05.24b Jobs as a Stupid Goal of Government Policy. Something that probably needs a chapter in my Economic Regulation and Social Regulation book is the stupidity of job creation as a social goal. This is one of those things on which all economists are agreed, but nobody else understands. The conventional wisdom is that one of government's most important goals, whether at the local, state, or national levels, is to create jobs.

The first problem is figuring out what this means. Probably people mean exactly what they say: that the government should undertake some policy to increase the number of people at work, whether by reducing unemployment or by drawing people into the labor force. This wouldn't be hard to do. We could eliminate social security, so more old people would work, for instance, or reduce student aid, so fewer people would go to college instead of working. Immediately, one sees why increased jobs is not an attractive goal, though: why should it be good that more people have to work? Indeed, the ideal would be to get rid of all jobs. What is desirable is increased output, not increased work.

This may seem obvious, but it isn't. Some people want the government to provide jobs, for example. That is easy to do. We can pay people to show up and sit in an office doing nothing. But it won't increase national wealth-- their pay will come from higher taxes on other people. It would be better just to give them the salary and tell them not to bother showing up, if we want to make them richer.

What about reducing unemployment? Surely that is good. Well, no. We could achieve that by making it crime to be unemployed for more than two weeks, punishable by jail time. The result would be to drastically reduce unemployment, because, if use the conventional definitoin of unemployment as looking for a job without having one, people would either grab the first job they saw, or drop out of the labor force and retire or become students.

Even the natural job creation that occurs over time is often questionable. Is it a good thing that more young people have jobs now than in the past? I would rather have students studying than flipping burgers to make money for their Florida vacations. Is it good that more women are working? I would rather have them taking care of their children. Is it bad that people are retiring earlier, or that Europeans are taking more vacations? No-- in a richer society, that is a natural way to make use of greater wealth.

So what is at the origin of this feeling that job creation is good? Probably it is that if an economy is growing for other reasons, we see employers posting ads for new jobs, and so we associate new jobs with a healthy economy. Ordinarily, these new jobs are filled by people who have left old jobs, so there actually isn't any net job creation, but we don't focus on that.

Also, at the local level, it may well be that there are more new jobs created than old ones destroyed, because the population can grow. The result is higher demand for local real estate, and increased wealth for the landowners. This, naturally, is popular with them. Moreover, it tends to be popular with them even if the increased population results in crowded roads or the new people consume more in city services than they pay in taxes. ... [in full at 04.05.24b.htm]

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