Opinion and Economic Analysis

HICKS: Job creation, destruction not mutually exclusive

July 21, 2012

I am always saddened and more than a bit disappointed when I hear politicians promise to create jobs. In the first place, we are Americans and shouldn’t be looking to the likes of President Obama or Gov. Daniels for a paycheck. We elected them for weightier matters. Moreover, governments don’t create jobs—businesses do.

Job-creation dynamics are hard to explain and often seem to confuse more people than almost any economic issue. Here’s why it is so hard to talk about.

We are a nation of innovators. From the shop floor of a tool-and-die operation to a glass high-rise in Silicon Valley to a retail website, we are a nation that revels in new ideas and new ways of doing things.

Naturally, we celebrate the heroes of innovation, both technical and managerial: McCormick, Whitney, Rockefeller, Carnegie, Bell, Edison, Ford, Packard, Walton, Gates and Jobs. These are names in history books, libraries and companies of today. And while we raise up these industrial entrepreneurs and scientists for remaking our world, it is a plain fact that they also are among the biggest job killers in the history of the world.

The innovations in science, managerial organization and supply chains wrought by these household names also closed many a blacksmith shop, canal boat and wagon master. These folks ended the romantic Pony Express route, put out of business the whale oil industry, the buggy-whip maker, the typing pool, all those folks assembling the Walkman, and all of Montgomery Ward. My profession has a technical name for this phenomenon: economic growth.

For workers with redundant skills in factories and businesses that can no longer compete, innovation can be frightening, and job losses are painful and disruptive. It takes courage to retool in middle age for a new occupation, but it is a common sort of courage that everyone needs.

For at least two centuries, probably longer, the notion that a worker could enter adulthood, learn a skill, and then prosper without significant learning has been folly.

Businesses and workers that are not innovating, learning and adapting will painfully fail. If our economy is to grow, it must always be so.

This is why I feel so frustrated by politicians who promise job growth. It isn’t just that they cannot deliver, but also that the process of actually creating jobs means old, less-efficient ones must go away.

These are not choices for governments.

Our leaders have two policy options. One condemns the process of creating and destroying jobs, excoriates those who enable it, and promises to slow the process. The other embraces technology and innovation, accepts the tough facts of growth, and works to make workers and businesses more capable of retooling and learning.

The first path offers only a dead end, stagnation and economic stasis. The second path is that of growth, prosperity and opportunity.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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