Saturday, January 12, 2013

Musings on job creation and wealth creation

I'd like to revisit the nebulous ideas surrounding job creation.  I've recently addressed the misplaced uproar about the record levels of profit.   If it's really true that the annual deficit is only a fraction of the future obligations that are being taken on each year (just google "unfunded liabilities"), you better hope to God that corporations start making money hand over fist.  You better pray for the days of the robber baron, because otherwise it's going to be Germany before Hitler, and all these Occupy Wall Streeters are going to beg for fascism to save them (all property will be claimed as public property under eminent domain and/or martial law, and a perpetual state of emergency will begin).

Many people, educated by the evening news and Bill Maher and sometimes also in college by the assertions of Keynesian acolytes, are certain that job creation in this day and age just doesn't happen unless THE ALMIGHTY GOVERNMENT creates a job out of thin air.  "Here, Bill, you takes this here hammer and pound on the ground and listen for hollow sounds.  Here's your badge as an official geomancer.  Here's your union card, and if anyone tells you your job isn't necessary, you just remember to vote in November for those who have your back."  Why, job creation is as simple as the ability to raise taxes in order to pay people to do whatever.  Employment is employment.

To understand jobs, let's go back to pioneer days in America.  Not quite as basic as "caveman" days, but maybe easier to imagine.  Let's say you're in a pioneer family that is living rather remotely.  There is no town that is closer than a day's journey, say.  Which means that you, as a family, are reliant on yourselves for goods and services.  If there is something you "need" (this becomes a more basic question than what is usually meant now) that you can't make for yourselves, you will need to ride out and trade with someone.  Let's stipulate for the time being that none of your capital is in money at this point.  You have weapons and tools and property and livestock and furs from trapping.  You will have to trade some of this for something you need.  Until you can accumulate valuable things you grow, trap, or make, you will not have any capital for trade.  No currency, you see.

Now, let's say that a relatively close neighbor has some outpost, a small sort of private general store.  He has accumulated more traps than he can really use, and he loans some out with the stipulation that he gets so many furs a month until the trap is paid for.  This may be a good proposition if your family doesn't have a trap of its own.

Now, let's say that this outpostman is willing to actually pay (a share of collected furs perhaps) some men to set and check on traps for him along with maybe some weapons.  The traps (the investment capital) are his.  They are the capital that are required to accumulate wealth in the form of furs.

Later on, as land gets cleared, land-owners may be willing to pay farmhands a wage to be able to produce more from their farm.  Typically, the farm-owner would provide the major tools: plow, horse, pitchforks, etc.  A farmhand was not automatically part-owner of the farm (unless that was the consensual contract with the farmer) just because the farmer agreed to trade some part of his accumulated wealth (food, board, livestock, etc.) for the farmhand's services.  And what if the farmer isn't willing to give the farmhand "what he's worth"?  Well, the farmer's family is just going to have to do more of the work themselves.  But a farm can typically produce more (up to a point) with more help.  

Jobs are created when the person with the capital (the farm, the plow, the stable, etc.) has enough wealth to pay the help in advance of the actual added production value the help will result in.  The sudden presence of a farmhand doesn't automatically result in the earth opening up and spewing out vegetables.

Jobs are also created in communities when a person specializes in work that is of use to a lot of people (farmhand is one example so far.)  A trapper may trade furs to a farmer (to keep his family warm) for vegetables (assuming the trapper's family gets tired of roasted opossum and needs some variety).  Maybe a hunter will trade meat for a certain kind of fur for which he doesn't trap.

All of this, you might say, is so old-fashioned that it doesn't matter any more.  The world has become too fundamentally different, you say.

How is it different?  Ore sits in the earth and doesn't turn into something useful without the right tools and labor.  Untended fields get overgrown with weeds.  Neither houses, nor the tools that build them, make themselves.  And human productivity doesn't improve without competitive appropriation of useful tools and methods.  Because money seems arbitrary to you (the green paper is worth such and such because someone decides it is), perhaps you think (or "feel" might be a better word) that the real value of goods and services doesn't matter any more, because no value is real.

Watch the film 2016: Obama's America and pay special attention to the segment on Kenya.  Obama Sr.'s compatriots talk about how horribly unfair British colonialism was. Why, the British made things with the natural resources of Kenya and then sold the products back to Kenyans!!!  Then President Obama's brother is later seen in the film arguing that it's hard to say colonialism was necessarily bad when the standard of living was so much better than it became after the indigenous central planners took over the country.  So, why is it so much harder for native Kenyans to benefit from their own natural resources than when they were buying the end products back from British companies?  They got rid of all that foreign investment capital and now the only thing that is causing production is labor and tools from the natives -- a system in which socialism is discouraging the rewards for increased labor and and discouraging the capital accumulation for advanced production.  The progressives have impoverished the the nation with trickle-up poverty.

In the (former) land of opportunity (America), while "robber barons" were being vilified for providing jobs that for less than "ideal" wages, foreigners were climbing over each other for the opportunity to be abused by these conditions.  These terrible abuses were the bottom rung of the ladder of opportunity, and immigrants were crazy for the chance to climb.   And climb they did.

Even now, consider how leftwingers typically argue that illegal immigrants are not impacting the economy because "they aren't taking jobs that anybody wants anyway."  It depends on how many people are being paid under the table.  If I am poor and need help moving to a cheaper apartment, according to these same leftwingers, I am mistreating illegal immigrants (or citizens, for that matter) by offering them $4 per hour.  I should either not employ them at all or pay them more.  But if it is simply not worth it to me to pay minimum wage, I'll do all the work myself even if it is hard on my back.  But typically no one would employ most "undocumented workers" at minimum wage for the same reason that employment of teenagers and recent college grads is doing so poorly.  Business owners won't hire someone for a wage that isn't in accord with what the level of service they want for that wage.  And they can't offer a wage that would be in accord; it's illegal.  So they simply don't employ as many people as they like.  (Or they expect employees to voluntarily work more hours than they are being paid for -- especially if we are talking about "at will" employment, something that people in certain unionized trades can't imagine.)

So new grads, instead of being able to pay for 70% of their rent are doing nothing on their parents' couches, unable to pay for anything, and decreasing the "purchasing power" of their parents.  But leftwingers are all for letting in illegals while at the same time making illegal the very opportunities for which they are coming here and shaming those who pay illegals under the table.  Notice that there is no law enforcement checking for papers at that crowd of unemployed poor people at Home Depot.  Just follow these people to their jobs and you can bust some horrible capitalist for evading minimum wage.  But you'll also be directly hurting the undocumented workers and losing votes from the Hispanic demographic.  So this is one form of capitalism leftwingers are eager to outlaw and just as eager to ignore.  So leftwingers, in this sense, totally disbelieve in the minimum wage, even though they are absolutely devoted to the minimum wage.

But with all these young people out of work, for whom there is no job directly related to their Cultural Studies degree and who can't convince someone to hire them when that company could hire someone equally (or more) experienced who isn't expecting "degree-level" wages... They are confronted by the real value of their services held up against the demand for those services.  Real job creation is when people are out there for whom your services or goods have enough value for you to make a living.  This all ultimately comes from being able to turn natural resources into (more) valuable commodities.  Even services ultimately only become valuable as labor is able to help add value to resources (e.g. dirt) by turning them into something more useful (e.g. corn).

There is a leftwing idea that things that are nonessential are illusory, like The Great Capitalist Machine is the reason we have ludicrous "needs" for things beyond food and shelter and clothing.  Without a government-run centrally planned society in which all these essentials that grow out of the ground automatically are distributed "equally" (think all the publicly available wealth in the once Soviet Union), all these wonderful things.   There is another (set of) leftwing idea(s) that the nonessentials are exactly what matters:  poetry and art and liberal studies are as worthwhile as engineering, and the government needs to subsidize your degree even if it's one that won't pay for itself.

It is a great trick for government to involve itself "to help," subsidize and regulate it into ruin, and claim the ruin as evidence that the enterprise was impossible without government involvement.  It is a wonderful gimmick for accumulating and centralizing political power, and people eat that idea up like kids go after Snickers bars.  Because people don't realize that our pioneers were the great entrepreneurs, and this country was built by people turning wilderness into country.  Government exists solely to protect the liberty that allows this to happen.

All the money or capital or value that government has (i.e. Obama's secret stash) is taken from the real value created by sovereign citizens.  Without that value created by citizens producing things by applying capital to labor and tools in order to make more capital, money itself is meaningless.  The government does not create the actual wealth that money represents.  This is why runaway inflation is possible to begin with.  Government can't create any real wealth by decree.  And ultimately, the jobs that a government can "create" out of thin air is only as meaningful as the real value of the products and services that result.  And if private investment wasn't attracted to "create" those jobs to begin with, what real value is bound to be produced by them?

Government, fundamentally and essentially, is parasitic on the privately motivated efforts of people.  This is why it is equal parts absurd and offensive that Obama says things like "you didn't build that" as though the use of Big Daddy Government's roads and bridges now obligates us all to pay back with interest.  It's as though we are all farmhands on  one big government farm.  There is only one Big Wealthy Capitalist to envy in this scheme and he is Big Daddy Government.  But don't worry.  This Big Wealthy Corporation (that truly controls the wealth and the power) supposedly has our best interests at heart unlike ruthless corporations.

What we have to understand is that Big Daddy Government didn't build anything.  Government was a middle-man that We The People employed.

DO YOU GET THAT?  Government is not the employer.  The people are government's employer, and the government is not The People.  They are paid representatives, paid employees of the people, that in turn took some of our money and paid some of us citizens to build roads and bridges that make our commerce easier to manage.  Government did not GIVE us anything.  We gave it all to ourselves, sometimes through government means and sometimes through private means.  The government simply managed this gift to ourselves (sometimes quite badly).  Of the People, By the People, For the People.

Take notes, Mr. President, because you don't get it.  We are the creators of jobs because there would be no government unless we first gave all you government people jobs.  WE employ YOU to protect our freedoms, not to force us into long-term obligations (through your atrocious mismanagement) for which we must pay you tribute for the rest of our lives.

But D.C. politicians will always gravitate to this thinking while there are so many among us that are willing to believe something so fundamentally in contradiction to common sense, in contradiction to the actual workings of real world economics, to believe ideas that only work in vague abstractions instead of reality.

No comments:

Post a Comment