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Sunday, February 6, 2011

Job Creation

New and poorly trained supervisors tend to start the day like this:

Here's a pile of work and here's a pile of people, what shall I give the people to do to keep them busy?

They miss the point which is to get the work done - not to keep the people busy. That means that they should look at the work first and assign enough people, with suitable skills, to get quality work done on time and as cheaply as possible.

Inevitably, during good times, most companies accumulate excess employees. Some of these employees have really nothing much to do (other than to look busy and refrain from attracting attention) while many more work quite hard - sometimes very hard - at tasks that contribute little of economic value. When times are good, no one cares very much since there are plenty of profits to support share prices and senior management bonuses. When hard times arrive, however, management focuses on removing excess while getting more useful work from those who remain. All levels of management, at least for a while, remember that the objective is to get the work done rather than to keep the workers busy.

Politicians generally think like poorly trained supervisors. They see corporations with healthy profits, and significant cash balances, and grab the opportunity to castigate them for not creating new jobs and hiring new employees.

These politicians also miss the point. If there isn't any useful and profitable work to be done, why spend money on additional employees? Since corporations, regardless of the propaganda that they may put out, are solely driven by profit, we can be sure that, if they can see a way to make more profit by hiring additional employees, they will indeed take that course of action.

None of this is very complicated so it would only take some very slightly more sophisticated economic thinking from our politicians to reduce - at least a bit - the noxious cloud of political hot air now enshrouding Capitol Hill.

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