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SOVEREIGN MAN

Is this a “jobs” super committee?

September 20, 2011
Johannesburg, South Africa

Earlier this month, some economic luminaries in the United States Congress introduced a new bill, H.R. 2835. The bill intends to “establish a joint select committee of Congress to report findings and propose legislation to restore the Nation’s workforce to full employment…”

Great idea, fellas. After failing to ignore your way out of recession, spend your way out of recession, lie your way out of recession, and print your way out of recession, you now intend to legislate your way out of recession.

This bill exemplifies how completely clueless the leadership is, and highlights the common demeanor of the political class.  By definition, people are in government because they believe that government is the solution, not the problem.

Legislating your way to full employment is as fantastical as prancing unicorns and the Tooth Fairy. It’s impossible. The only employment created by legislation are government jobs to staff all those new agencies and bureaus. And naturally, those jobs must come with some task, some responsibility.

With each new job is created an additional burden upon the taxpayer, and an additional bureaucratic hurdle for the productive class. From opening a bank account to going to see the doctor, things that used to be simple are now fraught with paperwork and regulation, just so some government worker somewhere has something to do.

Here in South Africa is an absolutely mind-numbing example of this mentality. A few years ago, the city of Cape Town installed digital parking meters– the high-tech kind where you could pay the parking toll on your mobile phone through an SMS… or the good ole’ fashioned way with coins should you so choose.

Then some politician decided they needed to create more jobs. So the city hired a bunch of workers to go through town ripping out the digital parking meters. In their place, the local government hired a small army of curbside parking attendants– human beings to replace the machines.

If you think this was a triumph of humanity over profit, then I have a modest proposal… let’s turn the clock back across all industries. We can build roads with hand-laid stone, dig canals with shovels, and hire legions of street sweepers armed with bristled brooms to keep our cities clean. Just think of all the jobs we’ll create!

Fact is, these sorts of moves are wastefully inefficient, and I shudder to think of what insane ideas would come out of the ‘jobs super-committee’ proposed in this new House bill.

Governments don’t create value, they destroy value. And the only way for more jobs to be created and money to start flowing again is for the market to perform its function matching willing buyers and sellers, producers and consumers.

The uncomfortable truth about the global economy is that the old way of doing things is gone forever. Monetary stability, social cohesion, political credibility, traditional career paths, investment assumptions… these are all changing. The game is being reset and the new rules are being rewritten.

The future is about creating value: what problem can you solve that’s so important to someone else that he/she would be willing to pay you for it, or trade for something that you value?

Everybody’s good at something. Hell, everybody’s usually good at a lot of things… from designing websites to cutting grass. “You have an overgrown lawn? I have a lawnmower. Let’s make a deal.” The greater the problem, and/or the more people it affects, the greater the reward.

None of this requires any government involvement; it simply requires a motivated individual to get out there in the world, figure out what needs to be done, and kick ass to make things happen.

About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

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Comments on this entry are closed.

  • http://www.facebook.com/pkleinsmith Pierre Kleinsmith

    About Cape Town, truth be told, last time around I voted for the idiots who run this place. But as with all things in politics there is the least worst, and they are it.
    Cape Town is actually the best run place in SA. The government makes them look squeeky clean.

    You may not have noticed but all those parking attendants are foreigners. Because the locals don’t want to work for that little money so Mozambicans, Angolans, Zimbabweans and other nationalities do that “dirty” work. Can anyone spell x-e-n-o-p-h-o-b-i-c a-t-t-a-c-k-s? I’m surprised round 2 hasn’t started yet.

  • algreg

    It’s so unbelievably stupid what’s going on. Why can’t we own up to our mistakes and make amends? Entrepreneurs create jobs with value. Government does stupid stuff like tear down efficiency in place of having jobs for all people. I’m not saying we don’t need government. I’m saying that they’re role is so expansive that it throws everything out of whack. All they have to do is safeguard the liberties and freedoms we were already granted. 

    Manipulating the markets isn’t going to work for much longer. Things are changing and these guys want the old guard to stay around for as long as possible. We don’t live in the old world. We live in the new world. And we don’t sit by and wait for government to give us handouts. We create value and give it others. And government does everything they can to make our lives hell.

    The bright side is that as this thing crumbles we will be ushering in a new paradigm. A new reality so to speak. And I’m looking forward to it.

  • Leland

    “… ripping out the digital parking meters. In their place, the local
    government hired a small army of curbside parking attendants– human
    beings to replace the machines.”
    That has go to be one of the most ridiculous examples of government waste I’ve ever heard of. And I can’t help but wonder how long it will take for gratuities to be accepted, then expected, then required, then turn into a bribe that you had better come up with, if you want your vehicle to still be there in good condition when you return.

  • Ignostic

    I have no idea of what the true story behind the parking meter situation in SA is, nor does this story give us any facts beyond what is needed to make a point.

    What often happens in privatization is decent paying working wages are taken away and “re-distributed” to a select few in the name of efficiency.  In the end there is little if any true savings to the citizenry and a net loss to the community as unemployment goes up and social costs rise.

    Using the SA parking meters as the example, what if…..?

    The company that convinced the local government to use their automated parking machine service charged a  percentage of revenue collected as their fee (a common business model I believe) and in the end net revenue to the municipality was the same or for sake of argument better than before.  But instead of that “cost of collection” being shared by a number of members in the community who used to do the work, it now gets concentrated to one individual.

    Now there are community members unemployed and relying on welfare or unemployment and other social programs.

    What’s better?  One person or a few making a shit pot of money or a number of people spitting the pie among them.

    What if the municipality found that net revenue actually dropped with the new machines?  What if parking fee compliance is found to be higher with attendants monitoring the street rather than inanimate machines.  What if the attendants also serve double duty as “meter maids”, again increasing net revenue.

    The illustration used leaves a lot of unanswered questions.

    The problem is the corporate profit model just looks at net profit.  What are the other hidden costs on society and the environment that are not figured in to the bottom line equation.

    Corporations (and I realize I’m speaking in generalities) will not hold themselves accountable for the other costs.  Just as the old copper smelters used to be profitable in the day, what was their bottom line if they had to account for the clean-up of arsenic in the groundwater, the soil, and pay the healthcare costs of those downwind of the plumes?

    • AC

      The reason that wealth gets transfered to the one person “making a $h*t pot of money” and not to the small army of workers, is the one person figured out a cheaper way to provide the needed service. If it isn’t cheaper, it doesn’t get bought (excepting cases of nepotism and crony-ism, which nobody should defend). Should that person not be rewarded for the service that was so obviously needed? Yes, former employees need to go find other jobs afterward, but that’s how creative deconstruction works. That’s the point he’s making with “rolling back” every industry. If we really feel that people should *just* be occupied, then let’s simply NEVER innovate; outlaw innovation. Then true wealth will never increase, but people will stay busy. One comes at the cost of the other. Which do you prefer? I choose wealth and progress. In aggregate, everybody has a higher standard of living precisely because of this process. We don’t live in caves anymore, thanks to innovation. We don’t travel on foot anymore, thanks to creative deconstruction. And guess what? That process is working, SO well that innovation is accelerating, and if people want to continue to profit (read: maintain and increase their standard of living) they’ll need to innovate themselves, and re-demonstrate their value when old jobs become obsolete.

      • Ignostic

        I appreciate the discussion.

        I don’t disagree with you in the slightest and I in no way want to still live in a cave or travel by foot or for that matter not continue to find ways to innovate and be efficient.

        The illustration used to demonstrate government inefficiency was lacking and while it elicits a reflexive “isn’t that stupid” reaction; there may be way more to the story.

        My point was to remember to be honest in our accounting when we consider what truly constitutes savings and innovation.

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