most good a
president can do is to get government out of the way.  Then free
people working together will create productive jobs that
efficiently make the things people want to buy.

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Copyright 2017
Albert D. McCallum