Guest Post: What does it mean to “create jobs”?
This is a guest post by FogOfWar.
The phrase is used constantly by politicians and economists, but what does it actually mean to “create jobs”?
Here’s an example: I open a coffee shop and hire two people. So I’ve created three jobs (counting myself), right? Really? Let’s assume for the moment that I’m no more or less efficient at making and distributing coffee than my competitors and also that the total amount of coffee required in the world is constant. Then my coffee shop must be taking customers away from another coffee shop, and at a frictionless level, there are three coffee jobs lost for the three coffee jobs I just created.
Yet no politician, and indeed no economist quoted on TV or newspaper, will go into the distinction between gross job creation (3) and net job creation (0). For politicians this makes sense because they want the appearance of good results to be reelected (and often nothing more than that). For economists, or at least economists dealing with journalists, it may well be that it just gets too fuzzy to make a simple point, and a story without a simple and strong hook is killed by your editor.
Another point: I can think of a specific example of something that really did “destroy jobs”–it’s the invention of the EZ Pass. When I was growing up (yes, I’m ancient), there were dozens of people working at each of the toll collection booths on the highways, each counting out miserable hours collecting change from surly passengers and inhaling vast amounts of carbon monoxide. Now there are a handful at each on ramp and a row of EZ-Pass computers.
There’s no question in my mind that EZ-Pass destroyed jobs, but this seems like a good thing rather than a bad thing. Should we strive to keep really crappy jobs that are obsolete by technology just so that people have something awful to do with themselves all day, instead of doing something equally unproductive like watching TV all day, or maybe even spending time with their families and community? I think this is a variation of the “broken window fallacy” if I remember my intro economics correctly.
Lastly, I’ve assumed a closed system, but let’s relax that assumption. Here are two things that definitively will create jobs: (1) start manufacturing cell phones in the US; and (2) have 20% of the US consumers buy American when they have a choice. Both of these actions will move actual jobs from overseas to the US and thus will “create [US] jobs” in a very real sense of the word.
One other thing that must be true: I’m not the first person to think of this and suspect there are people who have dedicated more serious time and attention to the question than my casual observations. Thoughts?