Wednesday, October 19, 2016

The Jobs Market

Imagine what it would be like if someone living a century and a half or so ago was suddenly brought in to today’s society.  Science fiction and fantasy (usually science-fantasy, as two-way time travel violates some law or other of motion) have dealt with this theme for years, from Edward Bellamy’s socialist classic Looking Backward to the latest crop of stories in . . . whatever print science fiction magazine(s) survive(s).
For those of you who have never seen one: here it is.
Just for the sake of argument we’ll assume that our time traveler adapts readily to the changed technological and social conditions.  Automobiles don’t bother him; they’re just carriages without horses, just like locomotives without rails.  He thinks electric lights pretty convenient, but nothing to get all that excited about, just fire in a little bulb using electricity instead of kerosene or illuminating gas.  The telephone?  Heard about it.  A talking telegraph, isn’t it?  Television?  A phenakistoscope with sound.  (And, yes, “phenakistoscope” is a real word and thing.  Look it up.)
One thing baffles him, however.  That’s all the references to “the Jobs Market” and “job creation.”
“You mean,” he asks, “that in this world of the future you people actually buy and sell jobs, sort of a hiring fair where the unemployed seek out employers?  That you produce jobs for sale, like, er, the British Army sells officer commissions, and then market them?”
“Well, ah, no,” you answer.  “The government sets policies and creates money that cause private employers to hire more people.  That’s what we mean by job creation and the Jobs Market.  If the government favors business and creates a lot of money, the Jobs Market is good and lots of jobs are created.”
"That's just . . . crazy!"
Our visitor from the past just stares at us.  Finally he says, “Have you or the government escaped from a madhouse?  The government starts a giant boondoggle creating positions that nobody needs just to slip some layabout some graft?  Who really pays for all of this nonsense?”
“The government creates the money,” you repeat.  “Nobody pays for it.”
“Who makes good on the debt the government issued to back the money it created?” our visitor insists.  “Somebody has to make good on that promise.  You can’t create money out of thin air.  You have to produce something, and ‘money’ is what you use to trade what you produce for what others produce.  Government doesn’t produce anything.”
“Ah,” you say.  “I understand.  The rich pay more taxes to redeem the debt.”
Our visitor thinks for a moment.  “Where do the rich get the money to pay their taxes?”
“Oh, from the government,” you explain, wondering just how dumb some people can be.
“I thought that was the money the government created to hire more workers,” our visitor asks.
You shake your head at such obtuseness.  Clearly this primitive from the past doesn’t understand modern economics or finance.
“No,” you say, starting to get a little irritated.  “Banks create money out of the money the government creates out of nothing.  This multiplies throughout the economy, creating jobs, and . . .”
A trusty Walch twelve-shooter (also available in a ten-shot version)
At this point you can say no more, because our visitor from the past pulled out his trusty .36 caliber Walch twelve-shot Navy revolver and plugged you between the eyes for spouting such obvious drivel.
Because no one really “creates jobs.”  The presumed need to do so comes out of the (Fabian) socialist demand that people must derive all income from a wage system job employing their labor, necessitating “full employment” in order to generate sufficient demand to keep the economy going.  This means the government must subsidize jobs to make hiring people economically feasible, and then raise wages and increase benefits . . . which makes laying them off necessary to remain profitable . . . which results in demands that the government prevent employers from laying off people because they need the income to survive . . . which means the government prints more money so employers can pay unnecessary workers, raising wages and benefits without a corresponding increase in production, which makes it necessary to get rid of workers . . . you see how it ends up.
The fact is that “real” jobs only come into being in response to genuine demand, which comes from people being productive. This is consistent with Say’s Law of Markets, which is based on the first principle of economics: “Consumption is the sole end and purpose of all production.” (Adam Smith, The Wealth of Nations)
The only way to consume something is to have produced something first, either to consume directly, or to trade for what others produce. You can only produce, however, by means of your labor or capital . . . and the socialists (and Keynes) believe only labor is productive, so capital ownership is irrelevant; all profits flowing to capital are stolen from workers and consumers. (Take that, natural right of private property!)
"The law should favor ownership."
In an economy in which technology is advancing and displacing labor, then, what is needed is not “job creation,” but “ownership creation.” Thus (as Pope Leo XIII put it) “The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.” (Rerum Novarum, § 46.)
And this can be done without redefining private property or redistribution by financing new capital formation with “future savings” (self-liquidating capital, i.e., that pays for itself with its own future profits) extended in ways that create new owners, and collateralized with insurance instead of existing wealth through a proposal called “Capital Homesteading” developed by the Center for Economic and Social Justice (CESJ).
And without using a six, ten, or twelve shooter to make the case.

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