Saturday, April 19, 2014

Creating "Real" Jobs Remains A Problem

On January 26th of 2013 the following article was published on this site. Janet Yellen has again brought the issue of creating jobs front and center in regard to setting monetary policy. Sadly the people in Washington remain clueless in understanding how "real" jobs are created;

               Creating "Real" Jobs In a Mature Market

Creating jobs in a mature market should be required to pass a certain "taste" test. It should be pointed out that while America is creating jobs it is costing a huge amount. I'm referring to the massive government deficit which I feel is the fuel driving our still rather weak growth. Is it sustainable, and just as important are these the right kind of jobs and will they last? When a job that falls outside the description of government worker fails to make economic sense it becomes a form of working welfare with the taxpayer picking up the tab. We as a country and as a society have paid dearly for each unsustainable job created through government incentives and partnerships, because of the nature of many of these jobs we might even call them temporary.

A great weakness in government generated jobs is after a huge outlay to set up, or put them into action, they often do not create or contribute to production. If these jobs are not asked to continually justify their cost, and they often are not, they merely become another burdensome cost to society. The feeble efforts to think through and link a job to a sustainable economic base that creates a needed product or generates real value is a major flaw in most government aided ventures. Once started government sponsored ventures are often slow to react or adjust to economic reality, this can be seen in the Postal Service and its inability to drop Saturday delivery.

Two examples of government over involvement come to mind from here in the city in which I live, the first I will call Kitty Hawk. In Fort Wayne, Indiana years ago the city aggressively backed a bond and the loan to build a massive hanger at the airport for an air-freight company named Kitty Hawk. The city lured the company to the area because it promised a slew of new jobs where they located their hub, the company is now bankrupt and the jobs are gone. The taxpayers of Fort Wayne are now paying for an empty hanger that they are trying to lease at a "aggressively" low price. This hurts those private investors and property owners that lease building space as they are now forced to compete against the government to which they are forced to pay taxes.

The other mind boggling, and hard to defend venture is the city's pathetically under used money losing bus system, Fort Wayne Citilink. Everyday buses running their predetermined routes crisscross the landscape of the city at an operating cost of over $6 a vehicle mile averaging only 1.15 riders per mile traveled. It is more common to see a bus completely empty then carrying any passengers. Funded by Federal monies as well as local real-estate taxes, most people give little thought to this economic failure. One could site that the poor or those without transportation need this service, but the cost of this inefficient system is huge. Burning through fuel and polluting the air as they transport so very few riders, it is hard to argue that they make the city green or that the jobs are economically sustainable.

Another way that governments hurt local businesses is to invite a company like Amazon into their community by offering tax incentives to construct a distribution center, as a way to encourage investment, or get new jobs. This often puts a dagger into the hearts of existing businesses. Anything that gives one company an unfair advantage over another tends to lessen the ability of the other to remain competitive, this often results in the destruction of real jobs. Solyndra, the solar panel company that got a $535 million government-backed loan then went belly-up should be placed in the dictionary and used as a definition as to what happens when politicians and bureaucrats join with businessman to play with taxpayer money. 

As I complete this post I'm forced to recall a prior post about electric cars and Think Auto, another over-hyped government folly {see link below}

1 comment:

  1. Linking "real jobs" to to a 'sustainable economic base that creates a needed product or generates real value' is not a priority for politicians, bankers, or business leaders. If "we, the people" don't act to police the unnecessary, harmful and parasitic "jobs" in our society, we probably deserve the chaos and misery that exists in the modern world. If loan sharks, fraudsters and carnival barkers rule the financial system, workers in "real jobs" end up carrying the burden for more and more people who take their support for granted - whether that is a welfare handout or a billion dollar stock swindle. I think that the only place to tackle the runaway money train is in local credit unions (or state banks) where ordinary people can refuse to bankroll the filth and corruption of the wealthy. The local economy is also where innovative ideas and creative solutions to today's problems can be supported and encouraged. The mighty board rooms and government chambers are only interested in prolonging the status quot as long as possible.