Friday, July 30, 2004

g) Creation of More Jobs by Investing in America's Future — Invest in Americans
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Since January 2001, 2.7 million jobs have been lost and more than 75% of those jobs have been high wage, high productivity manufacturing jobs. Overall 5.6% of Americans are unemployed . . . By requiring equitable trade, investing in urgently needed local labor-intensive public works (infrastructure improvements), creating a new renewable energy efficiency policy; by fully funding education and redirecting large bureaucratic and fraudulent health expenditures toward preventive health care we can reverse this trend and create millions of new jobs.

I’m all in favor of reducing fraudulent health and renewable energy standards. But let’s look at the policy more closely. Nader complains of a high level of unemployment (5.6%). Unfortunatly, by historical standards, 5.6% is not all that high. To remedy this grievous national problem, Nader urges an immediate local labor intensive project program with jobs that are high wage.
Now let’s assume that this program is to make a serious dent in unemployment – that it will hire 1 million people nationally, cutting unemployment in half. Next, the jobs will have to be high wage, since Nader is complaining that the jobs being created outside of the government were paying to little, so we’ll assume the low number of $25 an hour, which ignores prevailing wage law issues which would raise the cost, times 40 hours a week comes to $1000 a worker per week. There are 50 work weeks a year, so the yearly cost per worker would be $50,000. Since there are one million jobs created, the total cost comes out to 50 billion dollars, although since the wages were estimated on the low side, and materials/administrative costs were left out, along with the usual corruption costs, the true cost could be two to four times that amount. So where is this money going to come from?

Even worse, since these jobs are more labor intensive than efficient, it is likely that the product that is produced in the end will be overpriced. You can pave a road three times in a week, but the second and third time will likely add little to the benefit of society. In the free market, at least the jobs will be done by those who value the project.

A further difficulty with this program is that it is highly likely to increase governmental corruption. Jobs that pay higher than market wage are highly desirable – and the person who hands out those jobs will have a large amount of political power. In the free market, corruption is at least partially held in check by the need to avoid losses and to make a profit. In the government though, a cycle of patronage corruption akin to the Tamney Hall or Robert Moses scandals of the last century is likely to erupt. To increase power, politicians will have further incentives to increase the total number of government jobs, which would require ever higher taxes, and fewer and fewer benefits to society. Is that the society we really want to live in?

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