July 22, 2012
Job Creation and Destruction
I am always saddened and more than a bit disappointed when I hear politicians promise job creation. In the first place, we are Americans and shouldn't be looking to the likes of President Obama or Governor Daniels for a paycheck. We elected them for weightier matters. Moreover, governments don't create jobs, businesses do. Job creation dynamics are hard to explain and often as not seem to confuse more people than almost any economic issue. Here's why it is so hard to talk about.
We Americans rightfully believe that we are a nation of innovators. From the shop floor of a tool and die operation, to a glass high rise in Silicon Valley, to a steamy warehouse or retail website we are a nation that revels in new ideas and new ways of doing things.
Naturally we celebrate the heroes of innovation, both technical and managerial: McCormick, Whitney, Rockefeller, Carnegie, Bell, Edison, Ford, Packard, Walton, Gates and Jobs. These are names in history books, libraries and companies of today. And while we raise up these industrial entrepreneurs and scientists for remaking our world, it is a plain fact that these men are among the biggest job killers in the history of the world.
The innovations in science, managerial organization and supply chains wrought by these famous entrepreneurs also closed many a blacksmith shop, canal boat and wagon master. These folks ended the romantic Pony Express route, put out of business the whale oil industry, the buggy whip maker, the typing pool, all those folks assembling the Walkman and all of Montgomery Ward. My profession has a technical name for this phenomenon: economic growth.
For workers with redundant skills in factories and businesses that can no longer compete, innovation can be frightening, and job losses are painful and disruptive. It takes courage to retool in middle age for a new occupation, but it is a common sort of courage that everyone needs. For at least two centuries, probably longer, the notion that a worker could enter adulthood, learn a skill and then prosper without significant learning has been folly. Businesses and workers that are not innovating, learning and adapting will painfully fail. If our economy is to grow it must always be so. This is why I feel so frustrated by politicians who promise job growth. It isn't just that they cannot deliver, but that the processes of actually creating new jobs means that old, less efficient ones must also go away. These are not choices for governments.
Our leaders have two policy choices to follow. One condemns the process of creating and destroying jobs, excoriates those who enable job creation and destruction and promises to slow the process. The other choice embraces technology and innovation, accepts the tough facts of growth and works to make workers and businesses more capable of retooling and learning. The first path offers only a dead end, stagnation and economic stasis. The second path is that of growth, prosperity and opportunity.
About the Author
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