Capitalism's dirty little secret
Job "creation" doesn't work the way you think it does
Another monthly jobs report comes out this Friday. The last one wasn't so hot, and the economy seems to be slowing down in general. Many Americans are probably anxious to see how many jobs were created in April.
But let's stop and think about that language for a second. How is a job created, exactly? And who's doing the creating? You'd think we could just conjure jobs out of the unformed ether of our will, given the way people talk about this stuff.
Conservatives like to say that maybe if we cut taxes on business owners it would create jobs, or cut or reform welfare spending so as not to encourage idleness. The underlying assumption is that owners and workers already have the resources to "create" jobs. They just need the government to get out of their way, or to quit offering them handouts as an alternative to virtuous industry.
This misses a rather obvious point: Job creation isn't a two-way affair between employers and employees. (Often the same person where the self-employed are concerned.) There are also buyers involved. They provide demand: the raw material that makes it possible for entrepreneurs to turn an abstract idea into a new business, and for the jobs that produce that business' goods and services to actually exist, so people can have them. Economies — whether we mean small local affairs, big national economies, or gargantuan international ones — all depend on this feedback loop between consumers and businesses to create jobs.
That feedback loop isn't some evenly distributed abstraction, the same at all times and places. It's contingent on geography, the health of different economic sectors, and the make-up and sophistication of the economy. Inequality also creates problems, because more of the money created by the economy flows to a small, elite population concentrated in vibrant economic hubs. Large swaths of the national population are left without much purchasing power, creating economic deserts where it's hard for new businesses or forms of employment to take root.
The idea of the "job creating" worker or business owner makes a certain limited sense if you're thinking of an agrarian society where people grow their own food, make their own clothes, and build their own homes. In those circumstances, your own will and ability to work really does have a big influence on how much you produce, and thus your standard of living. You create your own job(s).
A civilizational model where we all do one thing — a single job, which gives us money to buy everything else we need from other people doing other single jobs — is relatively new, historically speaking. Just since 1900, farmers plunged from 40 percent of the population to almost nothing, and the rural share of the population went from 60 percent to just over 20 percent.
These days, we don't need access to land to provide for ourselves. We need access to the economic feedback loop. But here's the thing: We aren't in control of that access. We can't conjure that access ourselves. Whether the economic ecology provides us work is driven by impersonal structural forces. But it's also driven by our collective policy choices as a nation: how and how much we tax, how and how much we spend, our monetary policy, our trade policy, and so on.
My colleague James Poulos recently worried that a "culture of access" was overtaking a "culture of ownership" in this country, with bad consequences for our society's moral character and social ethos. But in modern capitalism, access is everything. More than anything, access to the cooperative economic ecology keeps us all employed. We all depend on each other to keep the economy humming and to provide a robust safety net, so we'll have the money to pay everyone else for the needs of life. Thinking through how we can encourage a sense of place and community in our market interactions is certainly worthwhile. But the economic changes are driving the cultural changes here. And we aren't going to go back to being self-reliant agrarian yeomen, each responsible for our own little plot of husbandry.
What determines your success is whether the people who make up the market you're entering — be it a small town, statewide industry, a national market, or an international one — have the demand and purchasing power to fuel the job you want to work or the business you want to start.
So when you look at something like Baltimore's massive lack of jobs — in the neighborhood with the most unrest last week, 52 percent of people age 16 to 64 don't have jobs, compared to just 32 percent in that age range nationally — what you're seeing is a failure of ecological management. How could we have created more jobs and improved access to the economy? Well, the government could have stepped in with public investment and infrastructure spending to boost employment. It didn't. The government could have expanded the scope and generosity of the social safety net, to give people more purchasing power and pump demand back into the local economy. It didn't.
At the national level, we've had austerity and cuts in public investment. We've gotten a monetary policy that's maximized the streams of income flowing to the rich, while letting jobs for the poor and the working class atrophy, rendering full employment an ever-more rare event. Recoveries from recessions have become weaker and slower, with the heaviest costs falling on the poorest Americans. Seven years out from the 2008 collapse, there are still more people looking for work than there are jobs in nearly every sector.
When you see a lower class that seems to have more and more trouble finding work, and seems to be wasting away in unproductive idleness, you're definitely seeing a moral failure. But not on their part. You're seeing a moral failure by the elite — the policymakers, politicians, thinkers, and commentators whose job it is to manage the economic ecology, and keep it healthy and vibrant and accessible to all.
Over the last few decades, they've made a hash of that task.