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Apr 14, 2010
by HERBERT
E.
MEYER
Good morning. Take your seats, turn off your cell phones, and keep them
off for the duration of this lecture.
Today's subject is jobs. As even the dimmest among you are aware, we're
in a jobless recovery, which means that economic activity is picking up,
but businesses just aren't hiring enough workers to bring down the
unemployment rate to an acceptable level.
Between now and the November elections, Republicans will blame Democrats
for this mess, and Democrats will say that it's all the Republicans'
fault. The decibel level will be excruciating. If you're among those who
would rather argue than understand, don't waste your time or my energy;
get up now and leave through the side door. But if you really want to
understand why we're not creating new jobs fast enough, put aside your
politics and let me teach you the one thing about economics you should
have learned in high school.
Just like those cell phones you're all itching to turn back on -- don't
even think about it while I'm speaking to you -- an economy has an
operating system built into it. This means that you have to do things
the way the operating system is designed to work.
Look, if you've got an iPhone, there's no Republican way to make a phone
call or check your e-mail -- no Democratic way, or liberal way, or
conservative way. Either you do it the way the operating system wants
you to do it, or nothing happens. It's the same for those of you with
BlackBerrys or any other model. Can these operating systems be improved?
Of course, which is why Apple and the other cell phone vendors send out
system upgrades from time to time. If you don't like the operating
system you've got, can you change it? Yes, give your BlackBerry to your
kid sister and get yourself an iPhone, or dump your iPhone for a
BlackBerry. But if you're trying to use the cell phone you've got,
either you do it the way its operating system is designed to work or
you're stuck.
Two Kinds of Economies
Broadly speaking, a country can choose one of two economic operating
systems. It can be a free-market economy, or it can be a command
economy. In a free-market economy, businesses work within the rules set
by government to sell their products and services, but no one is in
charge. In a command economy, there may still be privately owned
businesses, but the government's role is so large that it really calls
the shots. Because each country -- unlike each cell phone owner --
designs its own operating system, no two economies are precisely the
same. So our country's free market is somewhat different from Canada's,
which itself is different from Germany's, Australia's, Poland's, and so
forth. Likewise with command economies. Still, the similarities among
all free-market economies are more striking than the differences, and
all command economies are pretty much the same, whether it's a left-wing
or a right-wing government in power.
In a free-market economy like ours, it's the entrepreneurs who create
jobs. The dictionary defines "entrepreneur" as "a person who organizes
and manages a business undertaking, assuming the risk for the sake of
the profit." An entrepreneur can be world-famous, like Apple's Steve
Jobs, or that entrepreneur can operate a small business like a diner, a
hardware store, or a factory that manufactures valves. Your dentist is
an entrepreneur, and so's the algebra tutor your parents made you hire
so you won't flunk that course a second time.
If you want to create a lot of jobs, create an environment in which
entrepreneurs will thrive. They'll take it from there, because creating
jobs is what entrepreneurs do. Here's another way to think about it: You
people drink a lot of milk. Well, milk comes from cows. If you want more
milk, create an environment in which cows will thrive.
And just as it makes no sense to say that you want more milk but you
oppose cows because they're smelly, dirty, and leave their droppings all
over the place, it also makes no sense to say that you want more jobs
but oppose entrepreneurs because they're greedy, pushy, and often
wealthier than the rest of us. You cannot have it both ways, and if you
don't like how the world works, then go argue with Him, not with me.
(And you won't be the first to squawk: King Alphonso X of Spain once
complained that "had I been present at the creation, I would have given
some useful hints for the better ordering of the universe." Well, he
wasn't present at the creation, and neither were you.)
Dairy Farmers and Politicians
Whose responsibility is it to create and maintain an environment in
which entrepreneurs -- or cows -- will thrive? In the case of cows, it's
the dairy farmers, whose job it is to keep the beasts happy and
productive. These are the people who assure that cows have enough good
land to graze upon, good shelter at night and in foul weather, and the
best possible medical attention when necessary. Put a competent dairy
farmer in charge of the herd, and those cows will produce a lot of milk.
Put someone in charge of the herd who knows nothing about cows, and milk
production will plummet. And if you put someone in charge of that herd
who actually wants the dairy farm to fail -- for instance, a real-estate
developer who'd like to buy the farmland cheap so he can build a
shopping mall -- those cows won't make it through the winter.
And whose responsibility is it to create an environment in which
entrepreneurs will thrive? It's the men and women we elect at the local,
state, and federal levels whose job it is to create and maintain the
conditions that entrepreneurs need to start and expand businesses -- low
taxes, reasonable regulation, and the confidence to accurately project
their future costs and risks so they can make decisions to increase
manufacturing, or to launch new products and services, that will result
in people being hired.
Now you can understand why we're in a jobless recovery: Some of the
politicians we've elected have no idea that creating and maintaining an
environment in which entrepreneurs will thrive is what they're supposed
to do. Others we've elected have a vague notion that this is what
they're supposed to do, but no idea how to do it. And too many of the
politicians we've elected actually want those entrepreneurs to fail so
public support will grow for replacing our free-market economy with a
command economy -- one in which the government really calls the shots.
Your assignment is to draw up a list of politicians who are making life
miserable for entrepreneurs. Include local officials, state legislators
and governors, and members of Congress. Write a paragraph explaining why
you've included, or excluded, the president. Lastly, identify at least
one candidate in the upcoming November election who understands how to
help entrepreneurs succeed. If you want extra credit -- and if you want
to be able to find a job when you graduate -- volunteer to help out in
his or her campaign.
That's it. Class dismissed.
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