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From: lazarus@brahms.BERKELEY.EDU (Andrew J &)
Newsgroups: talk.politics.misc
Subject: Re: Unemployment shifting
Message-ID: <16087@ucbvax.BERKELEY.EDU>
Date: Fri, 10-Oct-86 18:28:52 EDT
Article-I.D.: ucbvax.16087
Posted: Fri Oct 10 18:28:52 1986
Date-Received: Thu, 16-Oct-86 06:19:36 EDT
References: <15678@ucbvax.BERKELEY.EDU> <117200087@inmet>
Sender: usenet@ucbvax.BERKELEY.EDU
Reply-To: lazarus@brahms.UUCP (Andrew J Lazarus)
Organization: University of California, Berkeley
Lines: 98
Summary: More Libertarian theorizing bites dust

In article <117200087@inmet> nrh@inmet.UUCP writes:
>
>>/* Written  4:38 pm  Sep 15, 1986 by lazarus@brahms.BERKELEY.EDU in inmet:talk.pol.misc */
>I suggest, in all good will and fellow-feeling,
>you talk with someone who knows a fair amount about economics before
>you talk more about this issue.
>
This is a suggestion from someone who believed job creation was a
simple linear function of "wealth" units.  

(Please see further remarks below).

>>>Since government produces no wealth of its own, what wealth it has comes
>>>from the private sector via taxes.
>>This assumes what you wish to prove.
>>>
>>>Suppose it requires 1 unit of wealth to provide/maintain 1 job.  So, for
>>What is the logic behind this model for jobs creation and
>>maintenance?  (Other than the fact it 'proves' what you believe.)
>
>[...].  The money you invest is the
>measured in the "units of wealth to provide/maintain 1 job" mentioned
>above.  
>
Do you really believe that to create one new position of nuclear engineer,
teacher, and janitor all require the same one unit of wealth?

>>>10 jobs it would require 10 units -- not 9, not 9.826, but 10.  
>>Unlikely even in your simplistic model.  Have you heard about
>>economies of scale?  (Or, conversely, the law of diminishing returns?)
>>This might explain why even inefficient govt. can generate more
>>jobs than it allegedly takes away.
>>[...]
>
>Err... It's quite true that 10 jobs might cost only 9 units.  The
>problem is that you are looking at one level of organization (ultimate
>cost to employer) and he is looking at another (payment cost per
>employee).  Stipulating that the two are not equal, it can go the
>other way too.  Just for example, suppose that if you employ over a
>certain number of people, you start having to file certain reports to
>the government, so if you employ M employees at a cost of C each, the
>cost of adding one more worker can be (M+1)*C' where C' is the cost
>INCLUDING the new cost of paying for government form-filling.
>Since C' is typically greater than C 10 jobs might cost 11 units.
>
I actually agree with you (2nd version) that jobs created as a function
of "wealth" is going to be non-linear.  I even agree that it seems true
that in certain situations the marginal cost would be greater than
one wealth-unit.  I do wonder why you seek to blame this phenomenon on
government forms -- a more likely explanation is the increase comes
at the point where large additional capital expenditures become necessary.
For example, an factory owner could triple his workforce by running 
three shifts/day instead of one.  After that, he would have to build
a new plant (very expensive).

And I still speculate that a large-scale job creation program might
create more jobs than it takes away, especially in the short term.
One way would be shifting from jobs which take a great deal of wealth
to create (e.g. Vice-president with extensive education) to jobs
which require little wealth.

Also, job creation is not the ultimate goal of even a well-run business.
According to libertarian dogma, profit is, although one empirical study
after another refutes this (large corps. are risk-averse).  What do we
do with a corporation deciding between a manual assembly line (many
jobs created) and an automated one (fewer jobs, different qualifications)?
Certainly these do not create the same number of jobs regardless of
which turns out to be the better choice.  Government might decide that
widespread unemployment is a sufficiently dangerous social phenomenon
that reducing the wealth of corporations (who mostly spend it on take-
overs, huge management salaries, etc. not job creation) to prevent
rebellion is a good idea.
>
>Do public works projects really decrease unemployment?  Certainly
>in one sense they do -- in the USSR it is illegal to have no job, and
>therefore there is *no* unemployment.  Decreasing unemployment
>REGARDLESS OF COST by government use of resources means re-channelling
>money from the sources of wealth (people who were paid) to an agency
>which got the money only because it could forcibly take it from others.
>
>This last doesn't GUARANTEE the money will be used badly; but that
>governments resort to this tactic means they couldn't make the money
>in any easier way.

I thought your view was all taxes were forcible takings, not just
Soviet-style.
>
>I think it was Heinlein who said: "There are the Makers, the Takers,
>and the Fakers, no fourth catagory."

I think it was Cain who said "Am I my brother's keeper?"

please see next posting for further observations on govt and 
wealth creation.

andy

.