Market Creation vs. Job Creation

I’ve blogged about the Olympics a few times, and I’m going to again, but this post isn’t about the Olympics specifically, it’s just a good case study. Perhaps I’ve been reminded of it by the winter Olympics.

One of the things said about projects like The Olympics, The Millennium Dome, the proposed high speed rail link, and endless other publicly funded projects that are more mundane, is that they create jobs. I wanted to write something about that claim.

Undoubtedly, the Olympics did create jobs in a nominal sense. But randomly burning down people’s houses would create jobs, does that qualify ‘randomly burning down houses’ as a job creation strategy? Would saying “it creates jobs” be a valid justification for doing it? Pointing out that a large scale activity creates some jobs is specifically misleading.

I think the most important thing to note is that in a market system wealth concentrates. Remember that the point of job creation is to counter disparity of wealth [1]. So the purpose of job creation is to reverse the effects of the market system. As I have pointed out many times, jobs are a cost and market systems reduce costs. This is why it has to be done by the state, because the state can ignore market forces.

The money spent on the Olympics was to instigate a huge market event in which existing industry could make money. By virtue of how our economy is structured that means that the major benefactors of the budget were marketing and financial companies. In so far as work was done by the private sector it is been done with the minimum number of jobs possible [2]. Much of the money spent will have filtered to the top, paying people a minimum along the way to maximize profits (i.e. upward flow). As a final insult, taxpayers didn’t even get free tickets, they had to pay to go. And although lots of small companies will have increased takings for a while, that will have been mostly funded by the publics wages… in other words funded by existing jobs. So in total it’s hard to see how this could be said to have created jobs, let alone call it job creation.

A job creation policy would be one specifically designed to reverse the upward flow of wealth, not inject finance into a market system. It would be required to get as much of the budget as possible into the pockets of those given jobs. It would create jobs that are of benefit to society, on a local level, specified at the community level.

We currently have a housing shortage. We apparently find it hard to collect bins every day, and we need to sort our rubbish. Much of the country is dilapidated. We are losing public services and closing down community resources. And yet… we have a job shortage. Why can’t we join the dots?

Because debt!

The argument is that it would cost too much. Actually this is nonsense. A government that issues it’s own currency, and can sustain a tax burden, can pay for job creation out of it’s deficit to whatever extent it feels necessary because it issues the currency in which debts are settled.

[1] You could also note that job creation is about creating productivity but products aren’t much good if no-one can afford to buy them.

[2] This will only get worse as technology advances.

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