Following Senator Bernie Sanders’s recent proposal of an idea to provide $15-per-hour government jobs to every unemployed American, I’ve found myself trying to think like a person who truly believes that this is sound public policy. According to Senator Sanders, the federal government is the likeliest candidate to spend the money it would take to either employ or train the roughly 13.4 million people (4.1 percent of the U.S. population) who are counted today among the unemployed. But the realities of such an idea—What would workers do? Who would decide? And who would pay for it?—are a lot trickier than a casual analysis might reveal.
But talk of jobs guarantees, living/minimum wages, and other labor schemes raise an even deeper question: why do jobs even matter?
We’re Always Talking Jobs
Observe most any political conversation, and you will discover “jobs” as the common cure-all. Whether to solve illiteracy (“hire more teachers!”), illness (“hire more nurses!”), aging infrastructure (“hire more construction workers!”), or government budget deficits (“hire more taxpayers!”), the discussion inevitably turns to how to secure more resources to hire more people.
These perspectives miss the true meaning of a job as an opportunity to engage in valuable behavior for other people.
This obsession with more and more job creation isn’t limited to one party or group—far from it. The democratic socialists regard having a job as a basic human right, freeing the individual from the tyranny of a boss who can suddenly revoke their livelihood. Social conservatives see a job as a validation of human dignity, channeling a person’s fallen human nature away from antisocial behavior and lethargic self-destruction.
Both of these perspectives miss the true meaning of a job as an opportunity to engage in valuable behavior for other people. This is because every new job created is fundamentally a bet that it will create value before a better opportunity comes along. Each job’s value is, therefore, a function of proper timing in service of fickle human preferences. Our changing preferences are why so many businesses either never get off of the ground and why even businesses that were once massively successful (e.g., Toys “R” Us, Kodak, and Borders Bookstores) sometimes break our sentimental hearts and close their doors.
The limited resources available to apply toward valuable opportunities are constantly changing, and this is why a top-down, government jobs guarantee or minimum wage is a fundamentally wasteful exercise. All they do is tie up talent and treasure that could otherwise be applied in more valuable ways.
Centralized economic decision-making in this vein has proven disastrous the world over.
There are two approaches to trying to channel individuals’ unique energies productively: top-down and bottom-up. In the top-down approach, lobbyists, bureaucrats, and legislators (in that order) in Washington, D.C., design a system to identify employment needs (such as infrastructure), manage work projects, and vet job candidates. The success of this model hinges entirely on a small group of D.C. insiders being at least mostly correct as to the most productive uses of this newly available gigantic workforce. If, at any point, the chain of Beltway decision-making is corrupted ethically (virtually impossible to avoid) or is confronted with imperfect knowledge about the particular details of a work project (entirely impossible to avoid), the integrity of the entire effort collapses.
Centralized economic decision-making in this vein has proven disastrous the world over, from the imposition of a federal minimum wage that prompts fast food companies in the U.S. to automate taking orders, to mass misery, starvation, and death in every country that has gone in on communism/socialism.
The bottom-up model, on the other hand, decentralizes the decision-making to entrepreneurs and offices nationwide.
The bottom-up model, on the other hand, decentralizes the decision-making to entrepreneurs and offices nationwide. Given the local ownership of the resources needed to employ people, this bottom-up approach also better aligns the incentives bosses have to strive for productive uses of labor. (Bosses have to demonstrate value creation, too!)
A strictly limited pot of resources in a business starting up in Norman, Oklahoma, for example, must generate value quickly, unlike a pot of billions of dollars flowing from D.C. This locally-sourced, bottom-up approach has an added benefit of being nimble enough to change course on a dime compared to the massive Carnival cruise ship that is every government body.
What Can We Do?
So, what can reasonably be done to address the actual material needs of 13.4 million fellow Americans who would most likely prefer to become independent, value-creating, productive members of society? Policy prescriptions that do anything other than remove the barriers for individuals to create businesses are likely to fall flat. This means we must each cast skeptical eyes at any proposals to create jobs, that favor any company or industry over another, that set minimum or maximum prices on either goods or labor, or do anything beyond permitting people to act on the special, local knowledge they have about their own needs and circumstances.
Nobel laureate F.A. Hayek wrote about the real, unintended consequences of intellectual hubris in his classic, The Road to Serfdom:
“We are ready to accept almost any explanation of the present crisis of our civilization except one: that the present state of the world may be the result of genuine error on our own part and that the pursuit of some of our most cherished ideals has apparently produced results utterly different from those which we expected.”
Recognizing the real limitations of the knowledge of leaders and experts won't make for a perfect world, but it will allow us to begin creating for ourselves a much less imperfect one.