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Reason...
What
Would You Do to Improve Job
Growth?
August 14, 2011
Reason
asks economists, writers, and
wonks for real ways to increase job growth
Robert
Higgs, Deirdre McCloskey, Amity
Shlaes, John Stossel, Don Boudreaux, Bryan Caplan, Bruce Bartlett,
Jeffrey A.
Miron, John Berlau, Allan Meltzer, Ira Stoll, Walter Olson, Peter
Schiff, Alex
Tabarrok, Fred L. Smith & Lucy Steigerwald | August 12, 2011
Faced
with a 9.1 percent unemployment
rate, a deeply disgruntled public and a creeping election season,
President
Barack Obama is hastily “pivoting” away from the debt ceiling debate
toward
jobs. In Michigan, where the unemployment rate is 10.5 percent, the
president
recently proclaimed “We know that there are things that we can do right
now that
will support job growth.” Things like building roads, extending
unemployment
benefits, cutting payroll taxes, and that old standby, clean energy.
Like
Obama, Rep. Nancy Pelosi
(D-Calif.) blames partisan bickering in Washington for the nation’s
economic
woes and recently accused Republicans of having “passed bills that
would
destroy up to 2 million jobs—nearly 10,000 jobs per day” in the 200
days since
she was booted from her role as House speaker. Pelosi, of course, is an
old
hand at job pivotry. She prefers her jobs bought and paid for by
federal money,
and in a pleasing shade of green.
Republicans
have their own jobs
agenda, but mostly prefer to talk trash about the Democrats. “Spurring
jobs and
the economy is always next on the Obama Administration’s to-do list,”
sniped
Current House Speaker John Boehner (R-Ohio) in an August 3 blog post,
“right
after more spending, more taxing, and more regulating.”
Meanwhile,
the American people are
raising a collective skeptical eyebrow at both parties on the
employment front.
A July Pew Research poll showed an even 39-39 split on which party
Americans
trust more on jobs. But a CNN/ORC poll released Friday finds that only
29
percent of respondants think there will be more jobs in their
communities a
year from now—and 26 percent think there will be fewer jobs.
In
an effort to produce real
free-market ideas for boosting employment, Reason asked some of our
favorite
economists, writers, professors, and entrepreneurs for one concrete
policy
change they would recommend that would increase job growth. —Lucy
Steigerwald
Robert
Higgs
Repeal
of ObamaCare would probably do
wonders to spur hiring, especially for permanent positions.
Compensation for
such jobs usually includes a benefits package with health care
insurance, as
well as a money wage or salary. Health care insurance often constitutes
a major
part of the employer’s cost of keeping a permanent worker on the
payroll, and
anything that makes this cost difficult to forecast makes employers
leery to
take on new workers.
ObamaCare—the
Patient Protection and
Affordable Care Act—is a gigantic statute, and it would be a big bite
for
employers to digest in any event. But as it stands, it serves mainly as
an
announcement that a large number of legal black boxes must be filled
with new
regulations that various administrative agencies will eventually
promulgate. As
Gary Lawson has written recently, “Implementation of the Act will
require many
years and literally thousands of administrative regulations that will
determine
its substantive content and coverage.”
This
situation creates tremendous
uncertainty that affects virtually all firms. After all, no matter how
firms
may differ in other regards, they all hire employees, and in most cases
employee compensation amounts to a major part of their total cost of
operation.
Repeal of ObamaCare would have many benefits, but surely a great
benefit would
be the removal of an ominous cloud of uncertainty about a critical
matter that
now hangs over the entire labor market. In the face of this
uncertainty, few
firms have been, or will be, willing to assume the risk associated with
increasing their permanent, full-time workforce.
Robert
Higgs is a senior fellow in
political economy at the Independent Institute. He is the author of
Crisis and
Leviathan: Criticial Episodes in the Growth of American Government, and
several
other books.
Deirdre
McCloskey
“Jobs”
are deals between workers and
employers, and so “creating” them out of unwilling parties is
impossible. The state,
though, can outlaw deals, and has. So: eliminate the minimum wage for
people
younger than 25. The resulting boom in jobs for young people will
amaze. Maybe
it will inspire voters to get the state out of the job-outlawing
business.
Probably not, so sure are we that the state “protects” by stopping
deals
between willing parties.
Deirdre
McCloskey is a professor of
economics, history, English, and communication at the University of
Illinois at
Chicago, and author of The Bourgeois Virtues: Ethics for an Age of
Commerce.
Amity
Shlaes
The
single thing the U.S. could do to
ensure long-term growth, including that of jobs, is to reform our
Federal
Reserve so that monetary policy is rules-based, not personality-based.
Even a
return to the gold standard would do, though it is also possible to
fashion a
monetary regime under which the currency is pegged to a basket of
commodities.
Amity
Shlaes is a senior fellow in
economic history at the Council on Foreign Relations. She is the author
of The
Forgotten Man: A New History of the Great Depression. Her biography of
Calvin
Coolidge will be released next spring.
John
Stossel
Close
the Departments of Labor,
Commerce, Agriculture, Energy, and HUD, then eliminate three fourths of
all
regulations.
John
Stossel’s show Stossel airs
Thursdays at 10 p.m. on Fox Business Network. He contributes a regular
column
to Reason.com.
Donald
Boudreaux
My
answer (within the realm of
“remotely politically possible”) is: Replace all income taxes,
including that
on capital gains, with a consumption tax. But do this only if the
Constitution
is amended to prevent government from taxing incomes and capital gains.
A
second, less radical, proposal is to
eliminate capital gains taxes and amend the Constitution to prevent
Uncle Sam
from taxing personal and corporate incomes at marginal rates higher
than 20
percent.
Donald
Boudreaux is a professor of
economics at George Mason University, and blogs at Cafe Hayek.
Bryan
Caplan
Easy:
Cut employers’ share of the
payroll tax.
Bryan
Caplan is a professor of
economics at George Mason University. He is the author of The Myth of
the
Rational Voter: Why Democracies Choose Bad Policies, and most recently,
Selfish
Reasons to Have More Kids: Why Being a Great Parent is Less Work and
More Fun
Than You Think.
Bruce
Bartlett
I
don’t believe there is any way to
increase employment significantly without raising the rate of economic
growth.
Therefore, the real question is how to raise economic growth. I
continue to
believe that the economy’s fundamental problem is a lack of aggregate
demand.
I
think a dose of inflation is just
what the economy needs and libertarians should stop being so obsessive
about
it. Moreover, I think at some point they need to admit that the Fed
cannot
raise aggregate demand by itself when the economy is in a liquidity
trap, which
it obviously is based on the level of interest rates being close to
zero.
Under
these circumstances, I believe
that some form of aggressive fiscal policy is necessary to get money
circulating,
raise the velocity of money, and get the economy out of a liquidity
trap. I do
not believe, under current circumstances, there is any type of tax cut
that
would achieve this goal; only direct spending by the government on
purchases of
goods and services will help. Therefore, the Fed will, somehow or
other, have
to figure out how to raise aggregate demand by itself.
The
only other thing I can think of to
raise growth would be a deliberate devaluation of the dollar, which
would raise
exports. Theoretically, the Fed could buy as much foreign currency as
necessary
to bring the dollar down. But this is impractical because foreign
countries can
retaliate by buying dollars with their own currency or impose
restrictions on
U.S. imports. Any policy of devaluation would be strenuously opposed
domestically by those who are obsessed with the idea that the dollar
should be
strong regardless of the economic conditions.
I
realize that everything I have just
said is totally contrary to the libertarian worldview. However, I
believe that
implementation of libertarian policies, such as cutting spending and
tightening
monetary policy, under current economic conditions will only make it
worse. I
support any regulatory measure anyone can think of to reduce
unemployment, but
am disinclined to think there are any that will have more than a
trivial effect
under current macroeconomic conditions.
Bruce
Bartlett was a domestic policy
adviser to Ronald Reagan and a treasury official under George H.W.
Bush. His
most recent book is The New American Economy: The Failure of
Reaganomics and a
New Way Forward.
Jeffrey
Miron
Policymakers
should stop worrying
about job growth. Instead, they should focus on eliminating economic
policies
that impede economic efficiency—runaway entitlements, a horrendous tax
code,
excessive regulation, impediments to free trade, and more—and then let
the job
situation fix itself.
Jeffrey
Miron is the director of
undergraduate studies and a professor of economics at Harvard
University.
John
Berlau
Repeal
portions of the Bush-era
Sarbanes-Oxley Act to make it easier for smaller companies to raise
capital by
going public, and thus expand and create thousands more jobs.
Repeal
portions of last year’s
Dodd-Frank Wall Street Reform and Consumer Protection Act, which has
created
hundreds of pending rules causing uncertainty and a halt in hiring for
everyone
from banks and credit unions to retailers and manufacturers that extend
credit
or hedge financial risks with derivatives.
Pass
the bipartisan Small Business
Lending Enhancement Act—S. 509 by Sen. Mark Udall (D-Colo.), and in HR
1418, by
Rep. Ed Royce (R-Calif.)—to lift the aribitrary cap on business lending
by
credit unions. The Credit Union National Association estimates that
easing this
barrier would create over 140,000 jobs in the first year and thousands
more in
the years after that.
John
Berlau is director of the Center
for Investors and Entrepreneurs at the Competitive Enterprise Institute.
Allan
Meltzer
We
have made the mistake of using
short-term policy changes to try to cope with a long-term problem.
There are
several long-term changes called for. There is great uncertainty and
lack of
confidence in the future. That reduces investment and employment. One
change
that would reduce uncertainty is a five-year moratorium on new
regulation
except for national security. Another would be a budget agreement that
made the
debt sustainable. Not likely. Third; corporate tax rate reduction paid
for by
closing loopholes. Finally, we need assurance that we won’t have
inflation. A
credible, enforced inflation target would work.
Allan
Meltzer is a professor of
economics and the political economy at the Carnegie Mellon University
Kepper
School of Business.
Ira
Stoll
Congress
should stop extending
unemployment benefits, and better yet, restructure the unemployment
insurance
program or block-grant it to the states to allow them to experiment
with ways
of doing so. The idea is to change the program so it creates an
incentive for
recipients to get a job, rather than an incentive for them to remain
unemployed.
This
could involve altering the
unemployment benefit formula so that the amount of the payment
gradually
decreases over time, reducing the propensity of beneficiaries to stay
on
unemployment until they frantically search for a job and find it just
as the
benefits run out.
Or
it could involve allowing states
“the flexibility to convert their unemployment insurance payments from
checks
sent to the jobless into vouchers that can be used by companies to hire
workers,”
as Bloomberg News columnist Jonathan Alter suggests, relaying an idea
from a
Democratic candidate for U.S. Senate from Massachusetts, Alan Khazei.
Or
it could involve changing the
program so recipients get a hefty share of their benefits up front, as
a lump
sum. They can then use the money as capital to start small businesses.
Or if
they find a job quickly, they can save or invest or spend the money.
(No repeat
passes, though; the idea is to increase incentives for finding or
creating a
job, not rewards for people who get themselves fired.) Another approach
might
be to fold unemployment together with health, college, homeownership
and
retirement as expenses that people can save for in a tax-favored
account.
Ira
Stoll is the editor and founder of
FutureOfCapitalism.com and the author of Samuel Adams: A Life. His
weekly
column appears at Reason.com.
Walter
Olson
If
I could press a button and
instantly vaporize one sector of employment law, I think I’d pick age
discrimination.
Its
beneficiaries are among those
needing least assistance. The main cash-and-carry effect of age-bias
law is to
confer legal leverage on older male holders of desirable jobs, such as
managers, pilots, and college professors, who by threatening to raise
the issue
can extract ampler severance packets than might otherwise be offered
them. Much
legal talent is wasted in the resulting exit negotiations, which seldom
seem to
rouse the ire of critics of gaudy executive pay, golden parachutes and
so
forth.
It
blatantly backfires on those it
tries to help. Once cut loose from the old job, those same buyout
recipients
find it harder to land the next high-level job because of the
perception that
older hires are more likely to need buyouts not far down the road.
It
generates pointless avoidance
mechanisms. Ask your HR director about the costly stage in layoff
strategy
known as “age-balancing the RIF” or about the many small-talk questions
you’re
not supposed to ask at job interviews for fear of seeming interested in
the
subject (“I notice you’re a veteran. Which war?”) or about the
brain-cracking
legal headaches that arise from the premise that (at least in some
situations)
the design of pension plans is supposed to take no notice of age.
Its
intellectual basis is lighter than
helium. Race, sex, sexual orientation and disability each form the
basis of a
major identity politics movement. But really: “ageism?” It’s one thing
to
abridge liberty to expiate the national guilt of antebellum slavery,
but can
anyone keep a straight face in proclaiming persons of late middle age a
historically oppressed class?
Please,
I want to see this law
repealed before I’m too old to enjoy it.
Walter
Olson is a contributing editor
to Reason, senior fellow at the Cato Institute, and proprietor of
Overlawyered.com.
Peter
Schiff
To
make the greatest impact on
persistent unemployment, the government should pursue policies that
allow the
free market to set wages, benefits, and all issues related to
employment. Just
as employees are allowed to leave jobs for whatever reason, employers
should be
allowed to hire and fire based on any criteria without fear of
litigation. In
other words, liability cost for hiring employees should be minimized.
Employees
become easier to hire once employers know that their downside risks are
minimized. In addition, all labor laws protecting employees from
employers,
including minimum wage laws, should be repealed.
Employment
is a voluntary relationship
between two parties. Our laws should reflect and support that concept
to the
highest extent possible. Employees do not qualify for special
privileges
(inappropriately labeled worker’s rights) simply because they accept a
job, and
employers do not lose their rights and become subjected to special
obligations
just because they hire. The playing field should be level.
Peter
Schiff is the CEO of Euro
Pacific Capital and the author of How an Economy Grows and Why it
Crashes.
Alex
Tabarrok
QE3:
Fed should buy lots of long term
T-bonds.
Alex
Tabarrok is the Bartley J. Madden
Professor of Economics at the Mercatus Center at George Mason
University.
Fred
L. Smith
Approve
the Keystone XL Pipeline:
20,000 jobs created. The 1,700 mile Keystone XL Pipeline would link
expanding
Canadian crude production from tar sands with America’s first-class
refining
hub in the Midwest and along the Gulf. The $7 billion project would
roughly
double U.S. imports of tar sands oil from western Canada.
Because
the Keystone XL pipeline
crosses an international border, the primary permitting agency is the
State
Department. However, oil production from tar sands is more
carbon-intensive
than traditional production, so environmentalist groups are staunchly
opposed
to it. As a result, the project has been in a permitting limbo for
three years.
By approving the project in short order, President Barack Obama would
directly
create more than 20,000 high-wage manufacturing jobs and construction
jobs in
2011-2013, according to an independent analysis by the Perryman Group.
Fred
L. Smith Jr. is the president of
the Competitive Enterprise Institute.
Read
it at Reason
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