Wednesday, May 02, 2012

Theory of Jobs

There seems to be a world wide shortage of jobs, and the question of how best to promote jobs is a vexing one for governments almost everywhere. Mitt Romney and his fellow Republicans promote a view that can be summarized as "more money for rich people." I don't want to get into the mystical foundations of this view, but it seems that the problem has probably been around for a long time. Most civilizations seem to eventually face the problem that most of the wealth ends up in a few hands leaving a large fraction of the population feeling that said civilization is a bad deal for them.

One popular answer, with a long history, is the public works project. The idea is for the government to collect enough taxes to keep the populace employed. The pyramids are one of the more spectacular results. Perhaps even older and more frequent is war and colonization. This double barreled strategy both employs and destroys excess labor supply.

But why do we wind up with excess labor anyway? One can imagine a sort of ideal economy in which everybody can do something valuable enough that someone else is willing to pay him for it, but in practice, it rarely works out that neatly. Variations on the theme of Mercantilism - selling a bunch of stuff to other countries - have proved temporarily successful for a number of centuries, notably for China and Germany in recent years. It's an asymmetric strategy though, and one country's profit tends to be another's debt burden.

The asymmetry is a clue, I think, reminding us that we are all, ultimately, in competition for a share of the same finite planetary resources. The market economy can soften that harsh face of nature, "red in tooth and claw," but that reality lurks always below.