Where do Jobs come from?

I have some bad news. No one gives you a job because you deserve one. No one gives you a job because you need one. Not because you are a good person, not because you are breathing, can fog a mirror, and/or are entitled. The 'free market' doesn't mean you get stuff for free.

You get a job because someone needs some work done and is willing and able to pay you for it.

Let's elaborate just a bit. Someone needs some work done and is willing and able to compensate you with wages, working conditions, benefits, opportunities for advancement and intrinsic rewards just enough to persuade you to turn down all competing offers and accept the job; and willing to put up with your human deficiencies in getting the work done. He or she does this because you present the education, skills, experience, personal hygiene, judgment, grooming, intelligence and social skills adequate to get the job done and most important, to return to the employer value in all of the above that exceeds what it costs him/her to compensate you; and to do so consistently and for the duration of your employment, whether a weekend part-time temp fill-in contract or a 40-year gold watch career.

'Willing' and 'Able' require some further explanation. Let's start with Able.

Employees typically cash a paycheck weekly, bi-weekly, or monthly. Entrepreneurs, strictly defined, don't cash a paycheck at all. They put up the capital for the enterprise, take responsibility for loans and other financing, pay the expenses (including payroll) and own the assets including revenue. If, over the course of months or years (or decades in the case of large-scale industrial projects such as oil drilling or computer chip manufacture), there is more revenue than expense, they enjoy profits which enable them to live well and invest in another round of entrepreneurship. If there is less revenue than expenses, and if the losing trend is not reversed, the enterprise eventually fails, and the entrepreneur goes bankrupt and has to go begging the banks or other financiers for capital to try again, or becomes the employee of some other more successful entrepreneur.

So 'able' means someone with capital, with money. Someone who has been successful in a prior round of investing but who has no guarantee of success in the next round. What you get paid as an employee is not a share of the profits that your work makes possible, but an advance on the speculation of the profit potential of your work value, financed by the prior round of investment, profit, and loss. If you were paid out of the profits that your work made possible, then you would have to wait months, years, or decades along with the entrepreneur for those profits to arrive, with no guarantee that they ever would.

'Able' means someone with a dollar more than you. Such people have been characterized as evil, greedy, uncaring and/or undeserving rich, but in all likelihood in a free market without privileges or prejudice, such people are 40 to 60 years old, who were not born rich but who have prospered through hard work, thrift, savings, education, and sacrifice over the course of many years. Most such people have suffered failures and setbacks in their careers prior to achieving success, and that success is not guaranteed to continue just by doing the same thing over and over. In any case, you're not likely to get a job from someone poorer than yourself.

So get over the envy thing. It's listed as one of the seven deadly sins for a reason; it destroys the one who engages in it.

'Willing' means that the investment opportunity is more attractive than other projects or keeping the cash in a mattress. Investment, including hiring you, means giving up the use of the money it costs to pay you for any other purpose. Scarce resources have alternative uses. She could have used that money to bathe in Newcastle Brown Ale. But she pays you instead because over time, your work (combined with all the other elements of the enterprise) has the potential to enable her to bathe in Dom Perignon champagne. Or to invest in even greater and more interesting projects, like sending astronauts to Mars, curing cancer, producing a blockbuster movie, or caring for her ailing elderly mother.

In order for someone to be willing to give up the use of a resource forever (which is what investment in long-term projects is), what comes back or is likely to come back has to be more attractive than what is given up. Many billionaires would be willing to give up billions if they thought it could result in a cure some dread disease, just for the satisfaction of seeing it happen, even if there were no monetary profit. On the other hand, in a money economy, the lowest common denominator is that the expected amount of money that will come back over time has to be greater than the amount that would come back from a savings account, certificate of deposit (CD), or municipal bond. There has to be a more attractive upside. This is not greed; it being un-stupid.

Investment (and with it, your job) is about the future, and the future is uncertain. There are more things that can possibly go wrong than there are characters in a Murphy's Law joke book. Earthquakes, floods, tsunamis, fires, hurricanes, tornadoes, landslides, epidemics of disease, and asteroids are among the natural hazards. Competition, (in)competence, effectiveness of marketing campaigns, reliability of suppliers and partners and fickle tastes and whims of consumers are among the ordinary business hazards. All of these and their relative likelihoods and risks have to be taken into account and hedged and/or insured against if possible. If the risks are too great, the investment won't be made and you will not get hired or get your raise.

But risk doesn't stop there. The greatest risk of all in a political economy is that government at some level will hamper or wreck the enterprise. Taxes on the activities, inputs and/or outputs of the business may be so heavy as to make it impossible to earn a return greater than a savings account, CD or muni bond.

Even if the enterprise is not committing murder, robbery, assault, fraud, theft, rape, persecution and/or conspiracy, government may treat the business as a criminal enterprise, with fines, confiscation of property or jail sentences handed out for non-compliance with regulations buried deep inside tomes of tens of thousands of pages, which even the regulating agency cannot explain in a consistent manner. Worst of all, governments and regulatory agencies like the EPA can change their minds in a week, while the entrepreneur has to plan years or decades in advance.

When heavy taxation, anti-business or anti-'rich' rhetoric from powerful politicians, instability and overbearing, unpredictable, and capricious regulation reaches a critical mass, the risks become too great for the investment to proceed. Capital goes on strike or looks for opportunities elsewhere, overseas. Kiss your job (or if you're lucky, your hours, your benefits and/or your raise) goodbye.

To recap then: Jobs come from successful entrepreneurs and investors willing and able to risk a buck on you in order to have the potential to eventually make two bucks for themselves and for the next round of investment, which in turn has the potential to create a new job or raise for you, or enable you to become an entrepreneur yourself. In order for that to happen, there has to be freedom of contract, respect and protection of private property rights, light and reasonable taxes and regulations, and political stability; the expectation that those conditions will continue. Those conditions have been deteriorating in the United States at an accelerating rate over the past dozen years.

Howard Hyde is author of 'Pull the Plug on Obamacare', available in Kindle and paperback editions from Amazon.com. He edits the website http://www.hhcapitalism.com/.
Email:
HHCapitalism@gmail.com                                                                                       Follow on Twitter: @HowardHyde 

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