Friday, August 12, 2011

No One Really Creates Jobs

There has been a lot of talk about jobs in the past two or three years, but I think it requires strong economic understanding and critical thinking to draw accurate conclusions.

Jobs are not created; they are purchased.  You don’t work for the boss; you work for the customer.  Conversely, jobs don’t go away, customers go away.  My experience is that many bosses don’t understand this important concept and fail to pass it along to the workers.  When a company is growing or downsizing, it is usually based on matching the number of jobs to the requests from the customers.  (Sometimes, though, they are just passing along their work to their customers, think self-service check-outs and those irritating phone menus).

When we work at jobs, making goods or deliver services, there must be a market for those goods and services.  People should say to themselves, ”Wow, this is better and cheaper than I could have done it for myself.  I’m glad I made that particular purchase.”  Everyone in the organization, whether it be a single proprietor or a global corporation, is working together to make the sale successful.  Then customers continue to buy and more customers arrive.  By buying more product or service, they essentially buy more jobs.  This is motivation for a company to improve customer satisfaction.

When a governor decides to “create green jobs” by mandating that a portion of electricity be generated by renewable sources (wind, solar), who purchases these jobs?  Since they are created, they must be additional to jobs that already exist and the additional wages for these additional jobs must come from somewhere.  Because there is no magic money tree, utility customers pay more.  These jobs are created not because there are voluntary customers; instead the customers are forced to buy these new jobs with money they would have spent on other things (i.e., other jobs).  Then we are paying more to support a wind farm that no one asked for, with a much bigger ecological footprint than conventional generation, that requires a back-up system anyway because it is only 35% efficient because the wind blows only part of the time and more at night, when less electricity is consumed.  It doesn’t improve customer satisfaction or attract new customers.  It merely creates jobs by displacing other jobs.

When we hear of jobs being created, we must be very wary.  GM, GE, General Mills, and Geico don’t create jobs.  When they have something we want, we, as customers, purchase those jobs voluntarily, not because of new laws or regulations, but because we believe the output of those jobs makes our lives better.

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