Robert Reich: Spouting nonsense again

In August, the United States created no jobs at all. Zero.

This simply isn\’t true.

It\’s nonsense.

The US created no net jobs is true, but the US created no jobs is nonsense.

It is Mr. Dillow who has been pointing this out for years. All economies are creating and destroying jobs all the time. The rise in unemployment, or the fall in it, comes when the process of creation or destruction becomes dominant. And that balancing figure is a small part of the whole movement too.

I think I\’m right in saying that the UK economy creates/destroys some 3 million jobs a year, about 10% of all jobs. That number, from memory, might be a little on the low side. The US economy it\’s a little higher, about 15% I think. I\’ve seen one number of 3 million a month which strikes me as a little over the top.

Now, OK, you might think this is trivial but it isn\’t. If you go around saying that \”no jobs\” have been created then you can end up starting to think that anything that creates jobs is just fine. Any job at all.

But when you understand that unemployment is the difference between the destruction/creation rate the whole problem becomes much more subtle. Yes, creating more jobs on net might well be a good idea: but you really do want to make sure that you\’re not increasing the destruction rate by doing so. Or perhaps slowing the creation rate in some part of the economy you\’re not looking at. Or even you\’re just creating jobs for those who would find them anyway.

Take that latest jobs report that Rubin mentions. Mining employment rose. Just market forces you understand. Yet many say that we should beat unemployment by putting up windmills. Create jobs. So, those people who put up windmills: are they likely to be the inner city deadbeats? Or those who could already get a job in mining (the skills are not exactly the same but they\’re comparable)?

It all becomes more complicated in this real world, doesn\’t it?

As to this proposal:

And a wealth surtax of 2% should be applied to all wealth in excess of $7m.

Twat. Capital taxation is the worst of all forms of taxation if its growth you want to see. And he is saying that he\’d like to see some growth, isn\’t he?

5 thoughts on “Robert Reich: Spouting nonsense again”

  1. There is an argument for tax in the rich and giving more to the poor in the US. US corporations are sitting on piles of cash and doing nothing much with it. Also, when given $X, the poor spend a higher proportion of it than the rich, thus giving the economy more stimulus.

    That argument is not foolproof, but it’s not a bad argument.

    Tim adds: Well, not really. Corporations ! equal the rich.

  2. Two points: They say unemployment is not the problem, but long term unemployment is. I think this is very true indeed – if one is out of work for a month or so then working again it a) means you do not worry as much about the next break in employment b) you make provision for those times, not living to the max on the never-never c) unlikely to get out of date in skills. Long term unemployment can break a person or stop a person fixing themselves.

    IMHO one way to help the long term unemployed is to remove National Minimum Wages and relax employment laws so people can “take a gamble” on someone without ending up in a messy tribunal situation if they have to later let them go.

    Also the near monopoly in low cost housing and a dearth of decent school places by local authorities means moving to find work is difficult for those who are insecrure as it is and living precariously.

    Second point is that I am beginning to see more and more voices piping up about taxing wealth as opposed to income. It is obscene to think that one is taxed on income as it is, being a form of slavery, but to tax wealth? That is something out of the Seven Samurai.

  3. Destroying jobs is good. We should do more of it. Because it means that we are getting more efficient, inventing labour saving devices, using less inputs for the same or more output, etc.
    (With all due sympathy to the sedan chair porters and telephone exchange operators in Tim’s readership.)

  4. bloke: preach it, brother. But my God, try convincing the average guy in the street that this is the case. As I commented on another post, one of the biggest hurdles is in showing people that truisms are called that because they are, well, you know, true.

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