The Unresolvable Debate on Job Creation
If you’re a political candidate, “jobs” is a word that almost guarantees applause at any rally, regardless of party. We all agree that creating and sustaining good jobs is a key priority, but we’ve had essentially the same debate on how to do it for decades. An early look at the 2016 candidates’ proposals about jobs shows that the debate won’t be letting up any time soon.
Democrats generally favor direct government action to create jobs. All the major candidates emphasize some kind of investment meant to create jobs. Often that investment is also meant to achieve another policy goal, such as bolstering infrastructure, clean energy, or healthcare technology.
Republicans favor job creation through indirect actions meant to unleash free markets. A good deal of consistency emerges when looking at websites for the top ten candidates (according to a recent poll). Eight of the ten candidates put tax reform and tax cuts first in their sites’ sections on the economy. The other two, interestingly both considered near the top of the pack, say nothing. Republican sites tend to use the phrase “create jobs” less often than their Democratic counterparts, consistent with a view that government’s role is to get out of the way of private sector job creation.
So why do we keep having the same debate? Isn’t economics scientific and empirical? Shouldn’t we know who is right, based on their policies’ outcomes?
A big part of the answer is that when it comes to broad macroeconomic policies, such empiricism is nearly impossible. Obama’s 2009 stimulus happened in the midst of the Great Recession; many on the left believe it prevented the loss of even more jobs, while many on the right believe it was counterproductive. In the natural sciences, one can run experiments, changing only one variable at a time. But we only have one data series, our own economic history, and we can’t run such controlled experiments. To do so would require a time machine. It is impossible to separate an economic policy from the other factors occurring at the same time.
It’s very unlikely that one side, entrenched in their positions and a lot riding on the outcome of an election, will ever see definitive data that would change their minds.
Since the debate can’t be resolved, the best thing right now would be recognition on both sides that they cannot fully “win.” Candidates with humility, open-mindedness and even some fresh ideas would be welcome as this debate rages on.
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Max Gulker
Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.
Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.
