Does anyone else realize that creating jobs is not the same as stimulating the economy?
The mediawaves are full of all of this nonsense about how the economy has shed this many jobs and this many people are unemployed and we need to create jobs.
Now, if we take a breath for a moment, we can talk about how silly this all is.
For example, the automobile industry created millions of jobs, many of them right here in Ohio. This industry created these jobs, in effect, by a system that invented jobs for job’s sake even when there was no work that really needed done. Arguably, hundreds of thousands, perhaps even millions, of the jobs in the automobile industry were not real, but a construct of politics and labor contracts. The inevitable result of this façade is exactly the collapse we see in the automobile industry now that the money has run out.
There are jobs that stimulate the economy, but those jobs have a very specific kind of look. Economy stimulating jobs are ones that adapt to the conditions of the times and produce an output that is greater than the input, a product called synergy. For example, computer-programming jobs that create software that allows other people to complete their jobs more efficiently are economy-stimulating jobs. First, these jobs provide income for the programmers. Second, they provide profits for the company providing the jobs. Third, they provide increased profits for the companies using the software.
On the other hand, other jobs do not really stimulate the economy at all. Highway construction jobs created with borrowed money eventually cause negative synergy. First, while the workers get paid, they do not get paid to do something people will want them to continue to do–highway construction is a finite demand. Second, highways do not, themselves, make anyone any profit. In fact, they continue to consume money after the workers finish them. Third, the money used to pay the workers who built the highways must eventually be paid back with interest. The result is that, at some point in the future, the borrowed money highway construction jobs will cost far more that they did when they were created.
The answer to the current economic problem, at least as far as jobs are concerned, is for everyone–individuals, the private sector, public companies, and the government–to invest in the kinds of jobs that create synergy and not anti-synergy.
This answer is not just some kind of theory. There are real industries and sectors that, with proper investment, could create both jobs and stimulus. Investment in the alternative energy industry could create that kind of stimulus. Investment in alternative automobile manufacturers could create that kind of stimulus. Investment in pretty much any kind of science or technology industry could create that kind of stimulus.
And, such stimulus will not only help those industries create jobs and synergy, but will also overflow into other areas. Stimulating science and technology cannot help but stimulate education, which increases the demand for teachers and schools. Stimulating those industries cannot help but stimulate the industries that supply science and technology, including manufacturing. Stimulating synergistic industries cannot help but stimulate the government because, as the effect of the stimulus grows, the amount of revenue going to the government also grows.
Imagine this scenario: the government–they’re procuring the money anyway–invests in a company that produces solar panels. That company hires scientists to help make more efficient solar panels, engineers to produce better-designed solar panels, and workers to build these solar panels.
More efficient, better-designed solar panels are cheaper, which means that people buy more of them. More solar panels means less consumption of fossil fuels, which drives the cost of those fuels down, thereby making energy expenditures lower. With the extra money, people are able to buy even more solar panels, synergistically perpetuating the cycle.
In the middle of all of this, the government collects revenue on the income of the solar panel jobs and on the sale of every panel, thereby making back its initial investment with interest.
This scenario does not event take into account the increased demand created for raw materials, means of delivery, sales people, and the ever expanding ripple effect such an investment would have.
So, why don’t we hear about this kind of idea in the media or from the politicians? Mostly because this kind of idea does not cause the superficial warm, fuzzy feeling of having done something right now. The current stimulus plan, if it is executed as it is designed, will make it appear that the economy has been stimulated because it will help create jobs in the near term while ignoring the long-term costs. Meanwhile, truly stimulating plans take years for their effects to be felt, but their effects last for decades.
If we are going to create jobs to stimulate the economy, then we should have the fortitude to create the kinds of jobs that are going to make our economy better for decades not years. Unfortunately, that is not going to happen. It would be better to cut everyone a $3,106 check than to do what we are going to do.