Gongol.com Archives: October 2023

Brian Gongol

October 6, 2023

Business and Finance Real job creation

Among the main demands made by the UAW of the Big Three US automakers in the course of the strike they have self-titled the "Stand-Up Strike" is the right to strike over plant closures. This highlights an inconsistency in the way that "labor" is usually described, and the void that inconsistency leaves in the economy. ■ The project America really needs is a private-sector initiative to establish cooperative firms with the express goal of creating the maximum possible number of jobs. We don't have any meaningful representative examples of such a project. By their nature, capitalists (meaning business owners, shareholders, and others who supply capital to the economic system) focus on maximization of firm profit. Employment is an input in the process, but not an objective. ■ On the other hand, unions are the most visible manifestation of what people generally conceive as "labor". But unions do not exist to promote the creation of new jobs, either, but rather to preserve the jobs that their members already hold. That's not a moral shortcoming, but it is an incomplete depiction of labor. That's especially the case when unions resist the creation of rival jobs that might reduce the market price for their own work. ■ People expecting institutions in either of these categories to pursue employment maximization as an express goal are bound to be disappointed. There is no fundamental reason, though, why novel institutions couldn't be formed to fill that need. We clearly recognize the demand for job creation -- practically every politician includes "job creation" as some aspect of their campaign platform. Yet, even with a lot of job-market growth, the vast preponderance of jobs aren't "created" by government, nor should they be within a market economy. ■ But they could be created by institutions formed and managed not to return a maximum value of capital to shareholders, but a maximum number (or quality) of jobs to employees. Cooperative institutions are well-established as ways of organizing firms that don't have profit maximization as a goal, but they typically exist for the purpose of delivering goods or services to customers at minimum cost, often where for-profit firms find market conditions undesirable. ■ A real "pro-labor" movement would undertake to pave the way for a class of job-maximizing firms, to show how they could be formed, find suitable markets, and achieve their desired results efficiently and sustainably. We don't need flash-in-the-pan stories, but rather self-perpetuating institutions to fill the void. ■ Creative managerial thinking can do the trick, but only if the incentives are aligned in the right way. Expecting unions, governments, or capitalists to create the largest number of jobs is asking the wrong outcomes of systems not set up for the task.