Politicians don’t create jobsPublished 9:33am Tuesday, September 4, 2012 Updated 11:36am Tuesday, September 4, 2012
As I watch the hordes of speeches from politicians, the overriding theme is how they will “create jobs.”
Those of you planning on voting in November, no matter what your party, please understand this fact: politicians can do little to nothing to create jobs.
In fact, if Mitt Romney (and Barack Obama, for that matter) really wanted to create jobs, he wouldn’t bother running for President. He’d create a new company.
Private business owners, big and small, create jobs. They do so not because they get a tax break or receive a government subsidy, but because they are willing to risk their own money – or acquire the money from investors – to produce a product or provide a service which they think they can sell for more than it costs them to make or provide.
A recent technical school graduate with a plumbing license, for example, creates a job if he or she decides to go into business rather than taking an existing position from a retiring plumber. Of course, if that person is successful in finding enough plumbing jobs to make a living, it doesn’t necessarily mean a job was created. What if, for example, that new plumber takes jobs away from an existing plumber, and the existing plumber, due to the reduction in the number of jobs, lays off an employee? That’s a net zero on the jobs front. Thus, plumbing jobs can only increase if the market demands an additional plumber due to a growth in construction or remodeling.
It’s part of the reason why the construction of a new retail store does not necessarily translate to new jobs. Assuming we as a society have so much disposable income, we as a society will buy a finite amount of coffee, iPads and movie tickets, so to speak. Unless our population grows or per capita income increases, a coffee shop owner will have to take away business from someone else to be successful. The successful business will create jobs, and the “losing” business will lose jobs. You see it all the time in Fergus Falls; one restaurant opens, and soon another one closes.
It’s why sectors such as manufacturing and agriculture are so valuable. If a product can be sold to a global market, it eliminates the need for a business selling a similar product to be unsuccessful. For example, manufacturers in Fergus Falls such as Quality Circuits (circuit boards), Shoremaster (docks) and StoneL (valve sensors) can, and are sold to companies and individuals around the globe. Similarly, corn, wheat and soybeans grown here can be sold to countries around the world, especially in rapidly developing countries such as China and India.
The best way for Fergus Falls to grow jobs would be if one of the existing manufacturers in Fergus Falls came up with a new product — for example, a new dock system, circuit board, or valve sensing equipment — that could be sold to a new type of customer. For example, let’s say Shoremaster could come up with a dock that was ideal for lake property owners, so ideal that property owners almost automatically purchased it as a second dock.
Shoremaster would then need to make twice as many docks. Assuming they’re already operating at full efficiency, to make twice as many docks, they’d eventually need to hire as many as twice as many employees.
How does the government fit into that equation? The government could give them a tax break or subsidy as incentive for opening the new plant. The government also could impose stiff regulations on the new docks – requiring more costly raw materials than planned due to safety concerns, for example.
But the fact is, in a vast majority of cases, the government wouldn’t affect the outcome either way. Considering the profits it would make, Shoremaster would create the new dock plant regardless of tax breaks. Assuming they wouldn’t be so financially burdensome to destroy the profit margin, Shoremaster certainly would deal with any regulations that would come with a new dock.
I’m not asking you to vote for either political party. I’m just saying, while the economy might be our country’s largest issue, it’s also the issue that – no matter what they say or even do – politicians really can’t do anything about.
Now, about Shoremaster creating that new dock…
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I want to wish my fellow competitors luck in this weekend’s Pot ‘O Golf and Labor Day Classic. I also want to encourage local residents to come out and watch the tournament. For a bunch of mortal golfers, having a gallery is always nice.
Joel Myhre is The Journal’s publisher. Email him at firstname.lastname@example.org