The phony rhetoric about job creation
Somewhere in my academic career I earned 12 semester hours in economics. The one thing that I remember for sure is that the market for salt is not affected by variations in price. So my knowledge of economics may be limited but I do know that most of the political rhetoric being generated about government job creation is phony.
Politicians exaggerate the capacity of government to solve problems. They suffer from the illness of “overpromise”. Even when the problem is clearly outside of the purview of government, they promise solutions, knowing that fickle voters will respond by voting for the candidate with the biggest promises.
“Overpromise” has become an epidemic on the issue of job creation. The public is expecting the government to solve the unemployment problem when there is very little the government can do. Economic decisions in this country are dominated by private enterprise so the issue is not going to be resolved by government but by the business community.
President Barack Obama has put forth a new $500 billion proposal to attack the problem. Over the past 18 months, the President has talked repeatedly about solving the jobs problem. The fact that he has been giving us more talk than action should tell us that he does not have jurisdiction of the problem.
Considering the size of the problem, his plan may help some folks but it will not change the course of the national economy.
All of the Republican presidential aspirants are also talking job creation as though they, if elected, could solve the problem. They are just as wrong as the President. Reducing taxes and abolishing regulations may help a little but neither action would hire many more people.
Thus far, the most vocal champions of job creation are Rick Perry of Texas and Mitt Romney of Massachusetts. Both of them are bragging about job creation in their respective states even though the jobs for which they are claiming credit were created by private industry rather than government programs.
Politicians in North Dakota are no different. We have seen a lot of bragging about North Dakota prosperity but little credit is given to the investment by oil companies or the infusion of millions for agriculture, FEMA, water projects, Medicare and Social Security by the federal government. The state did not hire drilling companies to develop the Bakken field. Private industry did that. Almost all of our present prosperity would have occurred even if North Dakota had no government.
Many economists feel that the jobs lost in the recent downturn will never come back. With many American companies outsourcing jobs to foreign countries where lower wages can be converted to greater profits, there is little reason to expect the outflow to stop or jobs to return.
Hardest hit by unemployment have been the folks at the bottom of the education ladder. An economic truth is that technology has been replacing people in the workforce for years. Technology is here to stay, meaning that the next generation needs to upgrade itself to qualify for jobs in the new economy.
Then there are the demands of corporate stockholders (representing my pension plan) to maximize profits. This reduces the options of management to incorporate costly social objectives into their financial plans. They are focused on making bigger profits by downsizing and not on creating extra jobs for the unemployed.
Government can do very little about the attractive lower wages in China, the utilization of technology or the demands of stockholders. The real dynamics of job creation are in the hands of the private sector. Neither the limited pump priming by President Obama nor Republican unfettering of the private sector will solve the unemployment problem. So let’s quit overpromising.
Omdahl is a UND professor emeritus in political science and a former lieutenant governor of North Dakota.
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