Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Democrats Jobs’ Guarantee is a Terrible Idea

“For every complex problem, there is an answer that is clear, simple, and wrong.” – H.L. Mencken

The Democratic leadership is committing the party to a horrendous policy that will fail to address the nation’s problems, waste resources and tax money, and potentially trap many Americans in dead-end jobs.

The policy is the Federal Jobs Guarantee, and the damage it might do is vast. Like all bad policies, the jobs guarantee offers a simple and easy to understand solution for a complex set of problems.

The idea is that if private enterprise cannot provide enough “good jobs” for Americans, the federal government should provide them. A blind and desperate Democratic leadership has latched onto the guarantee as an antidote for Trumpism.

The first jobs-guarantee legislation has already been introduced in Congress by U.S. Senator Cory Booker (D-New Jersey); a reputed presidential candidate, Vox reported. Booker’s Federal Guarantee Jobs Development Act would have Uncle Sam pay local governments to hire people at $15 an hour. Hired workers would receive health insurance and sick leave.

The Jobs Guarantee will do nothing to Help America

The jobs guarantee is being pushed as a solution to three terrible and interconnected problems; income inequality, stagnant economic growth, and technological unemployment. The guarantee will do nothing to address those problems, and will potentially make them worse.

The thinking behind the guarantee is that increasing the number of “jobs” will alleviate income inequality. Present data casts serious doubt upon that argument; the United States had a very low official unemployment rate of 4.1% in March 2018, the U.S. Bureau of Labor Statistics reported. That rate is the lowest it has been in years and it has been falling. In March 2017, the unemployment rate was 4.7%.

America has plenty of jobs; the problem is that many of those jobs simply do pay enough. Job growth is increasing but salaries are not. Wages for the average American grew by just .2% between 2016 and 2017 the Economic Policy Institute reported.

Incomes for the wealthiest 5% of Americans grew by 1.5% during the same year, the Institute noted. This trend is making income inequality worse; wages for low-income men fell between 2016 and 2017.

Technology shows why a Jobs Guarantee will not grow the economy

The biggest cause of income inequality is stagnant economic growth. The economy is simply not creating enough new businesses, which create jobs and wealth. The rate of business startups was 8.1% in 2016, or nearly 7% less than the 15% reported in 1980, which was a terrible year economically, The New York Times noted.

This is bad because new businesses accounted for almost all new job creation in the US in 2015, Fundera’s Alfonso Serrano pointed out. The younger a company is the jobs it creates, a 2011 U.S. Census Bureau study found.

The effects of income inequality and stagnation are magnified by technology. The number of Americans employed on oil drilling rigs fell by 75% between 2015 and 2017 because of automation, Futurism writer, Scott Santens revealed. There around 700 Americans working on 195 oil and gas rigs in 2015, and 177.4 working on 192 rigs in 2017.

The number of workers fell; but the amount of drilling stayed about the same because of the use of robots called iron roughnecks which do the work, Santens wrote. What happened on drilling rigs is being repeated in industries ranging from autos to retail.

Manufacturing has been the hardest hit; around 4.76 million factory jobs were lost to automation between 2000 and 2010, a study by Ball State University found. This explains why US factory output increased by around 250% between 1980 and 2016 even while the number of manufacturing jobs fell by around 50% according to a chart created by The Financial Times.

America faces a future with fewer jobs, less money, less economic activity, and more income inequality. The “jobs guarantee” will do nothing to fix that situation because it ignores the problems, and might make things worse.

The Jobs Guarantee would make things worse

There are several ways in which the jobs guarantee would make this situation worse.

The first would be taking money and resources away from more beneficial government functions such as education. A jobs guarantee would cost more than $500 billion a year the Center on Budget and Policy Priorities forecast. That money will have to come from somewhere.

There would be a strong incentive for Congress to take money from areas of the budget like defense, education, social programs, and research and development; many of which are already criminally underfunded, and spend it on “jobs.” After all the people in the government “jobs” would vote. Those most hurt by this would be the truly poor, who unable to get the jobs or work would have fewer government benefits.

A greater problem would be to discourage social and regional mobility, individual initiative and self-improvement. Many young people would say; “why should I go to college or trade school and study, when I can just go down and get a no-brain government job that pays $15 an hour.” People would have no incentive to move away from decaying rural and industrial areas and no incentive to get an education or start a business.

A Jobs Guarantee Might Hurt Economic Growth

Job growth might decrease because private businesses unable to offer the $15 wage would have a strong incentive to automate or offshore to fill open positions. Class, regional, and racial divisions might heat up as groups compete for the government jobs.

The “jobs” themselves might become a drain on economic growth by diverting workers from productive private businesses to government make-work projects. Taxes might be increased to pay for “jobs” that contribute little or nothing to the economy.

Something, Booker does not mention is what jobs local governments would create. Thanks to technology modern offices, construction projects, and infrastructure would not be able to create the vast numbers of jobs Booker wants. To make matters worse, many of those seeking the guarantee jobs would be the uneducated, substance abusers, the old, the sick, the mentally-ill, lazy, and often those incapable of performing most work.

The government would end up paying large numbers of people to do little or nothing. Positions created would include needless security-guard, mailroom, receptionist, labor, or janitorial positions.

Exclusive footage of jobs-guarantee employees at work in a government office.

Agencies would end up paying people $15 an hour to paint rocks, wash vehicles by hand, rake leaves, pick-up litter, or sit at a desk and play League of Legends on the government computer. Many agencies might create up separate needless departments just to keep the guarantee employees from interfering with the actual work.

A related problem would be that competent government employees would get sick and tired of babysitting the guarantee workers and simply quit. The government would become more expensive, less effective, and far more wasteful.

A likely side effect of the guarantee would be the creation of a large class of uneducated people with little or no initiative or independence, that are completely dependent on the government. Many individuals would end up stuck in dead-end guarantee jobs just to get health insurance.

The Jobs Guarantee Road to Serfdom

It would be fairly easy to turn such people into a modern-class of serfs; completely dependent on government and easily exploited by bureaucrats and politicians. To compound the nightmare, authorities would be a position to force any poor or unemployed person into that serf class.

After all the authorities would be doing those people a favor by giving them a “job.” Ungrateful wretches that refused to go along would be criminals and a drain on society.

The unemployed might get a choice of taking a guarantee “job” mowing the county commissioner’s lawn or go to jail. The chain gangs of the early 20th Century would be revived in a gentler but equally oppressive fashion.

This is eerily reminiscent of the dystopia envisioned by Kurt Vonnegut Jr. in his underappreciated first novel Player Piano. In that book, Vonnegut imagined a future America in which machines did all the work; the engineers who built the machines made most of the money, and everybody else was forced into pointless menial labor on government make-work projects.

That sounds like the America Senator Booker wants to create. Life is imitating art in a very frightening way. Perhaps Hulu should cancel The Handmaid’s Tale and produce a Player Piano series instead.

The Jobs Guarantee is More Probable than you think

The frightening thing is that a jobs guarantee is very popular in some influential circles.

Five U.S. Senators named as probable presidential candidates; Kirsten Gillibrand (D-New York), Bernie Sanders (I-VT), Jeff Merkley (D-Oregon), Liz Warren (D-Massachusetts), and Kamala Harris (D-California), have endorsed the guarantee. Editorials praising the notion have popped up in influential journals like The New York Times and several big think tanks have put out guarantee proposals.

Politicians and journalists love the jobs guarantee because it is simple and easy to explain to average people. Jobs are easy to understand, and not hard to sell to the voters and readers like welfare is. The slogan it “it’s not welfare it’s a job” would be simple, easy to understand, and popular.

It is also magical thinking at its worst, simply wave the magic wand called “jobs” and solve America’s problems. People will be able to pretend that problems like technological unemployment, income inequality, and economic stagnation do not exist. Nobody needs to worry about the poor anymore because the government has a “job” for them – whether they want it or not.

Yes, a jobs guarantee is absurd but it is no more absurd than the border wall that put a man in the White House. Worst of all, this horrendous notion is likely to dominate political debate and distract us from solutions that might work such as basic income, increased Social Security, improved education, social credit, more investments in research and development, single-payer healthcare, and social credit schemes.

If we want a free America that’s worth living in, we must say no to the Federal Jobs Guarantee now. It is a horrible policy with the potential to do incredible damage.