Monday, July 12, 2004

By Any Other Name

What, praytell, is a "job"? Is it anything more than an agreement between a person, the employee, and another person or group of persons, the employer?

Why do people have jobs? Is it not because a) the employer has money, and b) the employee is willing to do something for the employer for the amount of money that the employer is willing to pay?

A "job" in other words, is not the same sort of thing as an apple. I can see, touch, and eat an apple. I can move it from one place to another. I can take it out of the country. None of these can be done to a "job". My job is an agreement between me and my employer. That can't be taken out of the country unless I'm taken out of the country and my employer agrees to pay me over there.

It is true that I can be fired and someone else in a foreign country can be hired to do for the employer substantially what I was doing before. Provided, that is, that there is someone in the foreign country capable of doing what I was doing before. In that case, my job hasn't been moved, it has ended. Someone else got their job, but they didn't get my job.

Which brings up another point. No single party to an agreement can own the agreement. I can't own my job. An agreement can be abrogated by either side at their leisure. When the State intervenes to prevent the ending of agreements, people will respond to this outrage by ceasing to enter agreements, or at least ceasing to do so in a manner which is subject to State control and intervention. Because nobody is going to do something which may be turned around and bite them later when they're not watching. The secret of all economic behavior is that everybody has to know the rules. If the rules are that contracts can be freely broken, fine. If the rules are that contracts can never be broken, also fine, but good luck finding anybody willing to enter one.

Some modern-day corporations have taken advantage of modern-day telecommunications to expand their potential labor pool, potentially lowering their costs. I say, bully for them. That's how wealth gets created. My task as an economic actor is to ensure that I have sufficient skills and can drum up sufficient demand for those skills that I can adequately meet my economic needs.

A few things become obvious from this analysis. First, during one of those times when panic is spreading across the country and people are pulling in their economic horns, many people are going to simultaneously decide that they don't need some things they were previously paying for and are going to quit paying for them until the smoke clears and the dust settles. They're going to abrogate some of the agreements that they previously had; some people are going to become unemployed. This will occur in waves because panic occurs in waves. It has absolutely nothing to do with what any president does or doesn't do.

There are certain options available to the government. To wit, it can make money loose or tight. In the aggregate, loose money will have a big impact on monetary panic, and so, after a course of time, often years, will have a big impact on the willingness potential employers might have to hire. Conversely, tight money will have a big impact over the course of years in the opposite direction: it will increase the money-panic. The federal government made the colossal mistake in the early 1930's of trying to contract the money supply at the very time that the panic was rising to a crescendo. The Great Depression remains the single worst case of government economic failure yet known. Besides manipulating the money supply, government has another option, one which is a favorite of socialists the world over. Namely, government can artificially create makework jobs which nobody really wants and which are done at a price far above the market demand for those jobs. This is probably a good option in extremely desperate times, but its application in the late 1930's did little or nothing to alleviate the continuing Depression. That's because the economically inefficient makework jobs of the WPA et al. relied on government taxing, borrowing, or money-printing in order to occur. Money-printing, as all survivors of the Carter years can recall, leads to high inflation and ends up taxing the citizenry in a different way. Borrowing is simply deferred taxes. So all of these methods come down to some sort of taxation, which is why they inevitably fail: for the economy to resurrect itself, individuals have to have the belief that there is some hope for them and that they can make money. If the State is robbing Peter to pay Paul, Peter isn't going to be in the mood to hire anybody.

On the other side, individuals are obligated to find some activity they can perform for which there is a market. No doubt we would appreciate the opportunity to be famous painters, thinkers, stars-of-the-screen, but for most of us the reality dawns early that we simply do not have the talent to make a living at such activities. The invisible hand thus leads us ever so gently into those economic activities which people actually want done and are willing to pay for. Things like getting their cars fixed, making sure the faucets isn't dripping, and making sure that the shelves are stocked at the grocery stores. There's nothing glamorous about any of that but it's what real jobs are made of.

It sometimes happens that a vast area of economic activity disappears; sometimes this occurs so quickly that it seems to happen overnight. We've witnessed this lately with the dot-com crash. One day everybody wanted to hire web developers and programmers of every conceivable stripe; the next there wasn't a single ad in the paper and trained technicians were being laid off by the hundreds. This is unquestionably an extremely unpleasant exercise for everyone involved. Everyone who becomes laid off in such a process is obligated to do some deep soul searching. The skill which had recently been learned and upon which one was counting for future riches suddenly has no demand. Well, a little demand. A few lucky sods will be allowed to continue in this field. Most everyone else will be obligated to find something new to do. There's really nothing that the government or anyone else can do about this state of affairs. Those jobs are simply gone. It's time to look elsewhere, find a new agreement with somebody who has some money and needs something done.

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