On So-Called Job Creation

From the Telgraph blog Ways and Means:

Thomas Robert Malthus’ Essay on the Principle of Population was already well-known, indeed highly controversial, in 1838. But when Darwin read it in October that year, he saw something that no-one else had.

Malthus’ argument was deceptively simple known. Populations increase geometrically (1, 2, 4, 8, 16, etc) whereas the resources on which they depend increase arithmetically (1, 2, 3, 4, 5, etc.). In a moment of inspiration, Darwin recognised that the resulting “resource scarcity” selected some organisms (those better adapted to survival and reproduction) over others. Evolution by natural selection was born.

170 years later it is apparently over – at least for humans – or so reasoned Steve Jones in this newspaper last week. Fewer older fathers, more interbreeding between previously separated communities and greater resistance to nature’s processes of selection means that, for humans, natural selection’s engine has been switched off…

Our uniquely human capacity to improve resource yields seemingly indefinitely has led some to believe that we can pretty much conjure assets out of thin air. Banks traded vast resources that simply weren’t there in the belief that, if we just had enough faith, one day they would be. The Malthusian message of necessary limits was unwelcome at this party of everlasting wealth.

Take a long look at the bolded part: human population grows exponentially while our resources grow arithmetically. Obviously, with time, our population would, theoretically, surpass the total amount of usable resources on the planet. I’m reminded of a chilling quote by Thomas Pynchon from his magnum opus, Gravity’s Rainbow:

The Serpent that announces, “The World is a closed thing, cyclical, resonant, eternally-returning,” is to be delivered into a system whose only aim is to violate the Cycle. Taking and not giving back, demanding that “productivity” and “earnings” keep on increasing with time, the System removing from the rest of the World these vast quantities of energy to keep its own tiny desperate fraction showing a profit: and not only most of humanity — most of the World, animal, vegetable, and mineral, is laid waste in the process. The System may or may not understand that it’s only buying time. And that time is an artificial resource to being with, of no value to anyone or anything but the System, which must sooner or later crash to its death, when its addiction to energy has become more than the rest of the World can supply, dragging with it innocent souls all along the chain of life.

We are, indeed, living in this system, when we have been our demand for a certain resource, namely money via credit, has surpassed the banks’ stores of actual money — and, to alleviate this, we are simply throwing more money at the problem, which won’t fix things. But I digress, and will return to the real issue at hand: that of job creation.

Obama, earlier today, proposed a plan where he would give businesses tax credits if they created new jobs in the United States over the next two years, according to CNN, trying to get an incentive for businesses to hire new folks, citing that some experts believe that the unemployment rate could be as high as 9% by the end of 2009.

Let’s look back at what Malthus said about natural selection: human population increases exponentially, resources increase arithmetically. By extension, since jobs are (particularly Old-Middle jobs) the application of these resources to fit human needs, or to sell/manage a product, wouldn’t it make sense that jobs also increase arithmetically? Thus, logically, as the human population rises for any given area, the number of jobs in that area isn’t going to be able to match it (at least in the United States; if you live in China, there are cheap jobs abound due to cheap labor), resulting in… You guessed it: unemployment for some people. Of course, this is in the very simplistic abstract, which ignores such jobs that do not require people using/producing “material” things (such as computer programmers). Just food for thought.

Under the Obama plan, the incentive would be for businesses to create jobs, and hopefully make more money in the process. The problem is that the money to pay these new workers has to come from somewhere, and if the tax break doesn’t actually save companies money (meaning the money they save from taxes must be greater than or equal to the wages they’re paying their new workers), why bother doing it at all? Those taxes could be used to pay for the multitude of spending programs Obama has on tap: that money has to come from somewhere, right?

In a discourse about this very subject over at Donklephant, commenter Shawn noted:

I think it’s not necessarily meant to spur the creation of jobs that wouldn’t otherwise exist, but maybe instead to make it more feasible for a company to create jobs in the USA, rather than overseas.

One of the realities of a global market is that for many lines of work, even unskilled american workers are way more expensive than overseas labor. Hopefully a tax credit can help bring the equation more in favor of keeping jobs here.

To which I responded:

I must concede that I had not thought about the implications for lower-middle class labor — perhaps it’ll work as desired to keep jobs here in the states rather than ship them overseas. It’ll have to be a massive tax break though, seeing as the difference between the wage of an unskilled worker here and an unskilled worker in China or Thailand is staggering.

I stand by my remarks, but, to be cliché, time will tell whether Barack’s plan will get us out of the hole we’re in, or, at the very least, start to get us out. One thing’s for sure: it will take a long time to start the healing process for this country’s economy.

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