Archive for September 12, 2011

Direct Investment Is Not Efficient At Creating Jobs

September 12, 2011 11 comments

Here is a particularly relevant question-

How many new jobs could be created by the direct investment of 500 Billion USD?

We can assume based on previous experience that it can potentially create 1 million jobs that would otherwise not exist- or about 500,000 per new job created. Think of that number for a minute.. and ask yourself- is that the best way to use money for creating jobs?

What about paying 10 million unemployed people 50 k/year?

While doing so might seem bizarre, it can realistically create many more jobs for one simple reason- people will spend that money on stuff and services thereby creating and preserving many more jobs than would occur via direct investment. Such money will also pass through the hands of many more people thereby enriching all of them and is furthermore unlikely to leave the system creating an opportunity to recycle the money.

Why create jobs through direct investment when you can create 3-4 times more jobs with the same media wage by giving money to poor people?

You can invoke ideologies, “morality”, principles and other rantings of pathetic dead white men, but are those good reasons? Do you believe in the rantings of those morons when it came to things like the causes of diseases and medical treatments? So why not treat their rantings about society, human nature and economics with the same contempt? In any case, those people had no way to imagine the extent of change and new possibilities created by technology.

As I have said before, it is unlikely that public policy will change through any voluntary changes or reform. But it will have to change, because the other options are much worse. Then again some of you might like chaos, breakdown and conflict because you think that you (or your side) might win. Newsflash- you won’t! Technology has made the ability to destroy and fuck things up so widespread that such conditions would preferentially hurt those with more to lose (rich and upper-middle class) than those who don’t. It is no longer machine guns against zulu spears… the logistic trails of modern armies are long and easy to break. Information technology is tightly coupled with the ability to do business on a worthwhile scale. A lot of things can be destroyed by merely ignoring or botching repairs.

But coming back to the topic of this post, unless ideology adapts to reality we are in for interesting times.