• Tag Archives Bernie Sanders
  • Why Bernie Sanders’s Universal Job Guarantee Is Fool’s Gold

    Presidential candidate Bernie Sanders doubled down when asked about his universal jobs guarantee included in last Tuesday night’s Democratic debates. “Damn right, we will” create jobs for every adult in the workforce, he insisted.

    But Sanders’s promise of jobs for all, however appealing it may sound, aims at the wrong target.

    In what Henry Hazlitt described as “the fetish of full employment” in his 1946 classic Economics in One Lesson, Hazlitt declared that the goal of full employment is fool’s gold.

    Instead of focusing on policies to maximize employment, Hazlitt declared, “We can clarify our thinking if we put our chief emphasis where it belongs—on policies that will maximize production.”

    Why focus on maximizing production rather than jobs?

    Creating jobs is easy. As Hazlitt wrote, “Nothing is easier to achieve than full employment, once it is divorced from the goal of full production and taken as an end in itself.”

    Economist Milton Friedman was once traveling overseas and spotted a construction site in which the workers were using shovels instead of more modern equipment like bulldozers. When his host responded that the goal was to increase the number of jobs in the construction industry, Friedman replied, “Then instead of shovels, why don’t you give them spoons and create even more jobs?”

    The key to a healthy economy, conversely, is increasing production using less and less labor. Trying to exclusively “create jobs” or provide universal job guarantees can lead to perverse incentives like restricting workers’ access to productivity-enhancing capital goods in order to require more workers than necessary to produce goods and services.

    Under a plan like Sanders’s, a project would be considered more successful the more people it employed relative to the value of the product of the work performed. In short, success would be measured by making labor less and less efficient.

    How can it benefit society to demand, say, 200 workers build a bridge that could have been built using 100?

    As Hazlitt wrote,

    The economic goal of any nation, as of any individual, is to get the greatest results with the least effort. The whole economic progress of mankind has consisted in getting more production with the same labor.

    Value creation, not a measure of employment, is the true measure of economic well-being. Imagine if society could enjoy a luxurious standard of living that requires only half of the people to work to provide it.

    Hazlitt asked,

    The real question is not how many millions of jobs there will be in America ten years from now, but how much we produce, and what, in consequence, will be our standard of living?

    Moreover, Hazlitt dismissed concerns that labor-saving capital goods would cause significant unemployment. Indeed, he argued the opposite. “[O]ur real objective is to maximize production. In doing this, full employment—that is, the absence of involuntary idleness – becomes a necessary byproduct,” he wrote.

    Prioritizing employment over productivity puts the cart before the horse. He noted,

    [P]roduction is the end, employment merely the means. We cannot continuously have the fullest production without full employment. But we can very easily have full employment without full production.

    And the labor that is freed up due to productivity gains can be employed in satisfying other needs and wants of consumers, often new or not-yet imagined desires.

    As Steve Jobs said to Business Week in 1998: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

    If labor is tied up using spoons in make-work, government-sponsored “job guarantee” jobs, who will produce the next big thing?

    Government jobs programs will not only tend to reward less efficient labor but will also tend to tie the labor force to current modes of production, allowing less opportunity for life-changing innovations.

    In sum, high levels of employment do not necessarily mean prosperity. As Hazlitt concluded, “Primitive tribes are naked, and wretchedly fed and housed, but they do not suffer from unemployment.”

    Bradley Thomas

    Bradley Thomas

    Bradley Thomas is creator of the website Erasethestate.com and is a libertarian activist and writer with nearly 15 years experience researching and writing on political philosophy and economics.

    Follow him on Twitter: ErasetheState @erasestate

    This article was originally published on FEE.org. Read the original article.

  • Economics Lessons for Bernie Sanders

    It’s hard to tell at this point if Bernie Sanders’s presidential campaign is faltering because his ideas have gone from bad to worse or if his ideas are getting worse because his presidential campaign is faltering. Causality notwithstanding, both things are undoubtedly true. Just three months ago Sanders was solidly in second place with 24 percent support. That number has now dipped to under 17 percent. Over that same period, Elizabeth Warren has gone from about 6.5 percent to more than 16 percent, just half a percentage point below Sanders.

    It is clear that Sanders’s best chance at the White House was four years ago, and his 2016 run is not translating into success this time around. As that becomes more apparent, Sanders is becoming increasingly desperate to recapture the momentum he once had. All he can do now, though, is point the finger of blame at a growing list of villains.

    This time, it’s “big media.” More specifically, and predictably, it’s Google and Facebook.

    In a late August Columbia Journalism Review op-ed, Sanders opined that the United States doesn’t have “enough real journalism” because “many outlets are being gutted by the same forces of greed that are pillaging our economy.”

    The error lying just beneath the surface of this claim is the same error that causes all of Sanders’s economic proposals to go off the rails. Bernie Sanders simply has no idea what role profit plays in an economy. Because of this, he naively equates “profit” with “greed.”

    Of course businesses pursue profits; they always have. They did before the current higher education bubble, before the housing bubble of the 2000s, before the stock market bubble of the 1990s, and before the precious metals bubble of the 1970s. Businesses even pursued profits before the Industrial Revolution—a time, presumably, that Sanders would not characterize as being “gutted by greed.”

    Sanders loses his way, regardless of what kind of greedy person he happens to be demonizing, by ignoring two important facts.

    First, businesses will always pursue profit because the human beings who run them want things. This is true regardless of whether the political system embraces free markets or requires complete socialism. Why? Because it is human nature to want things, and profits, regardless of how those profits are acquired, make it possible for people to get what they want.

    Second, there are only two ways a business can obtain profit. One is to offer consumers products they like so much that they willingly hand over their money. The other is to offer politicians favors, contributions, and considerations they like so much that they take consumers’ money and to hand it over to the businesses the politicians prefer. Incredibly, every one of Sanders’ economic proposals involves the latter approach.

    Are media outlets pursuing profits? Yes. What else would they do? But to achieve profits, they have to give people what they want. If there is a problem with the media, it doesn’t originate in the media but in people’s preferences.

    Sanders points to the 1,400 communities that have lost local newspapers as proof positive that the government needs to intervene in the news market—something he promises to do if elected president. What he doesn’t seem to understand is that these news outlets went out of businesses precisely because people in the communities in question did not support the outlets. Why not? Because those news outlets were selling things that people simply did not want to buy. Now, Bernie Sanders wants to spend tax dollars to support these newspapers, thereby forcing people to pay for news products they have already demonstrated they don’t want.

    He is saying, in short, that he knows better what people should want than do the people themselves. But he doesn’t know better, and he proves as much regularly, which is why his campaign is faltering in the first place.

    This article was reprinted from Newsday.

    Antony Davies

    Dr. Antony Davies is the Milton Friedman Distinguished Fellow at FEE, associate professor of economics at Duquesne University, and co-host of the podcast, Words & Numbers.

    This article was originally published on FEE.org. Read the original article.