The spectacular failure of private markets and private employers to create enough jobs in the United States is now obvious for anyone to see. The solution, too, is obvious.
The problem and the solution are so obvious the New York Times can safely opine that the government does create jobs. Lots of them. Necessary jobs.
including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s old job) and congressmen (like Paul Ryan).
And, of course, it can create even more, at the local, state, and federal levels.
Which, precisely, is what makes private-market devotees like Robert Samuelson absolutely crazy—so much so he feels the need to write a column refuting an editorial.
Job creation in the private sector is mostly a spontaneous and circular process. People buy things they need and want. Or businesses and private investors take risks by investing in new products, technologies and factories. All this spending, driven by self-interest and the profit motive, supports more jobs. In a smoothly functioning market economy, the process feeds on itself. By contrast, public-sector employment grows only when government claims some private-sector income to pay its workers. Government is not creating jobs. It’s substituting public-sector workers for private-sector workers.
Notwithstanding his equivocation on the fiscal multiplier (which, like climate-change denial, needs only the admission that some people disagree with the emerging consensus), Samuelson has to admit there is an exception:
There is one glaring exception to the logic I’ve outlined. When the economy is in a deep slump, government can — in theory — increase hiring by borrowing and spending when consumers and businesses are retrenching. If the Times had confined its argument about government job creation to this possibility, it would have been on more solid ground.
What both the Times and Samuelson are dancing around is the irrationality of an economic system in which enormous resources and productive capacity sit idle while millions of workers remain jobless. We know, for example, that 27.4 million Americans are either unemployed or underemployed. At the same time, the capacity utilization rate of U.S. industry stood at less than 80 percent (78.3 percent, to be exact) in September.
That’s the insanity of the current situation: idle machinery and idle workers, and the inability of private markets to solve the problem by matching the two up.
No wonder honest observers are turning to (and others, like Samuelson, attempting to deny) the lessons of the First Great Depression, when in the midst of a similar situation the government directly employed millions of jobless workers.
But to do so would involve admitting that capitalists and capitalism have failed. Spectacularly. And so the myth of private “job creators” lives on, just like the myth of trickle-down economics.