The Truth About the Economy and Job Creation (L-O-N-G)

Just yesterday on CNBC there was a panel discussion of state governors and Obama, and one of the governors was saying (more like speechifying) about how the general public perception is that they’ve come to beg for money. Then he said that what they needed more than that was jobs—particularly jobs in the “green” industry.

This got me off the couch and in front of the computer.

First of all, there is no “economy” as an individual entity—rather, it’s a collective term to denote the billions of individual transactions that occur each and every day, of people being individually expedient in many different ways, and in their own best interests to satisfy wants, needs, or both.

When the number and frequency of these individual transactions goes down, the “economy” is down. The same is true in the reverse, and this is why it behooves us to do whatever’s necessary to keep the flow of these individual transactions fast and furious—by making credit loose and freely available, by marking down prices, by inventing scarcity, and by inventing exclusivity, among others.

In order to maintain frequent transactions, there must be some way to maintain the ABILITY to perform these transactions, through cash or credit maintenance. Ultimately, both rely on an income of some sort.

Now for the jobs: the horrible truth here is that a politician, no matter how high the rank, cannot create jobs. The magic just doesn’t exist. What he or she CAN do, however, is create the atmosphere in which job creation by employers is favorable, usually by one or more of the following:

• Making a favorable tax environment to help offset the risks involved

• Inventing a new clientele for the existing goods or services through trade policies

• Making subsidies available to encourage more investment in innovation and production

We had all three with Republican rule, but that’s about to come to an end, I fear, with Democrat rule and the incessant need to make supposedly better decisions for us than we can for ourselves—for that, they need our money. This means that the tax benefits would likely end, along with beneficial trade policies that kept many of us working up until this point. The theory is that the re-captured money from the first two would go to fund the third, but not just any old production—they want to target it to “green” production, regardless of demand for any of these products.

Normally, this would be the niche that venture capitalists would fill—putting private money to work toward innovation and production, and assuming the risks that went along with it. Not every venture pans out, and many end up as losing propositions, but now the government wants to be the venture capitalist, and guess who will bear the brunt of any failures? That’s right…Joe Taxpayer.

Any businessman can tell you the road to success is paved with other people’s failures.

Aren’t we bearing enough brunt from haphazard bailouts as it is? This would be a “bailout” of industries not asking for one, not needing one, and a wholesale financing of industries not ready for prime time (as it were). The demand simply isn’t there because of high price or lack of necessity, and to artificially encourage more of the same, mostly useless, industry to crop up because of mere idealism (and the hope of a magic bullet) is truly an immense waste of taxpayer dollars that would make the bailouts seem paltry by comparison. The want creation machine has been running for years on “green” to the point of burnout—with little to no demand, what good would it do to create FALSE demand with subsidies? You see how well it worked out with the farmers—in the end, we had to invent ways to get rid of excess crops (through ethanol, high fructose corn syrup in just about everything, global exports, etc.), and the same will happen to “green” things as well.

I can see it now: canopies out on the African plain made from excess solar panels and windmill blades the way slum shacks in Mexico and India are now made of cardboard, plywood, and tin sheets for roofs. Eventually, the excess will line our dumps just like everything else has. Once-expensive solar panels will become the next chic room divider or backyard fencing material on one of these TV decorator shows!

Side note about solar panels: Once upon a time, Jimmy Carter had solar panels installed on the White House to heat water for the kitchens. At the time, they only possessed enough power to offset half the hot water bill, but it was a start. Then Reagan came into office, and the price of oil and natural gas dropped very low, making the panels a novelty and reminder of times gone badly. After a re-roofing became necessary, Reagan had the panels taken down and put in storage. Eventually, the panels were unearthed, restored, and put back to use at Unity College. They didn’t end up in a dump, but they ended up in storage for a long time at taxpayer expense. The same type pf thing thing will happen again (to all houses, not just the White House) as Obama tries to fulfill this campaign promise.

Private investment is required to create a job, and it may take as much as $500k just to create ONE—first, there has to be a reason to hire additional people (through demand of some sort), then there has to be a place for them to work, which may require a larger facility, more machinery, furniture, stock, and let’s not forget training—seldom do people come off the street fully ready to work by Minute 1 after an interview. Training takes time and money as well, and that’s time and money that probably could’ve been put to better use with existing people, facilities, equipment, and stock.

What is really required to create a good-paying job is on the back of the individual worker, by making him or herself more productive and valuable to the employer…you know—INDISPENSIBLE. An employer can’t make us more productive or more indispensable, but he CAN provide an environment which the employees can make the most of their talents and skills to create value for the company and him or herself. The measure of the individual employee’s worth to the company is reflected in the paycheck. No politician can legislate one’s true worth, but politicians have managed to put a floor under the scale of worth, just like they put a floor under our education with the No Child Left Behind act. In other words, they catered to the lowest common denominator.

Individuals create their own jobs, and when they become NEARLY indispensable but not completely so, then employers are likely to do more to help them find comparable work elsewhere, through top recommendations and referrals. Unions and politicians aren’t needed for job security, only the worker and his/her skills and talents.

There’s nothing Obama or anyone else can do for you but you, contrary to what the Democrat credo is. I think Obama, and possibly everyone of his persuasion, is finally starting to come out of an idealistic coma and smell the coffee of reality. The soft-and-fuzzy is starting to give way to harsh, ugly, and crystal clear. I can see it on his face nowadays—can’t you?

Your self-created job security is what will allow you to function in the “economy”—if everyone got that message, we’d all make better strides toward secure employment, and being able to continue our individual transactions that make up our economy. Otherwise, we risk ending up as just another statistic.

Only you have the power to improve the economy. Obama can’t help you, and he never could, in spite of his campaign promises—I just wish he’d accept it, admit it publicly, and resolve to quit throwing money at the problem. This is what happens when you try to run the country armed with nothing more than a Utopian set of ideals, a constitutional law degree, and monetary connections.