Saturday, August 06, 2005

Creating Jobs and Creating Wealth

First, the government's job is neither to create jobs nor to create wealth. It is not qualified to do either; jobs and wealth are not created through force. Force only serves to transfer wealth from one individual to another, not create new wealth. When government institutes tariffs on foreign goods in order to "save jobs" in similar U.S. industries, it is merely taking from the people who would have paid less for the foreign products and requiring them to pay more to the U.S. companies for the same product. The money that would have been saved by allowing purchase of foreign goods goes to the U.S. company, at the expense of the U.S. people and other U.S. companies. No wealth or jobs are created or saved, only transferred from one company to another, or one person to another.

Secondly, jobs are not a resource. The language that we use to describe jobs is deceiving. When we say someone receives a "job offer," we are saying that they will purchase that person's labor. The job is the labor you will have to give up, or your cost, and the compensation you will receive in the form of salary or other benefits is your benefit. You don't go to work for the sole purpose of going to work, but to earn the things you need to sustain your life and to make it better. If you only considered the utilization of your labor as the benefit, you would volunteer. When we say "fewer jobs were created this quarter," we are saying that employers did not demand additional hours/workers to be productive.

Finally, Arnold Kling at EconLog explains why there is no need to worry about job scarcity, in his Aug. 5 post, "Jobs Are Not Scarce Resources." Human wants are unlimited and people will continue to demand better and better products and services to make their lives more enjoyable. Although we may be able to maintain the same productivity with fewer jobs, when people are driven by the chance of earning a profit and can find ways of continually making other people's lives better through invention of new products or providing quality services, they will continue to be employed.

Human needs and wants create jobs. Human invention creates wealth.

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