In yesterday’s New York Times, columnist Bob Herbert criticized the Bush administration for failing to "find or create jobs for the victims of Katrina."
I know what Mr. Herbert means: he believes that government should have provided opportunities for hurricane Katrina’s victims to earn incomes for use in rebuilding their lives. But his language — "create jobs" — is at once so wrong-headed yet so common-place that readers easily pass over it unaware of the deep economic ignorance that motivates such talk.
Creating jobs is absolutely no challenge. Indeed, that’s a chore that even government can do well. Jobs are all around us, super-abundant. (Persons who doubt this truth should call me: I have an endless number of household chores that I’m happy to assign to anyone who calls.) Katrina herself was positively brilliant at creating jobs.
What’s not so abundant is real income.
And while in market economies most of us earn our incomes by performing valuable services for others — that is, while in market economies each of our incomes is closely linked to the jobs we perform — it’s important to remember that the jobs are not the good; the incomes are the good. And real income — genuine purchasing power — is not created by make-work programs. If workers in such programs do get more purchasing power, it’s because the money they are paid is really a disguised forced or charitable transfer of purchasing power from persons who created it to persons who perform make-work jobs.
The tragedy is that hurricane Katrina destroyed so many lives, so much wealth, and so many ready opportunities to create wealth. Regardless of your opinion of how actively Uncle Sam should have intervened, post-Katrina, to transfer resources to people along the Gulf Coast, make-work programs are not at all helpful in restoring people in that region to prosperity. Indeed, insofar as such programs would have had people employed doing useless ("make-work") tasks — always a danger when employment activity is directed by government rather than by market signals — prosperity would have been further delayed.
This familiar misunderstanding about jobs sparks countless errors. In this column a few years ago I tried to explain in more detail why it’s important to remember that a ‘shortage’ of jobs is never, ever a problem.
