A Real Con Job; R. Anderson

Adam Smith pretty well said it all with that statement two hundred years ago in The W ealth of N a tions. Unfortunately, .this basic eco nomic truth has been all but lost in today's world. The public press and political rhetoric today focus attention on creating employment. The plight of the unemployed and the presumed· inability to obtain employment have become the over whelming concerns of our society. This concentration upon job creation has tended to conceal the ultimate end toward which a job is directed. Full employment has become an end in itse:Jf and society is assumed to have attained its final goal if all are employed. The Mr. Anderson is Executive Secretary and Direc tor of Seminars of The Foundation for Eco nomic Education. 404 prevailing economic wisdom holds that the purpose of production is to create jobs; but, in reality, we prod uce in order to enj oy the fruits of production.

While it may indeed be true that work can build character and is valuable for that purpose, this does not negate the economic ne cessity that the job be productive. In a free society, as Adam Smith observed, we produce in order that we may consume. Job creation, which generates greater produc tion grows out of the desire for greater consumption. The pursuit of full employment as a political goal is in total con flict with the ideal of a society of free individuals. The political goal of "job creation" not only involves the use of force, but will assure a waste of scarce resources by mas sive misallocation within the labor market.

1976 A REAL CON JOB 405 In a free society the desire to consume more will generate pro ductive work. The creation of "jobs" by political action, however, will hamper productive effort by siphoning scarce resources away from the Inarket into the public sector. In an unhampered market so ciety all individuals seeking pro ductive jobs can find employment. With unrestricted competition among employers, and a freely ad justing wage rate, there would be employment for all who wished it. Each individual, guided by his own self-interest, would maximize his productve work in an effort to achieve his goal of greater con sumption. The jobs so created are the basic means by which individ uals acting voluntarily and peace fully can attain a higher level of consumption. Tragically, our society today does not enjoy the benefits of such freedom in the economic sector. Government intervention over many years has generated massive distortion and permanent unem ployment wi thin large sectors of the labor market. Union cartels, protected by various laws, effec tively exclude competing labor; minimum wage laws bar low-pro ductivity workers; welfare legis lation encourages people not to work; and government-generated inflation in the pursuit of "full em ployment" creates inevitable eco nomic recessions. These forces, and many others, have established a continuing corps of unemployed, or worse yet, the so-called "unem ployables."

Rather than examine the poli tical causes of unemployment, and the resulting loss of consumption generated by such unemployment, all political attention is focused on unemployment itself. Again, it is a case of government attacking the adyerse effects of its earlier ac tions rather than ceasing the in terferences that have caused the problem. Ironically, the remedy continues to center on the effect rather than the cause of govern ment-created unemployment. The problem thus is being aggravated by such attempts to solve it. The political answer seems so simple: The way to eliminate ~n employment is to make the state "an employer of last resort." After all, socialist societies have no un employment problem. The socialist system assures every individual a "j ob." Why not borrow another of the socialist "virtues" in order to "solve" one of our major economic dilemmas? But that is to lose sight of the problem: We do not seek jobs for their own. sake; the end we seek is improved consumption. Unless work will generate greater produc406 THE FREEMAN July tion of those goods individuals wish to consume, it is wasted effort and should be avoided. Work is a great consumer of resources, (we wear out) and employment is beneficial only if it yields a return greater than the value of the re sources expended.

The failure to understand this economic truth has led to such policies as "featherbedding," shortened hours of work, restric tive work rules, attacks on auto mation, and the like. The false belief that there exists only a given quantity of work, and that more jobs can be created only by dividing this work among more people, has led to the adoption of such programs. In reality, there can never be a shortage of work. As long as in dividuals possess wants, the de mand for their fulfillment will al ways be present. The employment of labor is a never-ending race to satisfy more and more of man's wants. The creation of jobs is a natural consequence of the insati able human desire to attain an ever higher level of material well being - and there is no other way that can be achieved. This improvement in well-being depends upon more productive work. The objective of every job is "to get more goods out of the woods in a shorter period of time!" This is the only way man has ever been able to improve his material circumstances. In a free market society it is the combining of labor with capital (better tools) in a social division of labor that has brought about this result.

Labor, employing an ever-increas ing quantity of capital, generates a higher and higher productivity, with its ultimate benefit in a higher level of consumption for the worker. Abandonment of these economic facts of life in favor of job crea tion by the state can lead only to a decline in prosperity. Job creation demands economic resources to sustain such employment. As long as the productivity 0!l the job ex ceeds the resources consumed in employment, a growth in pros perity is assured. A freely func tioning market, guided by con sumer-directed signals of profit and loss will employ productive resources most efficently. Without such market direction, the return from labor devoted to a job can never be known. Government, as the "em.plryer of last resort," has no resources of its own to create jobs. All too often overlooked is the fact that "gov ernment funds" are a figment of political rhetoric. Governments do not create the resources they con sume, but redistribute instead the resources of others. Before govern1976 A REAL CON JOB 407 ments can provide resources to anyone, they must first withdraw such resources from private own ership and control - tax them away from someone.

The notion that government can be "an employer of last resort" denies this truth by implying that government possesses in itself the resources for job creation. What in fact must occur, if government is to be an employer, is an even greater growth in the political re distributive process in our society. More victims must be plundered of their resources in order to sup port an ever-growing throng of government wards. The resources surrendered by productive individuals to sustain the government's role as "an em ployer of last resort" impoverishes even further the productive citi zen. These lost resources, which would have been privately chan neled back into the market through increased consumption or produc tive savings, are instead trans ferred to the new corps of gov ernment beneficiaries. The poIitical transfer of these resources does indeed create jobs in the government sector. What it does not create is an improvement in the economic well-being of the citizenry. In fact, it creates pre cisely the opposite effect.

The ever-increasing burden of government on the private pro ductive sector discourages future productive effort. The government seizure of private resources pre vents the employment of these same resources in a job-creating market role. The further impover ishment of productive individuals retards even further the market's ability to increase productive em ployment. Future productivity and well-being suffer from the lost re sources that are redistributed by government to its new job corps. If the new government job corps could generate greater productiv ity than is consumed in resources, there would be no reason for its creation. The market much earlier ,,,ould have created such jobs, since it would have 'been in the self-interest of all to have done so. To use government as "an em ployer of last resort" js an open admission that job productivity must be less than the resources consumed in such employment.

When the goal of government is to become the "employer of last resort," when consumption is no longer the sole end of production, when the job becomes an end in it self rather than a means to an end, then the prosperity of the so ciety will surely be adversely af fected. What we get will not be grea tel'" abundance through the creation of productive real jobs but instead a real con job! ~ ANEW MESSAGE JACKSON PEMBERTON Mr. Pemberton graduated with honors in physics and mathematics, has a Masters de gree in business administration, has worked two years in Sweden, and now works as a professional systems analyst. He is a busi nessman who is active in community and church affairs, is a free lance author, and is often called on to speak. He lives with his wife and children on a small farm just out side of Salt Lake City. All rights reserved. 408 Words of courage and coun sel from the hearts of the Founding Fathers to their children in a troubled na tion.