What to Make of Obama’s Jobs Speech...Before it Even Happens

Attention comrades, workers and tax slaves! Tonight is the night! Get your tickets! Turn your televisions up and sit your buts down!

From the people who harass your small business…from the folks who regulate your entrepreneurial spirit into submission…from the clerks who mandate outsourcing, expropriate your profits and who cannot “create” one job without first destroying two, comes…

The Presidential Speech on Job Creation!

The papers were abuzz with excitement this morning. Journalists rushed to put ink to paper, careful to do so before they had time to think.

“Wall Street Mixed Ahead of Obama Speech,” announced one headline.

“Wall Street Falls Ahead of Obama Speech,” countered another.

“DJIA Wobbles Ahead of Obama’s Jobs Speech,” opined a third.

What are we to make of all this, Fellow Reckoner? Is it a wobbly, mixed fall we have on our hands…or a falling, mixed wobbly? And how are we to respond to these vacuous oddities, equal parts curious and meaningless? No matter. President Zero — so dubbed because of the precise number of jobs “created” last month — will surely fill us all in this evening. He’ll tell us how the world works, how the foreigner’s loans should be spent and how the savings of future generations should be allocated today, before they are even earned.

Commenting under a wire story on rising jobless claims ahead of Obama’s speech, one perceptive gentleman gives us a taste of what’s to come:

“Tonight’s focus group buzzwords for the ‘jobs speech’: Bi-partisan, Compromise, Sacrifice, Rich folks, Those of us, I, Me, My…”

The list goes on. You can probably think of a few more heartstring, bumper-sticker catchphrases too. Hey, maybe we can make a game out of this. One shot of tequila for every mention of the word “compromise.” A swig of whiskey for every “sacrifice.” A chug of beer for every “ordinary Americans,” “party politics” and “in the nation’s best interests.” Of course, you’d be on the floor within the first two minutes…but at least you wouldn’t have to listen to the rest of the speech.

Unfortunately, however, that won’t be the end of it. Not by a long shot. When the applause is over and the citizenry is back to the grindstone (provided they can find a stone on which to grind), the opposition will give us their version of the way the world works.

“Too much money spent here…not enough funding over there,” one will contend. “Less on infrastructure, more on schools,” another will counter. “What about my [insert special interest of choice here] group?” begs another.

The politicos will fight over that which isn’t theirs like a feral mob looting a sacked city. Lone will be the voice who calls for no spending, no demonstrably impotent “job programs,” no meddlesome intervention. The opposition’s rebuttal will be, in other words, many different versions of the same wretched thing.

What all world improvers fail to recognize is that the state, by its very nature, cannot simply “create” jobs. One needn’t look past the government’s own statistics to see that. We noted the zero jobs added last month above. Applications for unemployment benefits rose to 414,000 last week — outpacing experts’ expectations (again) — from an upwardly revised 412,000 the previous week. But for one week in early August, claims have remained above 400,000 since early April. And it’s not just a “rough spot,” a problem that spans a few weeks or even months. It’s the story of the decade, as Bill Bonner noted in yesterday’s issue “Counting the Zeros in the US Economy”:

How many new jobs have been created in the last 10 years? Zero.

There were about 130 million jobs in America in the year 2000. There are about 130 million today.

But even if the government could create jobs, how would it know what jobs to create? At what price? In which sector of the economy…and at the expense of which other? In a free market, it is consumers who ultimately decide what jobs, what goods and what services are needed when and where. Demand provides price signals, helping businesses to direct their resources and capital for maximum impact. As a “para-market” entity, the government is privy to no such signals, save for a dog and pony popularity contest held once an Olympiad, designed to fool voters into thinking they have the “power of choice.”

That not all jobs are created equal is obvious. President George W. Bush, for example, was very good at putting people to work dropping bombs on people’s heads in faraway lands. But bombs are expensive…to say nothing of other people’s heads. One number we saw recently put the costs associated with the wars in Afghanistan, Iraq and Pakistan at nearly $4 trillion dollars, an amount equal to between one-quarter and one-third of the entire national debt. Seeing how costly, how unsuccessful these foreign misadventures were, President Obama, a Nobel Peace Prize recipient, couldn’t help but to expand the bombing to Libya too.

The feds have spent trillions of dollars at home too — through various bailouts, shovel-ready programs and other stimulus gimmickry — trying to get people back to work. Unsurprisingly, their programs are not working. Folks are not going back. And in many cases, they never will. Of course that won’t stop the feds, with their committed aversion to learning from mistakes, from spending trillions more dollars retesting their failed theories.

In the end, job creation is not a “rabbit out of a hat” equation. The rabbit must first come from somewhere, just like the money for so-called “jobs programs.”

“The role of a good economist,” wrote Chris Mayer recently, referring to a key insight championed by the likes of Frederic Bastiat and Henry Hazlitt, “is not merely to show that which is seen, but to reveal that which is unseen.”

Readers can judge for themselves the “seen” consequences of state intervention in the job market. The unseen will be the burden carried by future generations, born into a nation that has already squandered everything they are yet to earn, abused its currency to death and sunk the economy beneath unserviceable debt.

“These Keynesian ‘cures’ of endless inflation and debt to fix our economic malaise are offered,” wrote Michael Pento, newest addition to the Agora Financial team, in today’s edition of The 5-Minute Forecast, “because there is a profound lack of understanding of what causes a depression in the first place.”

And, as the saying goes, those who don’t learn from history are doomed to repeat it.

Joel Bowman
for The Daily Reckoning

The Daily Reckoning