A Philosopher's Blog

Jobs

Posted in Business, Ethics, Philosophy, Politics by Michael LaBossiere on September 6, 2011
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While things could have been worse, August was rather disappointing in terms of employment. There was no job growth that month and the unemployment rate was 9.1%. On the positive side, at least the economy did not sink even deeper into the pit.

On obvious point of concern is the cause (or causes) of this problem. Going back a bit in time, the folks who wrecked the economy with their financial misdeeds would seem to bear a considerable amount of blame. Of course, some of the damage that was done was caused by actions that, at the time, were actually expanding the economy in some ways. However, this expansion proved to be mostly “air” and not substance-that is, yet another empty bubble.

The blame for the continued unemployment woes cannot be placed entirely on past actions. After all, it seems sensible to believe that some factor or factors are keeping employment from rebounding as well as the profits for companies has rebounded.

Many folks blame Obama. Blaming the President is an old tradition and, of course, the Republicans have been busy trying to convince Americans that Obama is at fault. On the one hand, this can be seen as an unfair charge: while the President has significant powers, control over employment is not one of them. On the other hand, the President can do (or not do) things that would have some impact on employment.

It has been claimed that unemployment is staying high because corporations are burdened by taxes and regulations. As such, Michelle Bachmann has said that she would cut taxes for corporations and get rid of regulation, including the entire EPA. On this view, Obama is an obstacle because he has been unwilling to cut taxes even more and has not dismantled the EPA.

The obvious flaw in this view is that corporations are doing exceptionally well now. They are, in general, enjoying significant profits and executive  salaries and bonuses are quite fat. They are not, however,doing much hiring, even though they clearly could be doing so. At the very least, executive salaries and bonuses could be trimmed slightly and the money could be used to hire workers. For example, if a CEO received the average “compensation” of $11 million, s/he could give up $1 million and that would pay for 22 workers at $45,000. True, asking someone to give up 10% of their compensation so 22 people could have jobs might be seen as asking too much. To some, it would make far more sense to fire state employees or cut their salaries and cut programs so that the corporations can pay even less in the way of taxes. After all, those who have less should sacrifice for the good of those who have so much more. Also, some of the state workers who are fired might be hired by the corporations. Or not-perhaps the corporations would simply take the tax cuts and enjoy even larger profits by not hiring people.

To some, it would also make sense to eliminate regulation, such as environmental protection. After all, without such regulations corporations could operate with lower costs and hence make more profits. Naturally, the costs that the companies paid in regards to safety, environmental protection and so on would now be passed on to everyone else (such as the folks who breath the air and drink the water tainted by the coal industry). But, for some folks passing on the costs to those who have less so that those with more can have even more is perfectly sensible. After all, this will create jobs. Or maybe not. Corporations might simply look at their savings and decide to keep the money as profit rather than pay it out in wages. After all, they are doing quite well now and yet not hiring and thus there is no reason to think that if they just had a bit more money that they would suddenly start putting up the help wanted signs.

As such, a large part of the blame for the lack of hiring would seem to rest on the corporations. They could hire people, but chose not to. The talk about taxes and regulations is, rather clearly, a clever ploy to get what they want. While some people argue that we need to make sacrifices to lower corporate taxes and decrease regulations, it seems more reasonable to ask corporations to “sacrifice” a bit and hire people to make money for them.

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32 Responses

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  1. T. J. Babson said, on September 6, 2011 at 7:27 am

    “As such, a large part of the blame for the lack of hiring would seem to rest on the corporations.”

    No. A thousand times no. The mentality that led to this incident is the problem:

    MIDWAY, Ga. (AP/The Blaze) — Police in Georgia have shut down a lemonade stand run by three girls trying to save up for a trip to a water park, saying they didn’t have a business license or the required permits.

    Midway Police Chief Kelly Morningstar says police also didn’t know how the lemonade was made, who made it or what was in it.

    http://www.theblaze.com/stories/georgia-cops-shut-down-girls-lemonade-stand-for-lack-of-business-license/

    • Michael LaBossiere said, on September 6, 2011 at 5:41 pm

      I don’t think that is the primary cause of the lack of hiring on the part of corporations. Red tape is a problem (but some of the rules do serve to protect the public-after all, we don’t want people to be able to sell just anything on the streets) and unnecessary rules should be removed.

      In any case, I do agree that cracking down on kids selling lemonade is a waste of public resources.

      • WTP said, on September 7, 2011 at 2:05 pm

        Perhaps all of us who have houses should hire people to mow our lawns. If you can afford a $100-200K house, surely you can pay someone $10/hour to do your lawn work.

        Mike, I will say it again, and again, and again. And I know of no nicer way to say it, so if someone else can help me out here, be my guest….You do not understand economics and/or where wealth comes from.

        • Michael LaBossiere said, on September 8, 2011 at 1:05 pm

          Not a bad idea. When I was a kid, people would hire kids to do just that. The home owners got to avoid the fun of mowing lawns and we kids got the chance to earn some money and learn a bit about how much working for minimum wage sucks.

          I am not an expert on economics, aside from those aspects that involve philosophy (theories of economics, value theory, game theory, and specific thinkers such as Smith, Marx, Mill, and so on) however I do have a reasonably good grasp of where wealth comes from-in its varying forms.

          • WTP said, on September 8, 2011 at 2:36 pm

            heh..I repeated myself. Wasn’t sure if I raised this point earlier or not. Are you serious when you say “Not a bad idea”? Again, it’s hard for me to tell. The following is not a sarcastic question, I need to know so that I can understand where you are coming from in your economic opinions. Do you know what an “opportunity cost” is?

            • Michael LaBossiere said, on September 9, 2011 at 10:09 am

              Yes.

            • WTP said, on September 9, 2011 at 11:01 am

              So then you understand that when wealth is committed to accomplishing a task, that wealth could have been spent elsewhere? For instance, in my facetious example, if you committed homeowners to lawn maintenance work, that $10/wk is not available to those homeowners to buy themselves lunch at the diner once a week, or a couple of beers with friends, or some nick-nack at the local artsy-crafty store. While you have “employed” one lawn worker for one hour, you have taken the opportunity away from the homeowner to spend it instead on the lunch counter waitress, the cook, the bartender, the artsy-fartsy lady, etc. You’re telling me you understand this? Or are you just being a smart-ass again by ambiguously replying “yes” to one or the other of my two questions?

  2. FRE said, on September 6, 2011 at 12:31 pm

    Regardless of how high company profits are, they will not hire more employees if they can meet the demand for goods and services without hiring more employees. The real problem is inadequate aggregate demand. For example, if you owned a restaurant and were doing quite well, but still had extra capacity, you would not expand the business. But, if there were more customers than you could serve, then you would expand the business and hire more employees.

    Cutting social security, medicare, etc., would further reduce aggregate demand even though in the short term it could reduce the budget deficit. Thus, cutting those costs would actually be counter-productive.

    An extremely serious problem that is receiving inadequate attention is that many companies will hire only people who are already working. That reduces the opportunities for the unemployed to find jobs; that’s especially true for the long-time unemployed. We already have laws that prohibit discriminating against people who are handicapped in various ways as long as they are able to work effectively. Perhaps we need laws to prohibit refusing to hire someone based on the fact that he or she is not currently employed. Unfortunately, such laws are needed and, if we don’t have such laws, it will be very difficult to get our economy moving again.

    Decades ago, I worked for one year for A T & T. At the time I was hired, because of a clerical error they had not noticed that I had failed the vision test; they required a minimum of 20:100 uncorrected vision which I did not have, even though I was corrected to slightly better than 20:20. There was no rational reason for that requirement. So, I had to re-take the vision test and was told that unless I tested to 20:100 or better, I’d lose my job. Fortunately, I was, before removing my glasses, able to memorize the chart down to the 20:80 line, so I passed. That is just one example of the sort of irrational restrictions that companies place on job applicants if they can get away with it.

    Regarding excessive regulation, the child’s lemon aid stand is not a good example. When I lived in Fiji (1994 – 2004), it was found that the juice sold by market vendors was dangerously contaminated with e-coli; there was a significant risk that that would cause illness. There were also sanitation problems with the barbecued food sold by street vendors. The lemon aid sold by the child could have posed a similar risk. Although there are certainly examples of excessive and irrational regulation, if all regulations were eliminated, we would quickly suffer consequences and clamor for having regulations restored.

    • magus71 said, on September 6, 2011 at 1:50 pm

      I still say that one of the most irrational restrictions is age in federal jobs. People older than 37 are not capable of being good Customs agents? Really?

      By the way, I’ve seen studies that show most of the jobs created in the last two years were merely people switching jobs, so they left other jobs empty. Another thing: The obsession companies have with empty resume time. I mean if someone is unemployed (willingly or not) for a year but has all the skills and a good work history, why hire someone right out of college?

      • Michael LaBossiere said, on September 6, 2011 at 5:46 pm

        They do need to reconsider the age limits. It would be more sensible to set the physical and mental requirements for the job rather than picking a number-especially a low one like 37 (says the 45 year old).

      • WTP said, on September 7, 2011 at 2:13 pm

        Magus, I would attribute this problem more to the Lib. Arts majors who make up much of the HR departments. I have done recruiting on college campuses and talked with many of these people. I have interfaced with some from my own company while in the process of helping my boss hire people on. From my observation, the vast majority of them appear to have insufficient understanding of what constitutes practical work experience.

        Another major problem, which I believe is the biggest barrier to hiring, is that once you hire someone, it is almost impossible to fire them. I am well aware of what is involved as far as documentation, etc. goes. It is absolutely ridiculous. You are more likely to get fired for making a diversity “mistake” than you are from screwing up and costing a company tens of thousands of dollars, or more. With such restraints on shedding excess and/or unproductive workers, it makes far more economic sense to try to make do with the people you have and force them to work OT. Of course, I’m just a guy out in the work force. I’m no philosopher, so I suppose I could very well be wrong.

        • Michael LaBossiere said, on September 8, 2011 at 1:09 pm

          Firing does work oddly in academics. For example, I have witnessed professors fired for one misconstrued remark. As another example, I have seen administrators who have committed felonies merely shifted to another position or, at worst, “fired” with their severance package intact and a new job lined up at the next school. As a third example, several staff members were recently fired because of budget cuts. They were called in one afternoon and told to pack it up and go home. They did, apparently, get one month’s pay.

    • Michael LaBossiere said, on September 6, 2011 at 5:44 pm

      Part of the problem is that one of the standard profit models for American corporations is to grow profits by cutting employees rather than growing profits by expanding and hiring more employees. This is taken to horrific extremes in the practice of taking over companies and gutting them for profits. While that creates significant money for a wealthy few, it does serious damage to the economic system by eliminating jobs and so on.

      • WTP said, on September 7, 2011 at 2:22 pm

        Mike, you constantly attribute problems to capitalism. Yet, the most successful and efficient societies that exist today are capitalist ones. People vote with their feet and even the poor flock to the US and other capitalist countries in search of a better life.

        “This is taken to horrific extremes in the practice of taking over companies and gutting them for profits. While that creates significant money for a wealthy few, it does serious damage to the economic system by eliminating jobs and so on.”

        As I say above, you are not qualified to make such unqualified statements on a subject which you do not understand. Read Friedman, Hayek, etc. What you write is simply boilerplate ivory tower pablum that has been repeated and repeated over and over again in the media and on college campuses and thus believed only by those who lack the requisite skepticism to think for themselves. The contrast between your burden of proof level for global warming vs. what you believe about economics would be quite amusing, were it not for the fact that you are a philosophy professor. I don’t say this to be mean. As I’ve said time and again, you are probably a very nice guy. My mother was a nice lady. She didn’t understand economics either.

        • Michael LaBossiere said, on September 8, 2011 at 1:14 pm

          Well, that is because it does have problems. You’ll note that I never advocate destroying capitalism or replacing it with full on socialism. You are beating on a straw man.

          I am quite qualified to state that gutting a company and firing people seems to be rather bad for those fired workers. Sure, it generates nice profits for those doing the gutting, but this is hardly job creation. If a company dies of natural causes (poor management, changes in technology, bad work practices, etc.), then that is fine. But to intentionally destroy a company to make a profit certainly seems unethical.

          What is it that you think I fail to understand?

          • WTP said, on September 8, 2011 at 2:14 pm

            Many things, Mike. But sticking to just this issue. Firing people is bad for those fired workers, but whose problem is that? The company does not exist to provide people jobs. The company exists to provide goods and services to customers in a manner that increases shareholder equity. If they could do it with robots, they would. It is everyone’s responsibility in life to be productive enough to support themselves. Each person has a responsibility to make themselves useful. It is not nature’s responsibility to find a use for people, nor is it society’s.

            “Sure, it generates nice profits for those doing the gutting, but this is hardly job creation. If a company dies of natural causes (poor management, changes in technology, bad work practices, etc.), then that is fine.”
            Please explain what exactly you are talking about here. How does one “generate profits” by shutting down a profitable business? Now there are companies that are on the verge of going belly-up anyway, but what productive company, competitive in it’s industry has been shut down? Bought out and run more efficiently perhaps. You’re using boilerplate leftist dogma as fact.

            It amuses me when people say things like “my job”. Workers don’t have jobs. The entities that they work for have jobs to be done. They hire workers to do those jobs. If they can get those jobs done without those workers, what is the obligation to employ them? A little off the main topic, but consider this…we could create tons of jobs by requiring every homeowner to pay someone to do their lawn maintenance. But would that be a good idea?

            As for me “beating on a straw man”, well if that’s not the pot calling the kettle black…Of course capitalism has problems. Everything has problems. Name one economic system or, better yet, philosophy that has no problems? What you seem gloss over are the problems that are created by the “solutions” proposed by those of a philosophical bent who lack real world experience. Not the best link to support my point, just one I have handy:

            http://www.nationalreview.com/corner/276469/why-johnny-cant-figure-out-which-end-hammer-hold-mark-steyn

  3. magus71 said, on September 6, 2011 at 1:45 pm

    “Or maybe not. Corporations might simply look at their savings and decide to keep the money as profit rather than pay it out in wages.”

    So what changed from 6 years ago? They were doing well then, too.

  4. T. J. Babson said, on September 6, 2011 at 1:57 pm

    Small business has always been the engine of job growth. Our entrepreneurs are being discouraged, Gulliver-like, by a thousand little threads holding them down.

    • Michael LaBossiere said, on September 6, 2011 at 5:48 pm

      One source of trouble is the fact that bureaucracy tends to grow and almost never shrink. Rules pile up for various reasons (often based on some event of the moment or political fad) and seem to rarely, if ever, be reconsidered and purged. Some folks have suggested that all laws should have mandatory expiration dates and they have to be reconsidered and re-passed. Of course, that would create problems as well.

      • WTP said, on September 7, 2011 at 2:26 pm

        Lest I be accused again of being a mean old meany, I agree. But you do seem to like the idea of placing more and more restrictions on markets. While I am not opposed to all market regulation, certainly what we have today is out of control. See my post above about how hard it is to fire people.

        • Michael LaBossiere said, on September 8, 2011 at 1:17 pm

          I’m not for a mere numerical increase. I am, at heart, in favor of liberty over regulation. However, the freedom of each of us requires some limits on what others can do to us. As such, I am fine with restrictions that are aimed at keeping people from doing harm to each other, be that physically or via the markets. This should be done with the minimum amount of regulation. I am, believe it or not, a small government person: the government should be just large enough to meet its legitimate obligations and should not grow beyond that.

  5. T. J. Babson said, on September 6, 2011 at 7:24 pm

    I read the following in Robot Magazine:

    ROBOT: Texas is noted for its job
    growth and innovative companies like
    DaVinci Minds—what is behind this?

    CLIFF: I think it is our state’s focus on
    education and our strong entrepreneurial
    spirit, as well—which permeates not
    only business but the education community
    and even our government organizations.
    I think of it as “pioneer spirit,”
    which you can find anywhere in the
    U.S., and, excuse my bias, especially in
    Texas!

    The article is online here:

    http://content.vexrobotics.com/docs/pdf/ROBOT_Grassroots_SeptOct11.pdf

  6. magus71 said, on September 7, 2011 at 12:59 am

    The major thing I see is the atmosphere of uncertainty that Obama created. All his talk of change is harmful. In uncertain times, people hunker down and don’t take risk. Few people really know where he stands and he seems haphazard in his agenda.

    • T. J. Babson said, on September 7, 2011 at 7:00 am

      I agree that uncertainty is one of the big reasons people are unwilling to take risks now, and Obama has contributed to this uncertainty.

      What some may not understand is that the girls with their lemonade stand are truer capitalists than corporate CEOs who get ahead by lobbying and manipulating government.

    • T. J. Babson said, on September 7, 2011 at 7:04 am

      Obama’s most recent fetish, moderation, also is proving something of a bust. Anxious not to be labeled anti-business, he has surrounded himself not with entrepreneurs but consummate crony capitalists — chief of staff Bill Daley (scion of the Chicago machine family), General Electric‘s Jeffrey Immelt and proposed Commerce Chief John Bryson, who has spent much time as a master manipulator for a large regulated utility. These figures have little or no credibility among grassroots businesspeople. They are seen as being more adept at working the system than succeeding in the free market. If this is what moderation is about, the public has good reason not to trust it.

      http://www.forbes.com/sites/joelkotkin/2011/09/06/obamas-economic-trifecta-how-the-president-helped-kill-progressivism-capitalism-and-moderation/2/

      • WTP said, on September 7, 2011 at 2:36 pm

        Speaking of crony capitalism, Mike speaks of how he disapproves of government handouts to big business. Mike, does this story concern you? It’s $500 million of our tax dollars wasted…

        http://online.wsj.com/article/SB10001424053111904900904576554542751469206.html?mod=googlenews_wsj

        An interesting side story is how a reporter at Time magazine mocked Republicans for questioning this company’s viability, only to have to eat his words:

        http://www.verumserum.com/?p=28820

      • Michael LaBossiere said, on September 8, 2011 at 12:42 pm

        He is moderately moderate.

        Because of the political machine that we have forged, politicians need to have ready sources of big cash to tap. That is the fuel of modern politics.

        I find Buddy Roemer rather interesting-he seems to be intent on changing how the machine runs. Most folks in the media and the Republican party seem intent on ignoring him (and Ron Paul). That does seem to be an actual media bias-they seem to systematically ignore or downplay Roemer and Paul. I disagree with Paul on many things, but he does seem sincere and certainly has earned the right to be accorded some respect.

    • Michael LaBossiere said, on September 8, 2011 at 12:38 pm

      He wants more jobs for Americans. Plus, he’d like the Republicans to stop being so mean.


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