Jobless Daze

A generally good piece by Bill Gross states:

A 9.1% official unemployment rate, and a number nearly double that when discouraged and part-time workers are included in the rolls, portend an angry and disillusioned electorate, which will include millions of jobless college graduates ill-trained to compete in the global marketplace. Over the past 10 years under both Democratic and Republican administrations, only 1.8 million jobs have been created while the available labor force has grown by over 15 million.

And goes on to correctly diagnose the problem: “Our labor force is too expensive and poorly educated for today’s marketplace.” Unfortunately, his prescription for the cure – more big government – is risible. He points to the Chinese example of dirigiste industrial policy as a guide, ignoring the fact that the result of this policy has been malinvestment on a massive scale, potentially as disastrous for China’s future as the US housing bubble (not coincidentally, also a government artifact) has been for the US.

Yes, government can spend money and employ people. But unless such employment results in economic value added, it is simply digging the over-consumption hole deeper. The reason that we employ a market-based system of allocating scarce resources is that command economies, in general, fail. The reason that they fail is exactly that they do not demand economic value added, substituting a variety of other motivations ranging from political correctness to self-interest and just plain larceny. The myth that government is somehow more moral than profit-maximizing business lingers on, even in the mind of a supposed money manger like Mr Gross. Government is people, Bill, no better and no worse than any other large group and just as self-interested and self-righteous as any. Without the discipline imposed by markets, they will inevitably fail to allocate resources efficiently or effectively, as we have seen.

After all, it is big government that got us into this mess through its attempted manipulations. What makes anyone think that the same big government either can get us out of it, or even has the slightest interest in doing so? After all, the goal of the Republicans is not to fix the problem – it is simply to take over all the best offices in Washington from the Democrats. Like the guy running from the bear, they just have to run faster than the Dems, success at fixing the economy’s woes is completely optional because so long as the Dems lose, they win. This is the fundamental failure of the “two-party” system – a party that doesn’t lose is guaranteed a win. Just think about the implications of that. They do not care if their proposals fix the problems – all they care about is getting more votes than the Democrats. Of course, the converse is true of the Democrats..  There is no reward for fixing the problem, so long as neither party fixes it.  仕方がない Shikata ga nai, nothing can be done about it.

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