What Creates Real Jobs And What Destroys Them

by | Apr 29, 2015

Jobs come from government getting out of the way and letting employers produce goods and services.

Target Businessman

I took a camera to Times Square this week and asked people, “What creates jobs?” Most had no answer.

One said, “stimulus!” What? Government creates jobs? No!

I suppose it’s natural that people think government creates jobs because politicians always say that.

“We’ve now created more than 10 million,” said President Obama. But that just meant that he took office at the start of the recession, and finally job creation resumed.

He didn’t cause that. In fact, his taxes and complex regulation slowed job creation.

His 2012 presidential election rival, Mitt Romney, was a little more free-market-oriented, but he sounded like Obama when he talked about jobs. He had “a plan” to add 12 million. Don’t assume his plan was just to get government out of the way of the private sector — Romney said it’s a bad idea to cut government spending during a recession.

FDR’s New Deal was the dawn of belief that jobs flow from government. FDR didn’t seem to care whether jobs people did were productive or sustainable. He just wanted something done about the “armies” of unemployed. If they weren’t given jobs, they might become a real army and revolt.

Now that government has lots of power, people look to it to create jobs. Communist countries had five-year plans. They didn’t work.

That’s because jobs come from government getting out of the way and letting employers produce goods.

Every new layer of regulations sounds nice — protecting the environment, providing more health care, forbidding discrimination against disabled people — but most rules do more harm than good.

Humans have needs and desires. Entrepreneurs see those needs as opportunity. They hire people not out of generosity or because government told them to — but because it’s profitable to employ people if they produce valuable goods.

If it’s not profitable, that means those people would be better employed doing something else. The prices customers are willing to pay and the wages workers accept are the best indication of which jobs can be done profitably and therefore ought to be done.

But politicians don’t trust business owners to make those decisions. Some also resent it if entrepreneurs succeed without kissing the politicians’ ring.

President Obama famously said, “If you’ve got a business, you didn’t build that. Somebody else made that happen.”

I’d think Hillary Clinton would have learned from the outcry that followed, but no — she then said, “Don’t let anybody tell you that it’s corporations and businesses that create jobs! That old theory, trickle-down economics, has been tried. That has failed.”

But it hasn’t failed. Free markets lifted a billion people out of poverty during Hillary’s career. She just won’t acknowledge it. Lawyer-politicians aren’t comfortable with creative destruction they don’t control. They prefer central planning.

That’s why Hillary also said, “I voted to raise the minimum wage. And guess what? Millions of jobs were created.”

This, too, is absurd. Politicians act as if they can wave a magic wand and grant everyone more money. But minimum wage laws don’t create jobs. They just make lower-paying jobs illegal. Some of those jobs go away. That’s basic economics.

The effect on the economy is small because 95 percent of American workers earn more than the minimum. But the more employers are forced to pay, the fewer people they’ll hire. McDonald’s responded to recent demands for higher wages by making plans to replace cashiers with automated services. Once more, political “solutions” create new problems.

People need jobs, and millions find dignity in work, but not from jobs that others are forced to provide. People want to be genuinely useful. They don’t just want to go through the motions.

More and more, Americans want jobs that have meaning and “purpose,” says John Havens, author of “Hacking Happiness.” “Purpose” usually means creating actual wealth.

Governments talk about five-year plans and false guarantees of stability, but truly futuristic thinking happens when governments leave people free to explore, innovate and profit. If the politicians don’t screw that up, that process will create jobs we haven’t even imagined yet.

John Stossel is author of No They Can't! Why Government Fails — But Individuals Succeed. For other Creators Syndicate writers and cartoonists, visit www.creators.com.

The views expressed above represent those of the author and do not necessarily represent the views of the editors and publishers of Capitalism Magazine. Capitalism Magazine sometimes publishes articles we disagree with because we think the article provides information, or a contrasting point of view, that may be of value to our readers.

3 Comments

  1. ….and part of that process is to allow businesses to fail. To the extent someone is successful economically, they get to “vote” with their dollars every day; either by buying goods and services, or creating goods and services. The creation comes first before anything can be bought. So, there is a natural feedback loop in the free market – to the extent that one is successful economically, one gets to partake to that extent in the free market economy. People who make bad decisions, whether they be bad investment decisions, bad business decisions, or bad consumer decisions, are saddled with losses to that extent and have less “say” in the free market as a result of their diminished wealth. This does not necessarily mean that only the rich get a say – they are relatively few. The vast, productive middle class has the biggest say because of their relative wealth and sheer numbers. They have a say by the fact of what they choose to purchase on a day to day basis, but more importantly, in the products and services they produce (note to the collectivists: the vast middle class does not act as a unit, but as individuals – so it is millions of individuals making economic decisions that result in the success of the businesses they choose to purchase from and those businesses they choose to develop). Hence, people and companies who make bad decisions need to be allowed to fail so that our limited resources are not misallocated any further (that is, no government subsidies which are stolen from the productive and successful). Keeping unsuccessful companies afloat only gives them the resources successful people would have used to expand their businesses; businesses that the vast majority has freely chosen to support. Nevertheless, to fail at something doesn’t mean to lose – you are free to pick yourself up, learn from your mistakes, and perhaps go into a different line of business if you choose; and hence, earn your “votes” again in the free market. This is how a free market works. You should not be handed other people’s money to do so. You’re free to make your own decisions, but not to evade the consequences – good or bad. Economically, it is a feedback loop based on the economic facts of reality. This is freedom – this is individual rights; and the concept of individual rights is morality applied to society. It should be emphasized that we do not live in a free market economy; we live in a mixed economy – part freedom, part government controls. In a mixed economy, it is possible to have “successful” individuals and companies due to their pull with the government. This is what has to stop as it is both an infringement of individual rights and harmful to the economy. We also live in a welfare state, where vast amounts of wealth are transferred from successful economic participants to the unsuccessful. This, too, has to be phased out as it is just as harmful to the economy – harming both the productive people it steals from and those it is supposed to help by allowing them to live off others rather than making the effort to learn the skills to be successful. For those truly in need, a relative few, charity is the only way to help them in a country that respects the rights of all its citizens. It is the only MORAL way to help them. Charity organizations acknowledge that when they ask you for a contribution, your wealth is rightfully yours; so, they ask, they don’t steal through taxation. It is the only way to have a civil society.

  2. Well put!

  3. Real jobs are created by human action directed toward satisfying human needs and human desires, without the use of force. Real jobs are destroyed by crime, meaning by the use of force. The greatest, the most destructive, crime is that which occurs under cover of the guise of law & gvt. and politician. That’s crime by criminal plan & criminal regime and crooks. It’s not law & gvt. and politician.

    Law and criminal plan are created by the process of legislation. Law is legislation that respects and enforces individual rights. Criminal plan is legislation that violates individual rights. Enforcement of law is gvt. Enforcement of criminal plan is crime and it is not gvt. Makers of laws, executive enforcers of laws, and their cops, and interpreters of laws are politicians, cops and judges. Makers of criminal plans, enforcers of criminal plans, and their cops, and interpreters of criminal plans who don’t strike them down are all a bunch of crooks who must be disposed of as such.

    The gvt. in DC must dispose of the criminal regime and the criminal plans in its midst, by law. The interpreters must back the gvt., 100% when and if called upon, if they are to be judges and not crooks. The results will be individual rights and laissez-faire capitalism, unlimited job creation and no job destruction, as per free allocation and re-allocation of resources. Mike Kevitt

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