One of the reasons for the popularity of political rhetoric is
that everybody can be right, in terms of their own rhetoric, no
matter how much the rhetoric of one side contradicts the rhetoric
of the other side.
President Obama constantly repeats how many millions of jobs
have been created during his administration, while his critics
constantly repeat how many millions of jobs have been lost during
his administration. How can both of them be right — or, at least,
how can they both get away with what they are saying?
There are jobs and there are net jobs. This is true not only
today but has been true in years past.
Back during the 1980s, when there were huge losses of jobs in
the steel industry, the government restricted the importation of
foreign steel. It has been estimated that this saved 5,000 jobs in
the American steel industry.
But of course restriction of competition from lower-priced
imported steel made steel more expensive to American producers of
products containing steel. Therefore the price of these products
rose, making them less in demand at these higher prices, causing
losses of sales at home and in the world market.
The bottom line is that, while 5,000 jobs were saved in the
American steel industry, 26,000 jobs were lost in American
industries that produced products made of steel. On net balance,
the country lost jobs by restricting the importation of steel.
None of this was peculiar to the steel industry. Restrictions on
the importation of sugar are estimated to have cost three times as
many jobs in the confection industry as they saved in the sugar
industry. The artificially high price of sugar in the United States
led some American producers of confections to relocate to Mexico
and Canada, where the price of sugar is lower.
There is no free lunch in the job market, any more than there is
anywhere else. The government can always create particular jobs or
save particular jobs, but that does not mean that it is a net
creation of jobs or a net saving of jobs.
The government can create a million jobs tomorrow, just by
hiring that many people. But where does the government get the
money to pay those people? From the private economy — which loses
the money that the government gains.
With less money in the private sector, the loss of jobs there
can easily exceed the million jobs created in the government or in
industries subsidized by the government. The Obama administration’s
creation of “green jobs” has turned out to cost far more money per
job than the cost of creating a job in the private sector.
In addition to reducing jobs in the private sector by taking
money out of the private sector to pay for government-subsidized
jobs, the Obama administration has made businesses reluctant to
hire because of the huge uncertainties it has created for
businesses as regards the cost of adding employees. With thousands
of regulations still being written to implement ObamaCare, no one
knows how much this will add to the cost of hiring new
employees.
In the face of this economic uncertainty, even businesses that
have an increased demand for their products can meet that demand by
working their existing employees overtime, instead of adding new
employees. Many employers hire temporary workers, who are not
legally entitled to benefits such as health insurance, and who will
therefore not be affected by the cost of ObamaCare.
When President Obama boasts of the number of jobs created during
his administration, the numbers he cites may be correct, but he
doesn’t count the other jobs that were lost during his
administration. His critics cite the latter. Both can claim to be
right because they are talking about different things.
What has been the net effect? During this administration, the
proportion of the working age population that has a job has fallen
to the lowest level in decades. The official unemployment rate does
not count the millions of people who have simply given up looking
for a job.
If everybody gave up looking for a job, the official
unemployment rate would fall to zero. But that would hardly mean
that the problem was solved or that the “stimulus” worked. Creating
particular jobs does not mean a net increase in jobs.
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