Jobs or Snow Jobs? – by Thomas Sowell

unemployment

President Obama keeps talking about the jobs his administration is “creating” but there are more people unemployed now than before he took office. How can there be more unemployment after so many jobs have been “created”?

Let’s go back to square one. What does it take to create a job? It takes wealth to pay someone who is hired, not to mention additional wealth to buy the material that person will use.

But government creates no wealth. Ignoring that plain and simple fact enables politicians to claim to be able to do all sorts of miraculous things that they cannot do in fact. Without creating wealth, how can they create jobs? By taking wealth from others, whether by taxation, selling bonds or imposing mandates.

However it is done, transferring wealth is not creating wealth. When government uses transferred wealth to hire people, it is essentially transferring jobs from the private sector, not adding to the net number of jobs in the economy.

If that was all that was involved, it would be a simple verbal fraud, with no gain of jobs and no net loss. In reality, many other things that politicians do reduce the number of jobs.

Politicians who mandate various benefits that employers must provide for workers gain politically by seeming to give people something for nothing. But making workers more expensive means that fewer are likely to be hired.

During an economic recovery, employers can respond to an increased demand for their companies’ products by hiring more workers— creating more jobs— or they can work their existing employees overtime. Since workers have to be paid time-and-a-half for overtime, it might seem as if it would always be cheaper to hire more workers. But that was before politicians began mandating more benefits per worker.

When you get more hours of work from the existing employees, you don’t need to pay for additional mandates, as you would have to when you get more hours of work by hiring new people. For many employers, that makes it cheaper to pay for overtime. The data show that overtime hours have been increasing in the economy while more people have been laid off.

There is another way of reducing the cost of government-imposed mandates.

That is by hiring temporary workers, to whom the mandates do not apply.

The number of temporary workers hired has increased for the fourth consecutive month, even though there are millions of unemployed people who could be hired for regular jobs, if it were not for the mandates that politicians have imposed.

Economists have long been saying that there is no free lunch, but politicians get elected by seeming to give free lunches, in one form or another. Yet there are no magic wands in Washington to make costs disappear, whether with workers or with medical care. We just pay in a different way, often a more costly way.

Nor can these costs all be simply dumped on “the rich,” because there are just not enough of them. Often people who are far from rich pay the biggest price in lost opportunities. A classic example is the minimum wage law.

Minimum wage laws appear to give low-income workers something for nothing— and appearances are what count in politics. Realities can be left to others, so long as appearances get votes.

People with low skills or little experience usually get paid low wages. Passing a minimum wage law does not make them any more valuable. At a higher wage, it can just make them expendable. Raising the minimum wage in the midst of a recession was guaranteed to increase unemployment among the young— and it has.

None of this is peculiar to the current administration. The Roosevelt administration created huge numbers of government jobs during the 1930s— and yet unemployment remained in double digits throughout FDR’s first two terms.

Constant government experiments with new bright ideas is another common feature of Obama’s “change” and FDR’s New Deal. The uncertainty that this unpredictable experimentation generates makes employers reluctant to hire. Destroying some jobs while creating other jobs does not get you very far, except politically. But politically is what matters to politicians, even if their policies needlessly prolong a recession or depression.

  • bushlikesdick12

    Bush gave $700 billion dollars worth of wealth to the bankers and of all people you would think they would know how to distribute wealth.

    But no, if they didn't give those bonuses to their executives then they will take their serivices elsewhere — what a shame, the greedy people who drove our banks into bankruptcy going elsewhere.

    The lesson here is the more wealth the wealthy obtian the more greedy they get.

  • bushlikesdick12

    This article obviously is designed to pursuade the people who are ignorant of economic trends in recessions.

  • davarino

    You obviously didnt read the article. What would you do, make it illegal to hire temporary workers, employers can only hire? Oh and make it illegal to lay anyone off and jack up the minimum wage, even if the market cant support it. I know, we should be just like France, where an employee has a job for life, regardless of performance. But that makes employers afraid to hire anyone in the fear of hiring a bad employee and not being able to get rid of them.

    The point of the article is that the market is best left alone to fix the economy not government. What is it Thomas trying to pursuade those who are ignorant of economic trends? That recessions happen? The government shouldnt give out freebies? That employees should continue to work for market wages as opposed to artificially inflated wages?

  • CowboyUp

    Yea, it was those bonuses, lol. Hussein's own goon approved them, btw.

    Unlike, say the bums hussein and the dp gave their $800 billion ineffective 'stimulus' to, the banks will pay the money back. In fact, congress is trying to figure out how to p*ss away the $240 billion the banks didn't need or take.

    The lesson here is nothing on earth is moregreedy than government.

  • bushlikesdick12

    You're going all over the place and telling me what the article is about is joke because the article itself really can't stick to one subject.

    here is one for you ~~However it is done, transferring wealth is not creating wealth.~~~

    basically, the old myth of trickle down economics.

    Let us be real honest here.

    I will agree with Sowell in his claim that it has a lot to do with redistribution of wealth.

    But that is the case no matter who is in office and what their agendas are.

    You don't think Republicans fight to distribute wealth to their voters?

    Look man! Democrats run this country right now and you should just stop whining till they get control back.

    Besides, I doubt you will turn down your social security check when the time comes so don't feel so deprived

  • bushlikesdick12

    So you agree that stimulus is a bipartisan issue?

    If you monitor the bills being passed in the Senate, you will see that the Republicans attach addendums to every bill the dems pass in congress for their own agendas. Go figure cowboy up

  • davorino

    So you believe in trickle up poverty then huh?

    I will take my social security check because I will have paid into it for 40+ years, therefore I deserve it. You once again you show that you dont know what you are talking about. I worked hard for my money, it was not distributed/given to me.

    Plus, you still have not shown me what it is that Thomas is deviously trying to convince me of.

  • thinker1

    even if some stocks went up, American workers are being fired….Chinese, mex, etc. people get paid.
    Of course there will be less and less people fired…until there is nobody to get rid of…
    Recesion just started. There will be a big boom next year.
    BTW – Harry Reid, you are mentally sick BESTard!!!!

  • The_Inquisitor

    Poor little boy! Are they picking on your Democrats again?

    You show 'em. Those Republicans did it too. Watch out; a chicken will roost on that lower lip.

    Grow up. This is about economics, not partisan politics.

  • beckNcall

    This so called jobs summit was a fraud. Nothing was done to promote small business at this so called jobs creation seminar, this was about paying off Andy Stern and the SEIU members. My stars people when are you going to stop with it's all Bush's fault and wake up to see this administration is RUSHING, RUSHING US TO BEING A MARXIST NATION! Who gives a rats rear who's fault it was or is….it's happening as we speak.
    I think the entire nation, doctors, hospitals, business' should tell them, even if they pass these outlandish bills, to go to hell in a hand basket.

  • babsst

    Yet another liberal who throws the “I doubt you will turn down your ss check when the comes so don't feel so deprived”. What you FORGET sir, is that people have had NO CHOICE to pay into SS for a zillion years so those who DO get social security, after paying into all those years, should get it. Not the millions who get a SSI check and never paid into it. So please, go spew your hate on another website like MSNBC who will just LOVE hearing from you.

  • waynelogue

    It seems to me that the name “bushlikesdick..” is a sad case of Freudian projection. In this case, on himself.

  • waynelogue

    So who's ignorant of economics in this case Mr. Dick? Your assertion that “transferring wealth is not creating wealth” is an example “trickle down economics” shows this pot is calling the kettle black.

    The observation of transferred wealth is not created wealth is economics 101, and economists of both left and right agree. As Dr. Sowell contends, transferring wealth is a belief system/practice of politicians who think they know economics, not economic truth. It has nothing to do with the Laffer Curve observed by Dr. Arthur Laffer. The Laffer Curve, which works every time it's tried, is derogatorily referred to as “trickle down economics” by socialists.

    If you had ever studied economics, you would know that JFK believed in the principle espoused by the Laffer Curve. In his 1963 speech on American economic development, he said “a rising tide raises all ships” as a metaphor for the principle described in the Laffer Curve.

    How about a practical example of the benefits produced by Dr. Laffer's work? When the United States dramatically reduced tax rates in the early 1980's, it spurred the longest peacetime economic expansion in our nation's history. At the same time, western European countries were bogged down with unemployment and stagnant job growth while they continued to hold hands singing “Kumbai Yah” around the campfire of tired Keynesian economics.

    Before you attempt to wax eloquent on issues of economics, try studying the subject first. FWIW, High school classes and the editorial comments of NYTimes don't count.

  • davarino

    I guess you got nothin. You really are a genious, you figured it all out havent ya?

    Actually your probably one of these schizoid lefties, mad at the world because you were banking on the commies taking over the world and then you were going to get your hand out. You probably didnt do anything to prepare for the future cause you were to busy smokin dubies down by the river and now you want all the rest of us to make up the difference for you.

    Either that or you are still young with a skull full of mush and couldnt find your ass with both hands. Well good luck with that my friend cause your utopia aint gunna happen, at least not in your life time.

  • CowboyUp

    What stimulus? What they passed and what they are talking of p*ssing away the unspent tarp money on isn't stimulating to the private sector. Neither are the tax increases coming this year, the dp health care takeover (go figure is right, I see how the parlamentary idiots in the GOP are playing around with that), or their carbon market scam (remember enron?).

    Tarp was a government bailout of government backed loans. Barney “rolled the dice,” as he himself put it, and crapped out at a politically opportune moment for the dp.