@ FutureChallenges: Jobs, Jobs, Jobs: It's the Fundamentals

My newest article at FutureChallenges has just been published. Linked to the content package, Work in the Developing World, the article, Jobs, Jobs, Jobs: It's the Fundamentals, explores the current economic issues faced by the United States and offers a discussion on a possible way to attack the jobs problem.

It is clear, to even the most casual observers of American politics, that one of the most pressing problems of the past several years and a poignant issue in the 2012 election cycle is jobs. With unemployment rates at dismal levels—8.5% as of December 2011—and not having fallen below 8.0% since January 2009, Democrats and Republicans have been slogging it out over who is to blame and what steps need to be taken to ameliorate the situation.

This marks a significant change in the focus of the American electorate. Following 9/11, security and terrorism were, for at least a decade, the primary issues on most Americans’ minds. However, as Eurasia Group, a political risk consultancy, argues, the 9/11 era is over. Over the next few years, economics—especially jobs—will be the driving force behind politics, both in the United States and abroad.

But while politics shift to an economic focus and politicians and pundits began to scrutinize, bolster, and tear-down each others’ and their own job-creating records, many gloss over the fact that governments are rarely directly responsible for creating actual jobs. This is particularly true in free-market systems with relatively small public sectors such as the United States. Instead, governments can indirectly facilitate job creation by generating a favorable economic environment, thus establishing the foundational prerequisites needed for the private sector to flourish.

To see the remainder of the article, please click here.

State of Class Warfare

Last night's State of the Union Address was rather dull. The President offered little in the way of anything new. He continued to spin his usual bombast and, while trying to portray himself as a cross-aisle conciliator, continued his divisive rhetoric and class warfare. He even went as far as to acknowledge (and failed to deny) that many might perceive his proposals and language from a polarizing perspective.

As the State of the Union Address and Obama's past record both indicate, class warfare is a key ingredient in the Left's worldview. It is a perspective that relies upon separating Americans into groups—classes—where the supposedly more fortunate have certain responsibilities to members of other classes. The Left tries to portray itself as the defender of the lower- and middle-classes, against the excesses of the uppermost classes. Accordingly, the Democrats attempt to cast the Republicans as defenders of the rich. Naturally, a dynamic develops, a divisiveness and a sort of warfare, of two-sides where the Democrats, from their perspective, try to claim the mantle of defending the average American against Republican-backed elite.

Unfortunately, this plot line is often successfully bought by the media and many in the electorate. But it unfairly distorts the Republican position. The Republicans (at least most) are not defending the rich, but are defending every American's right to own and keep their property.

This is an inclusive agenda. All Americans should be treated the same, regardless of one's income level. Each has the same claim to the product of his work or investment, whether labeled low-income, middle-class, or rich. In fact, the Republican ideology, if allowed, could completely do away with all of these labels. From the perspective of the government and its laws, there should be no class separations. All Americans should be afforded the same rights and should be treated equally under the law.

This stands in direct contrast to the Democratic worldview, which relies upon labels and divisiveness. The Left loves to classify and categorize individuals, grouping them by economic background, race, or other arbitrary division. Each group is then offered unique treatment, privileges, or responsibilities. This separates Americans and creates undue tensions between truly artificial groups.

Grievously, many accept this portrayal of American society. They cannot help but view America through this lens of autonomous and distinct groups, even though there are far more cross-cutting similarities among Americans than there are Balkanized group identities.

Nevertheless, many other Americans see through this distorted worldview. The low-income Republicans that many academics and pundits like to claim consistently vote against their economic interest are a prime example. It is not necessarily true that the so-called rural social conservatives choose social policy over economic interest. Instead many see the Republican economic position for what it is meant to be—a defense of every American's economic interests.

Whether one is rich or poor, it is in one's interest to have a system that believes that the product of each American's work is his or her own property. The government does not, as the Left likes to believe, have an a priori claim on one's income, thus graciously allowing individuals to keep the residual amount after "proper" [arbitrary] redistribution has occurred. Instead, our income and wealth are our own property and we have the right to do with it as we please. Taxes are to be paid to support the essential services that a government must provide, but these should be based on the proper needs of the system and our responsibilities as citizens to meet these needs, not on some arbitrary definition of "having too much."

Obama and the Democrats continue to distort this message, attempting to confuse Americans into believing that somehow some Americans owe something to others. This is simply not true, yet deeply divisive. Americans are in this together. We have one country in which we must share responsibilities and we should have one set of laws that treats everyone the same.

No Black Eyes

The Republican primaries are getting ugly. Mitt Romney and Newt Gingrich have been attacking each other with venom in their quest to secure the GOP's nomination. And while last night's debate in Florida had quite a few moments of real issue-based discussion—NBC's moderator, Brian Williams, should be commended for running a respectable and informative debate—a large portion of the debate descended into ad hominem attacks between the two front runners.

The termination of all personal attacks in election campaigns would be a noble and significant goal, however, it is probably unrealistic. The electorate too often jumps on juicy and vitriolic stories and character assassinations, even if voters simultaneously claim to abhor such behavior. The truth is that such tactics unfortunately work and candidates know this.

However, if running only issue-based campaigns is too lofty of a goal in general election campaigns, it is indubitably wise to terminate these tactics in party primaries. While primary candidates are rivals they are also allies in a broader conflict. By relying on tactics that may further their immediate goal, they often simultaneously undermine the longer-term goal. In the interest of winning the metaphorical war, not just the battle, Republican presidential candidates would be sagacious to change their tactics quickly.

By attacking each other in such personal ways, whether drawing out Herman Cain's infidelity, portraying Mitt Romney as a rich, out-of-touch, low-tax-paying elite, or labeling Newt Gingrich an "influence peddler," Republican candidates are only doing the Democrats' dirty-work. The GOP campaigns are unearthing truths and partial-truths that the Obama campaign may never have seized upon and will certainly use in the general election. This has gone a long way towards facilitating the reelection of Obama, particularly as the primaries head towards the spring.

Even more damning is the fact that the Republican candidates are systematically tearing each other down. These candidates seem to be forgetting that while they are currently competing for the votes of Republican primary voters, they are also being watched by the independent and liberal voters that they need to sway the general election towards the right. The things they say now will stick; if, for instance, Romney is successfully portrayed as an elitist, it will be hard for him to shake that image over the summer and fall.

Whether Mitt Romney or Newt Gingrich ultimately wins, the loser will inevitably endorse the nominee. Neither prefers Obama over his Republican rival. Yet after such a brutal campaign it is hard to see either able to successfully stump for the other, particularly when there are hours of footage personally castigating the former rival. Instead, the ultimate winner runs the risk of  Pyrrhic victory, defeating his Republican rival only to face Obama in a beauty contest with two black eyes and a chipped front tooth.

The primary campaign should be a time of sincere and honest discussion over issues. Candidates should attempt to distinguish themselves on the subtleties of their positions and the nuances of their beliefs. It is okay, even necessary, to indicate how one candidate differs from his opponents. Republican voters should know which type of conservative candidate they are selecting. Ron Paul's interactions with the other candidates are usually exemplary in this regard. Paul, for example, outlines significant differences in his foreign policy beliefs. He will criticize the mainstream Republican foreign policy, but rarely descends into personal attacks. This behavior is generally reciprocated by Romney and Gingrich, who may call Paul's foreign policy dangerous [it is] but do not attack the congressman personally. As a result, Republican and non-primary voters are informed and learn a bit more about their prospective presidents.

This is how a primary campaign should be run. It should be about the issues, not about deconstructing an opponent's character or personal life. Lively disagreement and debate is a must, but ultimately the GOP is a team. The candidates should compete vigorously, but not in a way that undermines the ultimate goal. They should fight on the issues not on the alleged personal failures of their Republican rivals.

Government Healthcare Interferes in Private Lives

Many are outraged at the Department of Health and Human Services' (HHS) recent decision to force religiously-affiliated organizations to provide reproductive and preventative services without co-pay or deductible, as required under the new Obamacare law. HHS Secretary, Kathleen Sebelius announced that while synagogues and churches would be exempt from the rule, other religiously-affiliated organizations, including non-profits would not be. Religiously-affiliated organizations, however, were provided an extra year to prepare for implementation.

This decision has highlighted the excessive overreach of Obamacare into the private sector. The law is facilitating gross interference in the private lives of individuals beyond what is appropriate for government involvement. It not only gives the government an undue amount of arbitrary coercive power, but greatly impedes the ability of the individual (person and organization) to choose their own way of life and even make their own mistakes.

Many religious leaders have spoken out quickly and decisively on the ruling, arguing that it forces them to provide for services, such as the morning-after pill, that challenge their personal and religious beliefs. The archbishop of New York, Timothy M. Dolan said "In effect, the president is saying we have a year to figure out how to violate our consciences...."

This is not a commentary on the wisdom of providing or not providing contraception. The issue at stake here is not whether these religious groups and leaders are right about the provision of these services—if one can even make the claim that there is a "right." Instead, it is about whether individuals and private organizations should have the right to choose the services they provide to their employees and the manner in which they conduct their operations.

Private bodies should not be forced, by the government, to behave in certain ways because some, who happen to be in power, believe that one way or another is a better way to conduct one's live. The wielding of such power by the government moves far beyond the pale of the proper role of government and descends towards a dangerous tyranny. While the government certainly has to make laws and use coercive power to alter the individual's behavior in some instances, there is a wide gap between, for instance, preventing murder or theft, which essentially protects one citizen from another, and forcing citizens to provide services or goods to others when the provider (and possibly the recipient) objects and the recipient can obtain these services elsewhere if they so desire.

By allowing the government to inflict such arbitrary and minute decisions on the lives of private organizations, Obamacare has ventured too far into the realm of totalitarian control. The rule has offered no clear delimitation of what is appropriate and what is inappropriate intervention in the private sector, relying upon a perspective of government that essentially allows any meddling if some policymaker believes the outcome would be "better." An argument that science or policy deems such practices better (even if true) is not sufficient to warrant government control.

The proposed alternative, exemptions, as provided to houses of worship, are not a fair or appropriate remedy. Everyone must be treated the same under the law. Allowing some to avoid following a law because of personal reasons relies upon the same arbitrariness that should not be present in legislating and government rule-making. Why, one must readily ask, should religious objections be acknowledged but not other personal or economic ones?

The truth is that the government has no business in deciding what employers should provide in terms of healthcare and reproductive services. There is certainly a worthy debate to have over merits of providing birth control—a debate that would most likely be lively and impassioned. But it is a debate that should happen in the social sphere not in the government. It is a debate that will ebb and flow as social values and mores change, as people, for instance, choose to associate and work for organizations that provide or refuse to provide benefits that coincide with their personal beliefs. But it is not just for coercion to be used to force some to adhere to the beliefs of others.

Policymaker in Chief

The media has been abuzz with Newt Gingrich's push-back against inappropriate questions asked by CNN's John King during last night's Republican primary debate in South Carolina. Responding to opening questions about allegations, made by Gingrich's ex-wife, of a request for an "open relationship," Gingrich refused to play by the standard rules of the game and fired back at the "despicable" line of questioning.

Gingrich's response is refreshing. Far too often politicians play by the media's rules, failing to push back against unwarranted assumptions, questions, and rules that have come to govern America's political process. This has unfortunately made too many good politicians look bad and has distracted the electorate from substantive issues (the Lewinsky scandal is a prime example). Gingrich said it well, "I think the destructive, vicious, negative nature of much of the news media makes it harder to govern this country, harder to attract decent people to run of for public office and I am appalled that you would begin a presidential debate on a topic like that."

In truth, far too much emphasis is placed, in political campaigns, on what should remain strictly personal. Accordingly, candidates often fail to draw a clear line emphasizing what is relevant and what is off limits. Instead, they act guilty and try to avoid direct answers, implicitly accepting underlying assumptions that reside within a question. This not only leads to discussion about issues that are irrelevant to an office-holder's job responsibilities, but also develops a culture that unquestionably accepts certain behaviors, even if they are unjustifiable. [This same failure to challenge implicit assumptions has lead, as argued elsewhere, to additional problems.] Instead, what should be relevant is the candidate's ideas, policy prescriptions, and how he will act as an office-holder.

Other candidates would be wise to follow Gingrich's lead. Romney, for instance, should make a similar argument regarding calls for the release of his tax returns. His past income, he should argue, has no bearing on his ideas and ability to be a successful president. He could easily link this to Gingrich's argument, defending a separation between the public (job-related) and private realms of a candidate's life.

Critics, of course, love to argue that these personal issues are somehow relevant to understanding a candidate. But such arguments fall flat. It is not relevant what income your attorney, accountant, or grocery-store bagger makers, nor does it matter what your gardener, professor, or firefighter does in his free time or in his personal relationships. What matters is if the individual has the required talents, ideas, and ability to execute the responsibilities of his job. America would find that it attracts more talented, intelligent, and more capable candidates, if it focused on the policies not the politics of their officials. The rest is just a distraction.

Newt Undermines GOP Arguments on Capitalism

A desperate and angry Newt Gingrich has relinquished his remaining grip on smart primary campaigning and unleashed an all out assault on Mitt Romney's economic record – and, by association, capitalism. Gingrich's attacks on Romney's experience, however, only serve to undermine Gingrich's stance as a responsible, non-negative campaigner and isolate him from the sensible Republican voters whom he needs to court to have any chance at receiving the GOP nomination.

However, aside from the damage that such attacks seem to be having on Gingrich's campaign, this anti-capitalist line of campaigning is causing monumental damage to the very economic basis that the Republicans are supposed to defend. In his quest to take down his rival, Gingrich is relying on the same Occupy Wall Street-style rhetoric that dominates the left. (To be fair, Governor Rick Perry has resorted to similar tactics, as the WSJ reports.)

The pernicious results are, at least, twofold. First, these attacks greatly help the Obama campaign. These are the precise attacks that the anti-freedom, anti-capitalist forces of the left will unleash on Romney come the general election. There could not be a better way to bolster their argument than by dishing it out for them. As the presumptive nominee, Romney will have an uphill battle to convince those who succumb to the easy anti-capitalist rhetoric that bashes the free market system. Obama can only be gleeful to have help in his mission in the form of Newt Gingrich.

Secondly, and arguably more importantly, Gingrich's attacks solidify misconceptions and distortions about how the free market works. The underlying assumption in his argument is the same as those held by the worst populists in OWS and the anti-Wall Street fringes of the Tea Party. The central argument is that somehow those who have money must justify their possession based on some social, communal good. This is simply false. The freedoms of the American political system guarantee that individuals have the right to their property. Provided they do not engage in illegal activities, individuals have no obligation to justify their earnings to the state in any regards. In other words, the rich, the middle-class, or the poor, need not demonstrate a social purpose or benefit from their occupation in order for the state to deem it acceptable. A free market functions precisely because no government body determines these things.

However many populists and the left implicitly rely upon this assumption when attacking the "rich." Accordingly, they argue that financiers cannot justify a socially-beneficial purpose and thus their "unjustly" earned wealth should be, at least partially, relinquished to the state. Gingrich has gone on record stating that the likes of Bill Gates, Steve Jobs, and Sam Walton deserve their billions because they invented something real. By contrast, goes the argument, Wall Street is just a "handful of rich people [who] manipulate the lives of thousands of other people and walk off with the money...."

This is a gross distortion of the role that finance plays in a capitalist system. Finance is an essential service – it moves capital from those who possess it to those who can use it best. It allows entrepreneurs, who do not possess the needed resources, to obtain them fairly and efficiently. And like anything in business, sometimes it succeeds and sometimes it fails. Capitalism's success is not because it always creates jobs, but that it allows resources to be successfully and most efficiently allocated to the right places, something no one person or institution (government) could do alone. This inherently implies hiring and firing, buying and selling, and investing and divesting. Firing, for instance, moves labor from an area that does not need it and thus frees it up to be used in a more productive fashion.

But Gingrich's attack plays into the leftist and populist rhetoric that ignores the importance of finance. Not only does it confuse voters who are unfamiliar with finance, providing fodder for the left to continue the myth that finance and Wall Street are greedy robbers that need to be stopped by the government (Progressive blogs have jumped on this Gingrich quote.) but it does a great disservice to the purported Republican goal of changing the direction of this country.

Gingrich should be ashamed at such low-brow politics. As an academic and a genuinely smart guy, he must know that the quest to hold political office should not undermine the long-term goals of righting the direction of this country. Relying upon political expediency rather than education only reinforces the anti-free market myths that dominate the public sphere. Republicans have unfortunately excelled far too much at this game. They choose to battle on the Democrats' terrain, using leftist arguments and thus continuously fighting on the defensive. The GOP will only be able to transform this country if it starts to think for itself, if it directly targets these sort of implicit assumptions that underline much of the political dialogue and replaces them with truth. Gingrich's behavior flies in the opposite direction by not just failing to break down the "Wall Street" is bad assumption but strengthening it.

Government Questions Employer's Right to Require High School Diploma

Once again the government is slowly pushing its tendrils into the private sector. The Equal Employment Opportunity Commission (EEOC) has recently released a non-binding letter indicating that employers may be in violation of the American Disabilities Act (ADA) if they require a high school diploma as a prerequisite for employment. The letter, which as of now is only an informal expression of the EEOC's position and does not have the force of law, states:

[I]f an employer adopts a high school diploma requirement for a job, and that requirement “screens out” an individual who is unable to graduate because of a learning disability that meets the ADA’s definition of “disability,” the employer may not apply the standard unless it can demonstrate that the diploma requirement is job related and consistent with business necessity. The employer will not be able to make this showing, for example, if the functions in question can easily be performed by someone who does not have a diploma. 

Even if the diploma requirement is job related and consistent with business necessity, the employer may still have to determine whether a particular applicant whose learning disability prevents him from meeting it can perform the essential functions of the job, with or without a reasonable accommodation. It may do so, for example, by considering relevant work history and/or by allowing the applicant to demonstrate an ability to do the job’s essential functions during the application process. If the individual can perform the job’s essential functions, with or without a reasonable accommodation, despite the inability to meet the standard, the employer may not use the high school diploma requirement to exclude the applicant. However, the employer is not required to prefer the applicant with a learning disability over other applicants who are better qualified.

While fortunately not yet legally binding, the argument behind this letter continues a worrying trend of arbitrary government interference in the private sector. However, putting aside the incremental threat of government micromanagement of the economy, this policy has the potential for significant negative economic and social effects.

First, the policy can arguably cause undue economic burdens to employers and restrict their ability to recruit appropriate candidates. The possession of a high school diploma is often used as a filter to screen out less than desirable candidates. While, like any such screen, it will be imperfect—sometimes keeping out good matches and other times allowing bad candidates to move on to interviews or even employment—methods of filtering job applicants allows employers to reduce overhead costs and save resources. Employers will have a much longer and costly hiring process if they are forced to consider every applicant without the ability to employ screening techniques as they see fit.

Likewise, employers will be faced with growing costs related to litigation and preventative legal steps, such as developing rubrics to discern if "the diploma requirement is job related and consistent with business necessity." The policy will open the door to expensive legal battles and direct corporate resources from primary business operations to the legal department.

Such costs will, of course, be passed on to consumers or taken from employees paychecks—results that are not needed during tough economic times. Additionally, higher expenses related to hiring can lead to damage to the job market. Companies will become more hesitant to expose themselves to regulatory action or litigation by quickly entering the job market when, particularly, short-term needs arise. Any job market needs to be largely unencumbered—to facilitate easy hiring and firing and thus allowing employers and employees to rapidly find mutually beneficial arrangements. This policy will have the opposite effect on the job market.

These economic concerns are rivaled by the pernicious implications that this proposed policy has on the value of education. Many opponents cite that this will limit incentives to a high school education. This argument carries some weight. After all, if employers are limited in requiring a high school diploma, students will have less pressure to avoid dropping out. More jobs that do not require a diploma will be available and legal action will always be a viable route.

Inevitably, the social effects of devaluing education could yield unfortunate ramifications—handicapping an already flagging economy and continuing the dumbing-down of our relatively declining pool of human capital. America needs to increase its productivity and human capital; high school education is a first step in this process.

America does not need disincentives to high school education. It does not need to continue providing excuses for people to disavow personal responsibility. Nor does it need to invent ways to try to "protect" Americans against every conceived stroke of bad luck, injustice, or risk. What America needs is to increase productivity, allow economic forces to freely operate, and afford Americans the opportunity to face and overcome challenges—and sometimes also fail.