Think about it - Can the Government Create Jobs?

"Americans Without Work" NY Times December 22, 2009

Let's pay attention to what this article says about jobs and then let's look at the assumptions they stand on.

-care about unemployment
-job creation a priority
-inding people work
-government boost to job growth
-coordinated stimulus plan
-job-creation programs enacted
-spur small business lending

Amazingly, not one mention of private enterprise...where jobs come from. It is as if the only source of jobs is the government. That business itself will just sit on its heels and wait for Washington to stimulate it into creating jobs.

To understand why these assumptions are so destructive, let's define the concept of "job."

A sustainable job is created by providing a service or product that adds value to someone's life. If my company can add value to your life at a price that is lower than the value I add, I increase your well being. If you then perform your service for another, you add value to their lives. Soon, we are all adding value to each other's life which is measured in an expanding economy with lower unemployment, higher GNP and better health and lives for us all.

To add value to your life isn't easy. I have to first, understand what you need or want. Then I have to create an option for you that you can't do for yourself. I have appeal to you with something that is better, faster or cheaper. Then I have to communicate this is a way that you can hear my message and provide a way to distribute the product or service and finally to support its use.

Ok, this ain't easy, but it is how businesses succeed. This process creates a sustainable job because no outside stimulus is needed to keep it viable. It is viable because it is smart and delivers value and grows and changes with your needs.

If you are an entrepreneur you have to do all of this process yourself. If you are a fortune 500 company, a team of people need to work together to deliver value to the customer. If you are an employee, you need to deliver value to the company...your compensation needs to be less than the value you deliver.

If a business fails to deliver value, it will eventually fail (unless it is subsidized by the government) as it should.

This article ignores this basic concept...that jobs are about delivering value. If they don't they aren't sustainable. The government can pass all the jobs legislation it wants, but unless creative people are figuring out ways to make your life better, the job will eventually go away.

So, the real question is: "What environment supports creative people to find ways to deliver value to others?"

If the government taxes you to create "jobs" you have less money to spend on your own welfare. If you spend money on something that improves the quality of your life, you have contributed to a sustainable job. If that money is used by a government to "create a job" there is no feedback mechanism to assure that that job contributes to someone's better life. The money is gone, and it didn't improve my life or your life.

In short, it isn't sustainable.

Every dollar spent on a job creation program takes a job from a sustainable value adding position to a one that is a mysterious "job" as left undefined by this article.

This article talks about the horrific rates of unemployment among inner city youth. This is partially the result of rising minimum wage rates that are set higher than the value a new employee can add to the company.

So, if a sustainable job adds value to our lives, then how do we support more of these wonderful things?

As we move more and more jobs from competing for your dollar to ones that are setup by the government, we will lower productivity and slowly reduce the tax base in our country.

Here is a thought experiment:

Imagine that tomorrow a new law was passed. It eliminated all capital gains taxes, dividend taxes, corporate taxes, employer mandates, hiring compliance, worker's comp AND unemployment payments.

What do you think would happen to the stock market with that surprise out of the blue? What would happen to business growth? What wo

in reference to: Editorial - Americans Without Work - NYTimes.com (view on Google Sidewiki)