Presidents don't create jobs, people do.
You can't in one instant argue productivity increases and global wage arbitrage destroys jobs and then say it's all the President's fault a few minutes later without sounding just a little childish and partisan.
I never said presidents create jobs. In fact I have gone on record as saying the job losses are not Bush's fault and furthermore jobs are going to suck under Kerry as well. I can point to probably a dozen posts on the Motley FOOL where I have said exactly that. I never said otherwise here. I can however criticize the way in which president Bush attempted to do something about it, his promises for job creation, and a host of other stupid things. I do not think his business tax credits created any jobs, I do not think elimination of taxes on dividends created any jobs, and I do not think crop supports for wheat, oranges, tobacco, milk, or cheese creates any jobs either (unless you count masses of migrant workers). Finally I defy you to show me where I ever blamed Bush for the loss of jobs. I merely stated that jobs were lost under Bush's presidency. That is a statement of fact. Perhaps the war created some jobs in the defense industry but I hardly think war is a valid solution to creating jobs.
Back on the productivity issue.
When a new DISRUPTIVE technology takes off, time and time again we have seen jobs created. Railroads, assembly line, radio, TV, etc new jobs were indeed created. Has improved manufacturing processes and productivity improvements in manufacturing created any new jobs for the last 20 years? Personally I doubt it. Even if wrong, they most assuredly were not created here in the US.
The internet arrived. Very disruptive right? I am sure we both agree to that. That disruption created hundreds of thousands of jobs, many of them exciting well paying jobs. It also did one more thing that was disruptive. Extremely disruptive. It made it possible for global wage arbitrage to kick in. For the first time ever we could have an Xray taken here, shipped over the internet to India, diagnosed in India, that diagnosis shipped back to the US and only the treatment is done here. Net loss = 1 US job. OK so there was a gain of 1 job in India. Even if the nest result is -1 here and +2 in India, it is not a very good situation for the US. Everywhere you turn, more and more and more jobs will be headed overseas. Why do accounting jobs have to be done here? I am sure 5-10 years down the road they will not be. What will replace those jobs?
The disruption of the internet created a boom but it also paved the way for a self fulfilling bust. That bust will continue until the US$ sinks low enough, US wages sink low enough, and/or until another disruptive technology comes along that creates more jobs right here in the US. I do not doubt that there will eventually be such a thing but the key word is EVENTUALLY.
In the meantime, non-disruptive productivity improvements are likely to cost the US jobs on average, while global wage arbitrage ensures that we will keep losing jobs to low cost providers. That is just the sad state of affairs. It is not productivity itself that creates jobs, it is disruptive technologies that create jobs. The fact that disruptive technologies are mammoth productivity enhancers does NOT mean that productivity improvements in and of themselves create jobs. IMO, that is where you and the FED miss the boat, and that is why Greenspan has been repeatedly perplexed about why jobs have not been created. Once a new technology becomes pervasive enough, we eventually reach a point where further non-disruptive productivity improvements in that technology are net negative in job creation. Even China is losing manufacturing jobs now. There is a worldwide glut of chips thanks in part to improved chipmaking productivity. Has chipmaking productivity created any new jobs as of late? Where?
Eventually productivity improvements lead to over-capacity! IMO that explains the current problem in a single one line sentence. It happened with cars in the 20's, manufactuoring in general over the last 30 years and it is happening right now with various internet/computer components. Over-capacity will result in job losses, reduced profits or both. Combine that thought with global wage arbitrage and you have a real mess such that world record stimulus failed to create any jobs. Someone email these simple thoughts to the FED because they surely do not get it.
In many speeches over the past several years Greenspan argued that productivity improvements would create jobs. Just a matter of time, just a matter of time. Well those jobs are nowhere to be found and IMO are not coming. Every faster manufacturing process has cost jobs. Faster more reliable computers allowed for the elimination of extra "order takers". Jobs LOST. Glut of chips... lost jobs. Xray diagnosis in India... Job moved. Call centers in India... Jobs moved. The initial disruption of the computer created jobs for years, that affect has long since vanished into overcapacity and global wage arbitrage IMO.
If you have a different explanation for Bush being the first president in history to lose jobs on his watch in spite of world record stimulus, loose money, a housing boom, tax cuts, and tax credits then I want to hear it. Just because I point this out, does not mean I am blaming him. It is just a mere statement of fact. He is not to blame and Kerry is not going to do anything to fix it either.
I do want to address a point you made earlier about there being more people in poverty because the poverty line went up. I am staggered by that comment. Have not prices gone up? Is your poverty elimination method simply rolling back the poverty line to where it was in 1940? WOW. Look at all the people that will take off the poverty roles. We can overnight solve the problem just by setting the line low enough. Why not drop it to zero and totally 100% eliminate poverty? Why not.
IMO huge numbers of people are far far worse off than they were 4 years ago. We have overbuilt, overconsumed, we are overly in debt, and we can not keep consuming the worlds resources at the pace at which we are doing so.
Everywhere I look the situation is not pretty and the job losses and wages losses are going to make it far worse. Tell me about jobs when the next disruptive technology comes along. In the meantime things are going to get worse here. Lots worse.
Mish |
