Jobs, Jobs, Jobs – How can we create enough jobs?
As the US struggles with its sluggish economy, it’s worth remembering that we’re part of a global system—one in which over 200 million people are looking for work, and another 200-400 million would eagerly take one if offered. Not that there isn’t work to do; often people hold down two or three positions trying to make ends meet. But what they do often just doesn’t pay enough. In spite of the modest improvement in last month’s employment report, there aren’t nearly enough jobs out there.
On one level, can’t government do more? After all, there’s certainly work to be done: repairing infrastructure, improving education, managing natural resources. The case can always be made for putting people to work by having them improve public goods on the public weal.
But that’s not sustainable. Public employment has to be paid for, and it can only be paid for by increasing the burdens on the private sector. Over the long haul around the world, the private sector accounts for some 90% of all the jobs created. Government is important, but it’s more like the rudder on the ship of state, steering society where it needs to go. It’s small, but crucial—guiding the ship of state away from rocks and ahead. You don’t make a ship more secure by increasing the size of the rudder. Growth has to be balanced.
The only way to add good, sustainable employment at good wages is to get the incentives right, to encourage people to provide goods and services that people want to buy without subsidies or handouts, letting firms fail when they’re not able to do this–and allowing them to grow when they are.
Simple, but not easy.
Douglas R. Tengdin, CFA
Chief Investment Officer
Follow me on Twitter @tengdin