Politicians are forever promising to create good jobs. It has become a dog whistle for the political class that too many of us unfortunately fall for.
Now enter Vermont Senator Bernie Sanders who is putting an action plan behind the popular old saw. Sanders is proposing that the government guarantee a job paying $15 an hour with benefits to every American “who wants or needs one.”
Well, you have to give the old socialist credit; at least he is putting his money—oops, I mean our money—where his mouth is.
The details of this monstrosity are still being worked out, but apparently the government would hire and train millions of Americans to work in education, care-giving, environmental projects and infrastructure. One of the other details still missing is how much this would cost.
The Washington Post’s Megan McArdle estimates that paying for those government jobs with benefits would tally up to between $1 trillion and $2 trillion dollars. That would explode the debt and/or dramatically increase taxes to pay the bill.
That alone should be a deal breaker, but let’s look at some other fallacies with this idea.
The concept is upside down; you don’t hire people and then try to find work for them. In the private sector, there is a demand for workers to perform particular tasks and then those positions are filled with the most qualified people. Sanders’ plan is the tired old “make work” idea that fails every time it is tried.
During the final days of the Soviet Union, President Mikhail Gorbachev wanted to know why productivity in the socialist economy was so low. Soviet economist Grigory Yavlinsky said, “The Soviet system is not working because the workers are not working.” That’s because a state-run economy with guaranteed jobs provides no incentive.
Why should we imagine that a state-run jobs program for 25 million to 50 million unemployed or underemployed people will work any better in this country.
The Sanders plan would also disrupt the private sector. Currently, wages are based on the supply and demand for labor, but what happens when the government steps in the hiring pool so deeply?
As Forbes Magazine opined, “To believe there would be no crowd out (of private sector workers) despite this massive change requires the assumption (that) every low wage worker in this country has productivity high enough to justify a good paying job, but that employers aren’t paying it now.”
I also wonder who is going to manage all these government jobs. We are going to need another big government agency to run this misadventure. How much will that cost, and should we go ahead and factor in a high percentage of waste, fraud and abuse?
Of course it is important to have a good job. Work not only provides a means to our economic ends, but it also gives us fulfillment. Collectively, productive employment creates wealth that grows the economy so the cycle can continue.
However, government make-work, like Sanders is proposing, is a witless idea that only makes sense to utopian socialists.