7/7/97

KUFM / KGPR

T.M. Power

The Economy as a Gigantic Make-Work Project

Almost all public discussion of the economy, whether at the national, state, or local level, focuses on job creation. During the last political campaigns both the Democrats and the Republicans beat that issue vigorously, each claiming that their approach to the economy would generate higher levels of employment.

In many ways that focus on jobs makes sense. The historical experience of the Great Depression where almost an entire generation of workers faced the real likelihood of soup lines and an inability to take care of their families was socially traumatic. One could also add the historical experiences of the many cities and towns that have been traumatized by losing an important industrial facility or an entire industry. Montana certainly has been buffeted by such huge local employment losses.

From a social and psychological point of view this emphasis on employment also makes sense. The loss of a job involves more than just the loss of the income associated with the job. Job loss threatens our identities, our self-respect, our feeling that we are part of a larger social undertaking.

Unfortunately, sole emphasis on job creation also can lead to grossly irrational economic policies that seriously harm most of us. If the economy is primarily looked at as a device to keep the entire population busy as much of the time as possible, the economy tends to be seen as just one gigantic government-run make-work project. The irrationality and dangers of that approach to managing the economy should be familiar to everyone. The centrally planned economies of the old Soviet Union provided an endless stream of examples of the waste and shoddy production that comes from simply trying to make work for everyone. Feather-bedding within our own economy provides examples closer to home.

The problem with only focusing on employment is that we all want more than just a job. We want a productive and adaptive economy. We want the freedom and responsibility to pursue our own and our family’s interests. We want good public services such as education for our children, protection from crime, and public health measures. We want public environmental goods such as our air, water, wildlife, natural areas, and scenic beauty protected.

To economists, anyway, the economy is not primarily a social device designed to keep everyone busy because of a religious or cultural belief that "idleness is the devils workshop." Rather, the purpose of the economy is to use the scarce resources that are at our collective disposal to satisfy our needs and desires as well as possible. We should judge how well the economy is performing primarily in terms of whether it is delivering to us those things we want, including the valuable services that flow from the natural world and our public institutions.

Economists make one other important point that initially sounds shockingly naive. That is that the economy tends towards fully employing its labor force. Although tens of millions of Americans and tens of thousands of Montanans have lost jobs over the last several decades, we do not have reservoirs of unemployed people that grow larger with each passing year. Quite the opposite, unemployment rates are at record low levels despite all of the layoffs, all of the young people and women who have entered the workforce, and despite the record number of foreign immigrants, legal and illegal.

Ten of millions of new jobs have been generated that have allowed almost all of these potential workers to be absorbed into the economy. It was not some gigantic government make-work project that generated those jobs. It was the ongoing operation of the economy and its supportive system of social institutions.

The reason for emphasizing that there is more to a productive and prosperous economy than "making work" is the mischief that can follow from taking that tack. We get lured, for instance, into subsidizing marginal, low wage, employers at the cost of reducing the funding available for the support of local public services. We get talked into sacrificing important elements of our natural heritage for the promise of a few jobs of short run duration. We give and we give and we give to those promising jobs and in the process systematically impoverish our communities by making them less and less attractive places to live, work, and do business.

It is time for us to become much more critical about job promises and the request that our public resources, whether our tax revenues or our natural heritage, be used to subsidize them. We should be asking whether we really need more jobs; who will fill those jobs; what will those jobs pay; why do the employers need public resources to proceed; and most important, what other important economic objectives are we being asked to sacrifice by the mantra of jobs, jobs, jobs. We are not children who need to be kept busy; the economy is not one gigantic make-work project.