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Waiting for Jobs

Thursday, September 15, 2011

Everyone is waiting for the mysterious engine of the private economy to reignite. Why can’t government make that happen?

Samuel Beckett wrote an absurdist drama called Waiting for Godot, in which the characters wait for someone named Godot to appear, but he never does. The French mystic Simone Weil wrote a book called Waiting for God. Alas, God never clearly appeared either, and she died young.

In the current economic recovery, our political leaders are in a similar position—waiting for jobs to appear so that unemployment falls. Somehow, they can’t bring it about.

President Obama has announced his American Jobs Act. He calls on Congress to pass it “right away.” But business leaders have already told him that it will have little or no effect on job creation. Economic conditions must first improve, they say, before they will hire. That is, the recession must be over before it can be over. So they, too, are waiting for Godot. Everyone is waiting for the mysterious engine of the private economy to reignite.

Why can’t government make that happen? What is the problem here?

In polls, voters rate the president or Congress on their ‘handling’ of the economy as if they controlled it, but they do not.

Is it partisan gridlock? With Republicans controlling the House and Democrats the Senate and White House, the government can pursue no consistent policy. It can agree only to spend more while taxing less, which everyone agrees is unsustainable. But even in the thirties, when Democrats controlled the entire government, it took more than a decade to overcome the Great Depression. It is still unclear which policies, if any, worked.  The final cure was World War II.

Is it the debt crisis? New York Times columnist Paul Krugman thinks that Obama’s first stimulus failed because it was too small. Now the president has proposed another one. With much more spending, however, financiers around the world might fear a default and refuse to fund our deficits. Even in earlier recessions, when the debt and deficits were less pressing, the government had little more power to raise employment than it does today.

Is it the economists? They cannot agree on whether more or less stimulus is needed. They draw conflicting lessons from history. Some argue that President Reagan’s tax cuts triggered the boom of the 1980s. But then Bill Clinton’s tax increase apparently helped unleash the still greater boom of the 1990s. The economy cannot just be manipulated by the book. It is a living thing that responds to public moods. To forecast it, one must be able to read mass psychology, something well beyond the scope of economics. Those who can do that are not scientists but soothsayers.

A basic fact about jobs is that the government is not in control. The president proposes various incentives in an effort to motivate employers to hire, but he cannot make them do so.

In every recession, Americans rediscover the shocking truth that jobs are not guaranteed in this country. There may not be enough employment for everybody. The free market generates more and better jobs than any other system. Historically, we have often had more jobs than available workers, which is one reason immigration to the United States has always been so robust. Yet there is still no guarantee of a job for everyone. In the end, capitalists are in business to make money, not to hire their fellow citizens.

The fear of chronic joblessness, of “panics” that destroy jobs, was the chief reason socialism was popular in many countries for 200 years. If the government ran the economy, socialists said, jobs could simply be created for the jobless and unemployment would disappear. Washington did briefly create jobs in the 1930s and again in the 1970s, when economic conditions were worse than they are now. But the positions were costly and wasteful, so they did not last. Employment policy went back to relying on the free market.

A basic fact about jobs is that the government is not in control. The president proposes various incentives in an effort to motivate employers to hire, but he cannot make them do so. He can propose needed spending on infrastructure, but that can provide only a few of the millions of jobs needed for a growing labor force. Private employers will hire only when doing so is in their interest, not the president’s. Obama must wait upon them, as must Congress.

Business leaders have already told Obama that his American Jobs Act will have little or no effect on job creation.

The irony is that the public holds politicians responsible for unemployment even though there is little they can do about it. In polls, voters rate the president or Congress on their “handling” of the economy as if they controlled it, but they do not. The deficit issue is radically different. There, at least, the politicians know what they have to do to solve the problem—cut spending, raise taxes, or some combination. On jobs, there is far more agreement about goals, but radically less knowledge about how to achieve them.

The great truth about capitalism is that it makes a country rich, but not secure. It forces ordinary people to constantly make their own best deal with the marketplace, both as workers and consumers. At times of crisis and change like now, that burden is heavy. Willingness to bear it, however, is ultimately what makes America rich and strong. Nations that spare their people that burden become poorer and weaker as a result. That was the fate of socialism. America wedded the free economy centuries ago, and that marriage endures. We are still riding that tiger today, and, despite current trials, we are not about to get off.

Lawrence M. Mead is professor of politics and public policy at New York University and a visiting scholar at the American Enterprise Institute. He recently published Expanding Work Programs for Poor Men and From Prophecy to Charity: How to Help the Poor. He will discuss Expanding Work Programs at AEI on September 26.

FURTHER READING: John H. Makin writes “The Limits of Monetary and Fiscal Policy,” Kevin A. Hassett discusses “The Long Gray Unemployment Line” and “Stimulus Optimists vs. Economic Reality,”and  Aparna Mathur writes “Missing Jobs and How We Can Find Them.”

Image by Darren Wamboldt | Bergman Group

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