Are Those Politicians Creating Jobs?
November 21, 2004
Amid all the campaign rhetoric, every politician was going to create jobs. And that left us thinking, how do politicians create jobs?
M.A.B: Well they don't directly.
R.L.H: Are you suggesting its campaign rhetoric and non-sense?
M.A.B: Yes. The only jobs a politician creates directly are the ones that are on the government payroll. And that generally doesn't appeal to voters; creating jobs at your expense through taxes. So, in this column we will try to cut through the rhetoric, and determine what politicians can do to expand the number of available jobs.
R.L.H: Well first, it would be nice, if the politicians would modify their rhetoric. Something like, in office I will promote policies to prompt job creation and strengthen the economy. And that is to explain their position on what creates jobs and would enhance the dialogue of how to best serve the economy.
M.A.B: Most economists generally agree, Capital spending is the main force behind economic development. Where there is capital there will be prosperity, and of course, jobs. So, the question a sensible politician could ask would be, how can we attract capital?
R.L.H: Interesting point. So, in effect, Capital like Labor will go to the place where it will attain the highest amount of return on investment. Its like working for higher wages, conditions being the same, one will always choose higher wages. As a result, capital must be attracted to create jobs, and to allow for this certain conditions need to be satisfied.
M.A.B: Absolutely correct. The business environment determines how much capital one would invest, and thus, where the capital will be located in the grand scheme for the highest return. Specifically, think of yourself as a captain of industry, would you move to a high tax area when low tax ones are available? No discussion on creating jobs would be complete without mentioning the need to keep taxation rates competitive with the rest of the nation and the rest of the world. Without competitive taxation rates a sound economy can not exist, let alone one that creates jobs.
R.L.H: Indeed Andy! Taxes are highly important, but also important is the labor force. There must be trained well-educated people willing to work for wages. And wages must be flexible. If hard times come, to preserve the job base, cuts must happen, and for cuts to happen everyone could share the burden to preserve the total job base. And when high times come, profits should be shared to encourage good will and a satisfied workforce. This will preserve jobs.
M.A.B: NY is fortunate to have one of the most highly educated workforces in the world. With our university system and our public schools, NY might have the best conditions for economic growth which to date remain untapped.
BOTH IN CONCLUSION: NY has untapped resources, waiting to be utilized and NY likely has the most impressive workforce in the world, and yet the economy stagnates. So when folks in politics talk about helping out the working man, and creating jobs, ask them: What will you do to attract the capital necessary to make this happen? And hopefully, if we can answer that question, true progress will follow. And that is how we see it FROM OUR PERSPECTIVE.