08 July 2012

Where Do Jobs Come From?

I find it remarkable -- and telling -- that neither candidate for president in the United States has articulated a good, substantive answer to this question. Platitudes and exhortation are not a coherent economic policy.

According to the McKinsey Global Institute the world created 1.1 billion non-farm jobs from 1980 to 2010. Think about that. 1.1 billion, and 164 million of those in so-called "advanced economies." How did that happen? Where did those jobs come from? How will we make the additional 600 million jobs expected to be needed globally by 2030?

These questions have very clear answers, at least conceptually, which can be delivered in an elevator speech. Why can't our presidential candidates provide such an answer? 

Talking heads on TV don't do any better. I just saw Lou Dobbs on Fox News rattling on about entrepreneurs and small businesses, which was pretty weak stuff. The excerpt below from a debate on Fareed Zakaria GPS on CNN today also illustrates the poverty of this discussion.

Where do jobs come from?

Jobs come from an expansion of economic activity, which is called economic growth. Where does economic growth come from? There are only a finite number of places. Any answer to the question about where jobs come from that does not invoke resources and innovation (but also effort and luck) is incomplete.

Any policies put in place to try to increase employment needs to explain how economic growth will increase, but also how the consequences of growth will be managed and sustained. Specifically, because the economy is in constant flux as we seek productivity gains through constant innovation -- which is necessary to expand economic activity -- there is a constant need to train and retrain the workforce to elevate skills. Under current trends, the world (and the US) will have an excess of low-skilled workers and a shortage of high-skilled workers. How will our leaders manage this churn? Someone should ask them. More "college" is not the answer.