How do we actually kill jobs?


There was a recent speech in which Jesse Jackson, Democratic Congressman from Illinois, focused on a recent technological advancement concerning flat, touchscreen monitors which have computers and which allow users to go online, read books, run applications, and otherwise increase their enjoyment and productivity. In his speech, he accused these devices as being something which kills jobs.

Private market innovation and production especially with regard to technology and robots as being something which kills jobs is an old economic myth, but one worth addressing. Does the creative destruction of the market through the production of newer, cheaper, and better goods cause those old producers to falter and ultimately costs society it’s jobs? Does the invention of the refrigerator cost the ice distribution company their position in the market and therefore destroy their job?

First, it is important to realize that it is competition which brings about these types of innovations in the first place. That company who first produces a new type of good or service bids customers away from other companies and makes a profit, and that company can therefore expand themselves and reinvest back into their business to fuel more innovation. It is the sluggish behavior of monopolies and their unwillingness to respond to customer demand which causes stagnation and destroys the capacity to innovate, to which coercive monopolies are the worst offender.

One reason for this stagnation is the concept that monopolies have no concern for their customer’s opinions. If they alone are the sole provider of something, there is little the customer can do to meet the demands they have than to purchase that good or service from the monopoly. No other competitor is offering a superior product or lower price or another means of achieving the same goal. Even worse, under taxation, monopolies can forcefully extract money whether or not the customer even wants or needs the product.

With free competition and no barriers to entry, new competitors spring up with products in attempts to swing the market in their direction. Those who want those products vote for these different companies by giving them money in exchange for those goods. Monopolies are formed when there are legal barriers to entry so that competition cannot occur. For instance, no one may compete with the Federal Reserve and offer a competing money as the recent case of the Liberty Dollar silver coin producer who was sentenced to 10 years in jail for his attempts to offer a competing money. Laws and legal barriers prevent this competition from occurring with the backing of the enforcement of government mandates.

It is no wonder then that business and the state have been closely intertwined. The right laws will cause the right competitors to go out of business, securing the market place for those lazy businesses who have utter disdain for those energetic competitors always looking to bid away customers with new ideas. These newcomers implement changes which ruffle the earnings of those already established, and it is much easier to utilize the blunt force of government to hobble their competition instead of attempting to compete with such changes. Even seemingly minor implements cause larger competitors to have an advantage over smaller: for instance, a larger company has more capital with which to comply with the maze of regulations and also hire the legal team needed to pore over the tomes in which thousands of sometimes conflicting regulations have been imposed on businesses. Smaller companies have more difficulty surmounting such hurdles and therefore have less capacity for profit.

Why then, would the congressman call for action against such useful devices? I don’t mean to imply by my explanation above that someone is plotting to utilize the government to regulate new technological advances is the work of some plotting, mustache-twirling, business tycoon. My explanation shows where the wonderful advancements in time saving and wonderful products come from: the free market and competition. The only thing that government can do is hinder that process, and as a result we must be necessarily poorer. If the government had managed to outmaneuver the market and pass laws to prevent these touchscreens from entering into the market so as to “save jobs”, we would not have had access to these amazing devices.

As for unemployment itself, there are a thousand and one objectives to which we could allocate our labor towards. I personally want to see robots working to clean our house and drones delivering our groceries. The list of things we could be producing to meet our demands is near infinite: newer and more fuel efficient cars, better control for our mobile devices to interact with our home networks and electrical infrastructure, and newer types of energy production are a few goals I could name which could be aimed at.

If so, then why are there so many people who are not employed? What could possibly cause those desires to not be sought after, when clearly there are people who are willing and able to provide their labor services in the pursuit of such goals and ends? Why are these solutions, to increase the production of various goods and services rather than attack a new product, not being considered? Surely, the pursuit of those goals would increase production in all manner of other businesses down the line of production increasing the overall number of jobs, since production necessarily involves long processes starting from natural resources which slowly work their way through the different hands of different workers and companies to further refine those resources into a final consumers good.

The landscape required to really grow jobs is one in which government plays a minimal role in. For example, labor laws currently make hiring more expensive than it otherwise would have been and restricts the means that companies have to determine whether or not that individual would be a good fit for the company. The high firing costs due to possible legal battles makes employers weary of taking chances on those employees which may not work out, and internships or initially low wage rates with the promise of increase over time are made more difficult through these laws. Minimum wage laws artificially increase the barrier to entry, whereby teenagers and those just entering into the market place or those with lower levels of skill or ability are most affected. New, upcoming laws make entrepreneurs weary of their industry quickly being made unprofitable soon after their large investment of time and capital.

In the monetary sphere, the Federal Reserve tosses the already difficult to navigate sea of economic uncertainty into abject chaos by constantly adjusting the money supply and interest rates. Through it’s distortion of the real rate of savings, businesses think that more savings is available to fund their projects than is actually being saved by people in society, and they make rash decisions about investments which soon creates a boom of seeming prosperity but which inevitably leads to a bust.

Besides, what really makes us better off are the goods produced, not necessarily “having jobs”. What helps us to produce more is capital goods. These technological screens with which we can reference our calendar and quickly check email and collaborate with co-workers or clients aid in the productive process by saving us time and also energy by not having to lug around and power larger devices. Tools like this one and all the other robots and cranes and construction vehicles and mills and factories increase the productivity of each individual worker, leading to more stuff produced for more people. This alone should comfort those who are displaced by the new innovations: these new goods increase the individual’s productivity and also let us free up people to work on other exciting innovations and goods. Additionally, the more capital and consumer goods we have, the less we have to actually work in the first place.

And ultimately, that’s the real goal: to have the things we need and want with the smallest amount of effort and labor possible. Jobs are not an end in and of themselves but are a means of achieving our ends. When our ends are met, we don’t have to work to meet them anymore. It is the increase in production brought about by capital goods and an environment conducive for that production which allows us to work less and have more, while busy-body congress people can only hinder that process and destroy what would have otherwise been produced.

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