A Jobs Proposal

A massive federal Jobs Agency with broad authority as to the means to create jobs. Sounds like a recipe for disaster. Patronage. Special Interests. Bureaucracy. Waste & Inefficiency. I’m afraid I’ll look back one day and hang my head in shame at what is written here, given my libertarian leanings. What are the chances for making this a success? Probably zero. Piecemeal solutions. Half-hearted implementations. Cherry-picking. Dumbing down. This proposal will die a thousand deaths in committee before it ever sees the light of day. At least I provide ammo enough to kill the many inferior solutions being offered.

So why even care?

Contents

  1. A Jobs Proposal
  2. Why Care?
  3. The Proposal
  4. Encino
  5. Illustrative Projects
  6. Limitations & Guidelines
  7. The Engine of Growth
  8. Capitalism & Productivity
  9. Concluding Comments

Why Care?

Getting a job is not just a means of earning money. Jobs are integral to individuals’ understanding of themselves. A job is the means by which individuals feel they are helping others. It is the means by which individuals learn to deal with others with whom they may otherwise have deep enmity due to religious, political or social differences. It takes individuals out of their selfish mindsets and allows them to more readily see the viewpoint of others. It teaches negotiation skills, listening skills, tolerance and discipline. It builds pride in learning and executing new skills. It becomes part of one’s reputation. Jobs build both individual character, and national unity.

Giving someone a job is not just paying a wage. You have to administer to the person’s records and their bodily needs. You must put up with their quirks. You must endure their whining and grievances. You become an object of scorn and hatred when employees think they know more than you. You must make the tough choices to let go the few for the sake of the many, and to empathize with those few even though you may know them little. Taking on an employee is a great responsibility. It goes far beyond just paying a wage. But you also learn what it takes to run a business, grow an economy, and become a leading citizen.

I make this proposal as an alternative to federal government handouts. It is my belief that the ‘rational hand’ can help the ‘invisible hand’ do some of the heavy lifting. We lift citizens off the dole and into well-paying jobs. A well-ordered economic system does emerge, without rational intervention and quite miraculously, from the billions of private business transactions that take place every day in a modern society. But this ‘invisible hand’ or emergent economy does not necessarily achieve our best, as evidenced by persistent cycles of boom and bust, and persistent low levels of income for many wage earners. Yes I know these shortcomings are often blamed on the unintended consequences of government ‘rational’ interventions. Even if this is the case, this proposal, with its stringent limitations and guidelines, can help. We perform (limited) domestication of the wild economy, always keeping in mind that Mother Nature provides the raw materials (i.e., private transactions) within which we must work.

Still with me dear reader? Too bad, it’s a beautiful day. Go outside and play.

The Proposal

  • We create a national Jobs Agency, which ensures the availability of job openings with generous hourly wages for all citizens, including during economic downturns. Job creation and wage level support are inextricably intertwined.
  • We do NOT mandate how to do this beforehand (see illustrative projects). Job creation and wage level supports are left entirely up to the creativity of management in the federal Job Agency, subject to strict guidelines. There is no one answer and what works today will often be found inadequate tomorrow.
  • The federal Job Agency has broad authority, e.g. it can: commandeer funds from the rest of the federal budget; control guest worker levels (work visas); throttle purchases of federal supplies; reschedule federal construction projects; adjust up or down the minimum wage; tweak the timing of federal hires; enact temporary trade barriers; borrow during economic downturns. This is not your typical walled-off bureaucracy – job creation becomes integral to the way we do federal government.
  • This federal jobs program works in parallel with a separate federal program designed to dampen economic peaks & troughs by establishing private investment funds for long-term steady, safe growth for individual retirement savings (this is a separate program not administered by the Job Agency, see here for one possible investment vehicle). These investment options compete with financial intermediaries (e.g., mutual funds, stock brokers, pension funds, contribution plans) who today leverage trading in NASDAQ, the NYSE and other public stock exchanges. We invest into private ventures, yield near-market returns and we do this without being subjected to the whims of investor psychology (up or down) that come with unlimited public trading.

Seems straightforward, but here’s the rub. In the aggregate… You can’t increase numbers of jobs without an increase in standards of living. You can’t increase standards of living without an increase in worker productivity. You can’t increase worker productivity without an increase in the personal aspirations of the workers. Call it the Hormel Chili rule. If workers ‘settle’ for a can of chili instead of a restaurant meal, then the economy will ‘settle’ at this low level of economic productivity (I happen to love Hormel Chili, but it doesn’t return the love). I can manufacture many cans of Hormel Chili with very few labor hours. To increase jobs and wages you must increase the aspirations of individuals and provide them the means to meet those aspirations.

Encino

encino_motelIt is a slow day in the sleepy town of Encino and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit. A tourist drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms to pick one for the night.

  • As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.
  • The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
  • The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.
  • The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.
  • The hooker rushes to the motel and pays off her room bill with the motel owner.

The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything. At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves. No one produced anything. No one earned anything. Yet the whole town is now out of debt and now looks to the future with a lot more optimism. (ref. )

Injecting new money only works to the extent there is unused productive capacity in the town. If our Jobs Agency drops this same $100 bill into a town with overcapacity, where all rooms and prostitutes are fully booked, then we pay more for our rooms, meat and prostitutes. There is no effect (or perhaps even a negative effect) on standards of living, productivity and personal aspirations. And even if there isn’t overcapacity, as in the case of Encino, although everyone feels better off today, nothing changes tomorrow (unless you keep dropping in $100 bills until you reach overcapacity).

Our mandate for the federal Jobs Agency is to grow standards of living, industrial productivity and the personal aspirations of workers. Sounds like the perfect assignment for civil servants in a federal bureaucracy, heh? We continue.

Illustrative Projects

We do not mandate how the Agency is to do this work beforehand. Balancing job creation, wage support, labor productivity, standards of living and federal budget constraints is tough. It takes a creative, talented Agency management. It takes many distinct initiatives working in parallel. It takes independence from the day-to-day machinations of the political process. I envision a semi-autonomous agency such as the Federal Reserve (recognizing the negative connotations this may raise for many readers).

I propose the Jobs Agency work as a program office, staffed almost entirely by senior level executives managing a portfolio of job creation projects. The ‘work’ of the Agency is farmed out to non-governmental concerns. Below are projects that illustrate the proposed scope and flexibility of job creation actions open to the Agency:

  • Throttling of work visas for foreign guest workers. More visas during good times and fewer during bad
  • Tweaking the timing of purchases for non-perishable federal assets (e.g., bulk energy supplies, ammunition, rare earths). Less during good times, more during bad.
  • Tweaking the timing of federal infrastructure construction projects (and federal hiring). The Jobs Agency can commandeer and sequester other federal budget dollars for use during bad times.
  • Local self-help initiatives (i.e., local banding together of ambitious entrepreneurs)
  • Tweaking the mandatory minimum wage (i.e., setting minimum wage counter-cyclical with unemployment)
  • Enacting targeted trade barriers (2 year limitation)
  • Partnering with financial intermediaries (banks, venture capitalists) who specialize in starting or growing businesses (limited partner participation)
  • Establishing a National Jobs Corp. (2 year commitment)
  • New or major upgrades to national heritage sites (i.e., where the federal government has funding responsibility). The timing of this work is heavily skewed towards periods of economic downturn
  • Identifying foreign aid recipients that can effectively use a fast, short-term bolus of goods and/or services (i.e., where the federal government already has in place an aid program for the recipient country)
  • Subsidizing labor pools, where employers bid for difficult-to-employ job seekers at steeply discounted rates (2-year subsidy limit per employee-employer relationship).

The astute reader will recognize several of these projects as being at the center of today’s great political debates. These debates touch on well-founded fears (e.g., immigrants displacing citizen jobs or dragging down hourly rates). These fears often stem from piecemeal solutions. We intend the Agency to do and spend whatever it takes to achieve its broad program goals, in a coordinated manner, while minimizing disruptions to the economy and to other political agendas. We intend citizen job creation to be job #1 for the federal government, trumping all its other political concerns.

Limitations & Guidelines

This proposal must be safeguarded with a sunset provision, a poison pill: this program dies automatically unless a super-majority votes to keep it alive in a national referendum every ten years. This federal program must be super-popular otherwise throw it into the dustbin. Only with this provision would I support my own proposal.

Herein we provide ‘hammers’ opponents must use to discredit this Jobs Agency in the public eye. We appeal to patriots to attack this Agency with resolute determination, to help Agency management in their efforts to stave off ‘capture’ of the agenda by special interests. Zealots who push too hard for special privileges from the Agency run the risk of losing it all during the next nationwide referendum. Agency management should always be operating on a knife’s edge, as sharpened by the harsh criticisms of die hard, anti big government libertarians.

A federal agency having such extraordinary powers and scope needs correspondingly strict (and highly defined) limitations and guidelines:

  • Projects must, to the extent possible, avoid distortions to private markets (e.g., salvaging businesses that should be allowed to die; pushing up minimum wages and therefore inflation). As will be seen we do intend to ‘distort’ the market for low-wage labor by competing based on wages
  • No social agendas allowed (i.e., calls for ‘fairness’ ‘worker affiliations’ ‘project sponsor size’ ‘industrial sectors’ ‘demographics’ ‘set-asides’ ‘supplier credentials’ ‘geography’ ‘urban revitalization’ ‘environmental protection’ etc.)
  • No ‘investments’ into technologies, infrastructures or industries not already proven to be economically self-sustainable without subsidies, and at the proposed scales of production (e.g., no build-it-and-they’ll-come  projects)
  • No ‘dumping’ of excess production on other nations
  • No ‘make work’ projects (e.g., replacing bridges before their expiration date, cash-for-clunkers)
  • Government agents are NOT allowed to propose job projects (nor others on their behalf, why?), though the Jobs Agency may at times solicit these projects to back-fill unforeseen shortfalls in jobs creation
  • Projects must be completed within 2 years, with renewal contingent on submission and acceptance of a new project proposal
  • Projects should, to the extent possible, be prioritized toward sponsors and/or intermediaries who are already reputable, well-established legal entities. No calls for ‘fairness’ are allowed in project selection or awards.
  • Project approvals are subject to congressional committee oversight and veto (i.e., a line item veto). However, Job Agency management solely identifies and prioritizes all projects.
  • All project results will be independently evaluated against the project’s stated goals and objectives (e.g., productivity, stake-in-the-game, job-hours per federal dollar subsidy). Project success is a key component of Job Agency evaluation.

As a scandal-monger I cherry-pick these limitations while simultaneously combing through Job Agency projects. I look for instances of patronage, failed projects, ‘bridges to nowhere’, etc. I look for splashy headlines that can be used to kill this monstrosity. I hammer relentlessly, year-after-year to undermine Agency credibility with the tax-paying public. Survival requires a super-majority. I only need a significant minority.

Institutional respect in the U.S. is best found in the Constitution. All other forms of legal protection are corrupt. Zealots pushing for equal protection under the 14th amendment must run up against Job Agency restrictions in the 28th amendment. Job Agency Limitations and Guidelines must attain to this level of respect, and in a way that allows for refinements over time. One way is to make continuance of the Jobs Agency contingent on passage of constitutional amendments. Agency supporters have ten years to build momentum for passage of this enabling amendment. Pass the amendment and the Agency survives.

The Engine of Growth

Herein we find the engine of this proposal. Labor earning less than $20 per hour today can be made more productive. Both in slow times and in fast. Residents of the sleepy town of Encino can be made to appreciate and aspire to more than Hormel chili. We supply capital, federal capital, to create more capital, in a way that targets the residents of Encino, that is to say, citizens making less than $20 per hour. We act like capitalists in every greedy sense of the word, but we target the large untapped market for increased productivity in under $20 per hour labor force. We increase productivity, get a good return on our capital investment and the whole nation now looks to the future with a lot more optimism.

Walk into the Red, White and Blue Thrift store in Hamilton, NJ and you’ll see staff and cash registers abuzz with activity, 7 days a week and 12 hours per day. Customers line up to shop at this store. You find amazing bargains: designer dresses for $6, blue jeans for $4 and t-shirts for $3. There’s an incredible thrill in finding that single article of clothing which has your right size, color and features from amongst the endless racks of clothing. Employees earn minimum wage. That’s the only wage these prices can support. This is a low-capital, low-productivity business.

The government raises real wages only to the extent it can increase labor productivity. We increase productivity only to the extent we can profitably invest capital to lift the under-performance of our targeted wage class. The Jobs Agency makes its investments (i.e., its conversion of capital into machines, organization, etc.) preferentially based on a criteria that customers willingly reach into their own wallets and pay prices for our goods that make $20 per hour labor possible. We compete with Thrift stores for their employees, siphoning off employees into better paying jobs.

For example, elderly single female homeowners may feel safer having their home repairs serviced by an all-female home-fix it company. Many homeowners would subscribe to have home exhaust fans regularly serviced and cleaned. Door-to-door pet-grooming. Upside-down pizzas (mmm! fried cheese). A grocery store specializing in low carbohydrate foods climbs the value chain toward manufacture of low-carb breads, pizzas and chili’s. The Jobs Agency provides high-touch, advice-laden investments into these under-performing or new(er) ventures. There are millions of business ideas, many franchisable, looking for investors and newly-minted entrepreneurs.

To do this on a scale that would raise the wages of tens of millions of citizens requires a system that performs hundreds of millions of financial transactions, each subject to fiduciary oversight. This cannot be done centrally; rather it must be handled by financial intermediaries trained to specialize in these transactions. We leverage the skills of bankers, venture capitalists, investment groups and others who today routinely assess and finance hundreds or thousands of proposals for new business ventures.

And we leverage these intermediaries in a way that does not cheat this new (often-taken-for-stupid) angel investor, aka the federal government. We don’t get saddled with bottom-of-the-barrel or family-and-friends investment projects. This is the secret sauce of the Jobs Agency. Without going into details, protections include unpredictability, over-subscriptions and competition across intermediaries for participation. And we must protect our investments at the risk of losing everything at the next referendum.

Capitalism & Productivity

The Jobs Agency maintains employment by dampening (husbanding) productivity during prosperity for use during times of distress, e.g., throttling of government purchases, work visas, hires and construction projects. These projects do not increase long-term productivity nor wage levels.

The Jobs Agency grows employment and wage levels by investing into private (high paying) ventures. And, as the federal government, it does this without siphoning off productive private capital (a long story, but it has to do with risk-return premiums). These investments are the heart of the Jobs Agency and constitute our discussion here.

Someone worked more in the past than they needed and their excess work was captured as capital stock (i.e., savings). This capital stock was then used to build machines, organization, expertise, technology, infrastructure and other ‘aids’ from which today’s labor can produce more (or better, or newer) goods and services from the same number of work hours. The senior consultant develops intellectual capital during her nights and weekends, and leverages that capital by training junior consultants, allowing more clients to be served. Our prostitute leverages the internet satisfying many more customers than possible during her early career. In the aggregate each person does more for their fellow man, potentially allowing all to achieve higher standards of living.

We leverage capital, excess work from the past, to create more jobs. Great ideas, talented workers, patented technologies and great ambition all mean nothing without capital. You make a deal with the devil (i.e., the capitalist) or your patents expire, your workers leave and your great ideas drive you to despair from your inability to have them realized. The one thing you can’t buy is time; yet capital allows you to buy talent to shrink time. ‘Strike while the iron is hot’, that is to say, during those fleeting moments when the market is ready for your product and/or service. Think leisure suits.[1]

We make it and they take it! The workers are producing wealth but it’s going to the Capitalists.

We raise wages (mostly) by competing for labor not by fiat. The Jobs Agency invests in businesses that can afford $20 per hour labor. It provides an abundance of $20 per hour jobs looking for laborers. It is up to laborers to move toward those jobs and away from Capitalists who do not share the wealth.

Measuring national productivity is imprecise and full of loopholes. But it is not illogical to assert that having all individuals produce goods and services others are willing to buy is, by definition, more productive than putting those same individuals on the dole. Careful. It does no good for productivity to create jobs by having individuals sell dollar bills for $.90. But we start by having all individuals produce more than it costs (including Agency costs) to get and keep those individuals employed. We then constantly push to increase the amount of money others are willing to pay for goods and services provided by these individuals.

Suppose national retail wages now average $10 per hour. Are we proposing to out-compete this 10% of the economy? Not at all. We set $20 per hour as the targeted (desired) wage rate and nudge average wage rates upward over many years. We invest where wage earners can receive upwards to $20 per hour, and slowly bring along the rest of the economy. Replacing the thrill of that special find at Red, White and Blue will take time.

Government actions in these financial transactions must be just as greedy as the private capitalist. This is not a charity. This is not bureaucratic waste and inefficiency. We intend, at the end of ten years, to proclaim that this federal agency cost the taxpayers nothing, indeed it contributed significantly to federal receipts. We run this agency like a profitable business, giving our investors a reasonable return on their invested taxes. We pay back taxpayers. It just so happens our investments raise standards of living, industrial productivity and the personal aspirations for all workers, especially those earning under $20 per hour.

Concluding Comments

It’s not hard to imagine a society where all the basic needs of its citizens can be manufactured or serviced by a privileged few, due to automation, production efficiencies and high levels of capital utilization. The ‘jobs’ of the few can, without major contradiction to logic, support the basic needs of all. Think Star Trek replicators.

Offsetting this imagined world, the ‘needs’ of individuals grow without bound. This is a fundamental consequence of the capitalistic system: capital seeks the means for its own growth and is unrelenting in pushing consumers to believe they ‘need’ more of its output, of increasing worker aspirations. The toys of the privileged few taunt the imagination of the many. Capitalism is ‘the consumer society’.

Let’s just meet those needs of the poor where we can all agree! Food. Housing. Transport. Healthcare. Internet Porn. We’ll take from the privileged few and give to the rest.

He is holy. He carries in his heart the secret of renewal for all: that power which will, at last, establish truth on the earth, and all men will be holy and love one another, and there will be no more rich nor poor, no exalted nor humbled, but all will be as the children of God, and the true Kingdom of Christ will come. – Alyosha, Brothers Karamazov

It’s easy to erase the distinction between rich and poor in a society. It’s hard to do this and grow the economy.

Perhaps the economy shouldn’t grow as fast as it can. Perhaps instead we lessen the distinction between rich and poor, and achieve the best of both worlds. We measure and pace our growth so the poor do not so much feel the distinction. We take today’s productivity and redistribute it to the under-$20 per hour working class.

Upper middle class crassness! How dare we think to shield the lower class from this distinction rather than give them the opportunity to rise to upper class status! The aim of government is to provide opportunity for all. Not to feel sorry or stoke the flames of envy.

We want the best out of each of our citizens: from each according to their ability. The ‘best’ is necessarily subjective, not centrally adjudicated. We provide distributed, unbiased, unambiguous signals to each individual as to whether or not they are achieving their best. Not just ‘keeping up with the Jones’, but more importantly recognition of a job well-done, by peers from whom we value this recognition.

Best for what? We want all citizens to actively help each other to achieve meaningful, fulfilling lives. Employers helping employees. Employees helping consumers and suppliers. We provide products and services customers are happy to reach into their pocketbooks to purchase. We purchase the most appropriate supplies delivered in the most appropriate manner. We interact with customers, suppliers, and partners in a thousand ways. We remember coworker anniversaries. We celebrate births. We mourn losses. We lunch together. We go out for a brew after work.

Give people a handout and their lives remain unfulfilled. Give them a chance to earn a living, to go after a set of needs without bound, and they grow their aspirations along with their lives. It’s not the destination, it’s the journey. We humans treasure narratives, great passions and the thrill of obstacles overcome. These you don’t get with a government handout. Instead we follow the game plan of the capitalist: we drive up demand for goods and services produced by our capital, to create more capital, and then do it again. We drive up the aspirations of the under $20 per hour labor class and provide them the means to meet those aspirations without bound.

If we can just keep this Agency from getting co-opted by those damn special interests and self-serving politicians.


1. There’s an apocryphal story of one clothing manufacturer who missed the leisure suit fad due to its inefficient distributor partners, and ended up with a warehouse filled with unsellable merchandise.

 

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