A number of reports on the US economy agree that in recent months, companies have been sitting on huge wads of cash. They have not, for the most part, used any of that cash to expand their workforce. Nevertheless profits are up, because existing workers are more productive than ever before—this coming on top of figures I noted in The Golden Calf, that American workers already were leading the rest of the world in productivity.
Economism teaches us that if we just lower taxes on the rich and on corporations, they will be the “job creators.” So why no jobs, if they are so flush with funds?
The students of economism offer us an answer. The problem, they allege, is uncertainty. Right now these companies have money, but who knows about tomorrow—maybe those nasty Democrats will raise taxes again, or enforce some new regulations. It’s not enough that the job creators have a lot of money; they have to be in the right frame of mind. This excuse as to why we don’t have jobs, when all the conditions seem to be just what economism ordered, is what economist and columnist Paul Krugman memorably labeled the “Mom, he’s looking at me funny” rationale.
So, says the political right wing, if you want jobs, it is not enough to put wads of cash in the hands of employers. You also have to ease their uncertainty that anyone could ever take that cash away from them. So be sure to elect Republicans to control both the White House and Congress, and then to appoint only pro-business, activist judges. And while you’re at it, dismantle American electoral democracy to be sure that the guys never get voted out of office (something economism believes but doesn’t like to say out loud).
It is part of the brainwashing job that economism’s acolytes have pulled off on American society that all this can be said with a straight face. So let me see if I can state the rather obvious flaw in this reasoning, even if no one in the political debate in the U.S. seems willing to go there.
Economism claims that the unregulated free market is this powerful force for good in society, and that if we just let it alone, it will do everything we desire. Everyone will be prosperous, except of course for those who don’t deserve to be, because obviously they didn’t work hard enough or didn’t have the right entrepreneurial moxie. Or God doesn’t like them.
Then when we line up all the ducks in a row the way economism says, and there are still no jobs, we are supposed to believe that the problem is uncertainty and lack of confidence. Somehow this incredibly powerful free market thing is so weak and unreliable that it will fall apart if it sees its own shadow.
So you can have a (so-called) free market that grandly sweeps all before it. Or you can have a free market that’s so wimpy and undependable that you have to make really nice to it to get it to do what you want. One way or the other, guys—make up your minds.