Home > Critical Thinking, Current Affairs, Dystopia, Economy, Musings, Reason, Secular Religions, Skepticism, Technology > Direct Investment Is Not Efficient At Creating Jobs

Direct Investment Is Not Efficient At Creating Jobs

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.

Comments?

  1. September 13, 2011 at 10:23 am

    The US economy is not about production but rather consumption quotas of cheap foreign goods. Without the US as the world’s greatest consumer base, the global economy would surely crumble! /derp

  2. G. Bush
    September 13, 2011 at 12:00 pm

    So what if the USA buys a lot of crap made over seas. Would a tariff on that crap make where the crap came from cease to be? The USA is on market in a global market.

  3. blaze
    September 13, 2011 at 9:35 pm

    What’s better is to make it so poor or unemployed people (and the last time I looked this is most everyone) don’t need jobs and can survive and do just fine outside the money economy. The stranglehold of having to ‘have money’ to do anything is very debilitating and the more people have the ability to live in homes, have food and live well without needing to need ‘a job’ as a means to do that, the better off everyone will eventually be. The more they do that, the more the rest of us will be able to do it too. I’m not talking about government or anyone handling barrels of cash to people with no jobs in order to stimulate creation of things nobody really needs and jobs nobody wants. An when folks talk about ‘economy’ today that means buying distractions and debt creation through interest. Having the ability to get outside the money structure with ‘land, skills, and tools’ to provide a living is something humans have been able to enjoy for millions of years, but now its not possible unless one is living on the fringes as some kind of full-time mountain madman. Lets get out of this nightmare quick

  4. September 14, 2011 at 4:42 am

    We certainly live in a state of collective checkmate, all of us holding one another prisoner, no one of us able to let one another go free for fear of our neighbors. And our neighbors, likewise and on and on through all of society…

  5. Commander Shepard
    September 14, 2011 at 3:37 pm

    On an unrelated note I have a request for you, AD. Could you do a blog entry on arranged marriages? As an Indian with “unconventional” ideas I’d really like to get your take on the matter.

  6. Mr. Stricter
    September 14, 2011 at 8:39 pm

    I think you are mostly spot on AD

    However in order for social credit or whatever to work and to reduce inflation pressure you need to close the money loop and have domestic production and consumption

    . Sending the money to zero sum hoarders like China, Japan and yes Germany is not going to help anyone.

  7. September 14, 2011 at 9:37 pm

    You want to pay each unemployed 50k/year; how close are we already to that target if you add up the value of food stamps, subsidized housing, EITC, neverending unemployment insurance, etc. In any event I deny that this ‘creates jobs’ per the title of your post. You basically wave your hands and say it will create a lot of jobs because people will spend that money. I guess they will, but now how many ‘jobs’ will the resulting effect ‘create’? Your claim is long on guesswork, short on quantities. Intuition does not trump empiricism.

    I do agree that I don’t want to see the government ‘invest’ (spend) taxpayer money in efforts to ‘create jobs’ though, and that it is wasteful. You actually overestimate the potential gains; 1 million per 5 billion where does this number come from? The government threw 500 million at Solyndra and I guess that ‘created’ about 1000 jobs…for like a year. Even if this scales, that’s still only a year, calling them ‘jobs created’ requires a huge asterisk.

    How about the government, having demonstrated proficiency in neither, neither ‘invest’ (spend) taxpayer money nor make wasteful transfer payments. What is your objection, ‘because it won’t create jobs’? Since when is the government’s job to ‘create jobs’? More to the point, when have they ever displayed any ability to do so?

  8. Mr. Stricter
    September 15, 2011 at 12:15 pm

    Sonic, Food Stamps and such do create jobs. That money gets spent in stores who than profit from it. Its simple math.

    While I think 50K is too much, the fact is if you give poor people money it all gets spent and thus just the same as your wage money, in the same fashion, jobs are created.

    Government cheese handed to individuals as vs. institutions is pretty much the same as private money, its not better, not worse but the same.

  9. September 15, 2011 at 5:23 pm

    Jobs may be ‘created’ when you spend money, including in the manner you’re suggesting spending taxpayer money here, but surely it matters how many? There is a world of difference between spending X to create N jobs, and spending 100X to create N/100 jobs. The former is better, the latter is dumb if the former is available, and shouldn’t even be described as a method of creating jobs, as opposed to a method (mostly) of wasting money.

    How many jobs created per $ are created by your suggestion? You don’t know. And since you don’t know, you can’t even claim to be making a good or even not-dumb suggestion. It’s just not enough to say that you want to spend X on thing Y because it will create a nonzero amount of jobs. How nonzero? The math may be ‘simple’ but the quantities resulting from that math actually matter to what you’re trying to say.

    And this all assumes, of course, that ‘creating jobs’ should be our only priority in everything we do, against all other considerations. That is not actually true either.

    best

  10. Mr. Stricter
    September 15, 2011 at 11:47 pm

    75% of the US economy is consumption Sonic. Are you really suggesting that taking tax money and giving it to people who spend all of it is going to create less jobs than wages?

    And as for creating jobs, well its kind of important if you know you want a working nation. I mean sure we can let people rot but than they have no reason to cooperate and not rip society down other than fear and if things get bad enough not even that. A neat thing is, the less jobs , the less can be spent on defense too. And yeah sure I suppose you can mint money for police only. Good luck with that in American land of 300 million guns ..

    The best case scenario you have without many decent jobs is gradual social elimination ala Japan. A peaceful non replacement of the population which if kept up too long ends a society as a 1st world urban culture.

    Lots of other cases are possible, many of them involving mass die offs, extermination of the elite, civil war and a host of other bad things. There are no good outcomes (unless you are the Joker or something) to long term unemployment. And yes given the alternatives (say flash mobs beating peoples skulls in) its even better to have government jobs with borrowed or minted money..

    Now if we really lust that much for efficiency I suppose we could go for a comprehensive welfare state and social credit but that has flaws too.

    And in case you want to bring up the muddle through argument, well we didn’t last time. Instead we went directly to coercion and forced the work week down by law and did a host of things at gunpoint to make people share wealth and work . Had people been a bit smarter about and done it earlier, the might even have avoided some of WW1 and WW2 and all the Soviet unpleasantness.

  11. September 17, 2011 at 5:13 am

    Where did you get your 75% number? Isn’t 100% of the economy “consumption”? Consumption is one side of the equation, production the other.

    Also, what does “create less jobs than wages” mean? I don’t know how to parse this.

    Bottom line is if your goal is to “create jobs” then fine, but one would think you’d want to do so in an efficient way not a wasteful way. Again, the quantities matter. The OP (and you) have no argument for why a guaranteed minimum income (which is what he is advocating) would “create” more jobs than other things that could be done with that money, such as for example not tax it away from earners in the first place. If you had an argument, I’d be able to recognize one.

    Just repeatedly saying “poor people will spend it all and that will create jobs” is not an argument. How many jobs? You don’t know. That’s fine (I don’t either!), it’s just that unless/until you do, it’s not a real argument.

    best

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