Pale Rider
10-29-2007, 12:48 AM
An interesting theory...
Creating Jobs Is Counterproductive
April 15, 2006
INTRODUCTION
Essentially every politician in America, at the local level, the state level, and the national level, promises to work to create new jobs in his or her jurisdiction. This seems to be regarded as the highest service a politician can render to constituents.
THE PARADOX
Did you know that creating jobs in a community increases the number of people in the community who are out of work?
THE MICRO-EXPLANATION
Suppose the equilibrium unemployment rate in a community and across the country is 5%. A company comes into the community, builds a factory, and starts hiring people. This reduces the local unemployment rate to, say, 3%. Then what happens? People from the outside move into the community to take jobs so that the unemployment rate is returned to its equilibrium value of 5%. But because the population of the community has grown, the number of unemployed people is now 5% of the larger population. When the equilibrium unemployment rate is restored, more people are out of work in the community than before.
Every time you create 100 new jobs in a community, you create 4 or 5 more unemployed people in the community.
THE MACRO-EXPLANATION
Thousands of new jobs have been created in the last several decades in every major city that has experienced population growth. If creating jobs in a city reduced unemployment in the city, then each of these cities should now have an unemployment rate that is less than zero, whatever that means. In spite of all of the growth, the unemployment rate in these cities is never far from the national average unemployment rate. So creating jobs in these cities has caused population growth but it has not caused any long-term reduction in the unemployment rate, so more individuals are out of work than before.
A FUNDAMENTAL TRUTH
As long as people can move freely around the country to take jobs wherever they wish, creating new jobs in a community will always, in the long run, increase the number of people in the community who are out of work. So we can see that creating jobs in a community is an appealing mechanism for promoting population growth of the community. Considering all of the environmental destruction, congestion, crowding and increased taxes that are caused by growth it is clear that creating jobs is a promotion of quantity rather than quality. And we need to remember that, contrary to what the promoters say, the growth never pays for itself.
Population growth increases the rate of consumption of fossil fuels and other non-renewable resources so that these resources won't be available for the use of future generations. This led the late David Brower to say words to the effect that,
"Promoting population growth is simply a sophisticated way of stealing from our children."
http://www.numbersusa.com/news?ID=6993
Creating Jobs Is Counterproductive
April 15, 2006
INTRODUCTION
Essentially every politician in America, at the local level, the state level, and the national level, promises to work to create new jobs in his or her jurisdiction. This seems to be regarded as the highest service a politician can render to constituents.
THE PARADOX
Did you know that creating jobs in a community increases the number of people in the community who are out of work?
THE MICRO-EXPLANATION
Suppose the equilibrium unemployment rate in a community and across the country is 5%. A company comes into the community, builds a factory, and starts hiring people. This reduces the local unemployment rate to, say, 3%. Then what happens? People from the outside move into the community to take jobs so that the unemployment rate is returned to its equilibrium value of 5%. But because the population of the community has grown, the number of unemployed people is now 5% of the larger population. When the equilibrium unemployment rate is restored, more people are out of work in the community than before.
Every time you create 100 new jobs in a community, you create 4 or 5 more unemployed people in the community.
THE MACRO-EXPLANATION
Thousands of new jobs have been created in the last several decades in every major city that has experienced population growth. If creating jobs in a city reduced unemployment in the city, then each of these cities should now have an unemployment rate that is less than zero, whatever that means. In spite of all of the growth, the unemployment rate in these cities is never far from the national average unemployment rate. So creating jobs in these cities has caused population growth but it has not caused any long-term reduction in the unemployment rate, so more individuals are out of work than before.
A FUNDAMENTAL TRUTH
As long as people can move freely around the country to take jobs wherever they wish, creating new jobs in a community will always, in the long run, increase the number of people in the community who are out of work. So we can see that creating jobs in a community is an appealing mechanism for promoting population growth of the community. Considering all of the environmental destruction, congestion, crowding and increased taxes that are caused by growth it is clear that creating jobs is a promotion of quantity rather than quality. And we need to remember that, contrary to what the promoters say, the growth never pays for itself.
Population growth increases the rate of consumption of fossil fuels and other non-renewable resources so that these resources won't be available for the use of future generations. This led the late David Brower to say words to the effect that,
"Promoting population growth is simply a sophisticated way of stealing from our children."
http://www.numbersusa.com/news?ID=6993