This recent report in The Chicago Tribune is one of many like it from virtually every state as well as the Federal level:
“The Illinois Tollway this year will go full speed on a $12 billion construction program, touting it as a jobs generator that will put an estimated 120,000 people to work over 15 years. But while additional billions in increased tolls already are adding up, the job numbers don’t. A close look at analyses cited by the Illinois State Toll Highway Authority only accounts for about 82,500 jobs, and even that relies on ‘wildly optimistic and unfounded’ assumptions, one independent expert said.”
Forget about the corruption and fraud involve in this false promise. There is a more general point to learn. Policies designed to “create jobs” are going to destroy us! Even though we are being told about a “jobless recovery,” the government trying to make jobs and maintain jobs is actually working against us.
There was a time when, if you were a webdesigner with experience in how to make, modify, and maintain virtual “shopping cart” systems, you were in high demand and could make good money. You could work for Furniture.com or Flooz.com or Toys.com or Homegrocer.com. If you graduated from high school in, say, 1998, you would probably think that going to college to concentrated in a degree in the area of web design was a sure money maker. You would here of all these new companies starting up and of the money that was being diverted to the dotcom industry.
There was a time when, if you were a home builder, you could make a pretty large amount of money every year and banks were eager to lend you money to use to invest in such projects. You would pay them back when you sold the new homes.
In both of these situations, you were being deceived. In the case of the dotcom bubble, there was no need for your services because there was no need for the services of the enterprise that was hiring you. If you just happened to have those coding skills and the right computer knowledge, your temporary time rolling in money (if you were smart enough to get paid in cash and not rely on stock options) would have been an overall blessing. But you would have been making money from other people’s mistakes, not because you were really helping them.
Likewise, for the housing bubble, there was no real need for all those new homes. The profit margins were unsustainable. The demand for housing was not caused by people wanting to buy homes to live in who were willing to pay for them, but by people who were buying homes as “investments” or who were selling the homes by convincing people they could afford them and loaning them money on impossible terms.
In both cases, these bubbles were inflated by the Federal Reserve keeping interest rates lower than the market would have dictated.
This is the point. Those moments of easy money were delusions. The general population would have been better off if they had never happened. A few people got rich, but they simply got other people’s money on the basis of untrue assumptions (many without realizing what was happening). No value was really produced.
And that leads to another implication: We would all be better off if the crashes had fallen sooner!
If the dotcom bubble had only lasted three months, it might not even be remembered today. If the housing bubble had popped sooner, it wouldn’t have done as much damage. Not as much wealth would have been directed into it and thus not as much wealth would have been destroyed.
Which brings us to the conclusion: A wave of job losses this year might be better for us all than a delay in those losses. How many jobs are actually productive to meeting real needs rather than make-work assignments that depend on exploiting the public?
We need an opportunity to create businesses that meet real needs. Prices, which are the market signals about where to allocate resources, need to be detached from government manipulations. But the politicians can’t let go and we keep turning to them as if they know enough about the whole economy to create real jobs. The threat of wages and prices falling is treated as if it would be the end of the world. But that is the big lie. It is really the only way to get rid of the distortions and build a real economy in the private sector.
There is no political solution. Allowing the economy to create itself means allowing potential producers and consumers to feel pain to make them adapt. But voters in pain elect politicians to soothe them, to make false promises, and to save up the pain for a worse crisis in the future.