Job Creation: Does Government Help or Hurt?

HARBESON: Here’s to free trade

(COLUMN NOTES: There are quite a few comments on the newspaper's website that you may want to go check out.)

> SOUTHERN INDIANA — Politicians spend a lot of time jabbering about jobs. They make a lot of noise, fussing with each other over what to do. But there’s really only one question we need to answer about job creation: Does government help or hurt?

Maybe it can help us find the answer if we strip down the issue. In simplest terms, a job is created when one person pays another person to perform a task. Even young children can do it. So let’s simplify and use a real-life example of a time when my two children created a job for themselves.

Some years ago, our family lived in a condo complex in Jeffersonville and a winter storm dumped a lot of snow overnight. This happened on a weekend, which meant many of the neighbors did not have to go to work, so there were many cars in the parking lot covered with snow.

My daughter and son saw an opportunity and decided to offer their snow-clearing skills to the neighbors. They charged 50 cents a car to clean off the snow and successfully earned a nice chunk of cash that day.

Now, let’s imagine how this could have turned out if they had to deal with the government. What might have happened if government was involved anywhere in the process?

First of all, depending on local ordinances, they would need to apply for an official government-approved solicitor’s permit before they could even knock on a neighbor’s door. Next, this job could require licensing. What if they had to pay fees and attend a government-approved class to get the proper “government training” because everyone who performs this job has to have a license?

What about the working conditions? The government certainly can’t let ambitious individuals decide for themselves when to go inside for a cup of hot chocolate. So they impose a break schedule much stricter than necessary, thereby restricting the number of hours they have available to offer their services.

Since this particular job was a result of a weather “disaster,” the attorney general may decide to take a look to see if they are taking advantage of the situation. If he determines that 50 cents a car was too much it could mean they’d end up being accused of “price gouging” their customers.

Let’s say another kid wants to help out. This prospective employee is very inexperienced and low-skilled, but they offer to pay him 15 cents for every car he helps clean. He agrees. But the government’s minimum wage laws require payment of 30 cents per car.

At that price, he’s not worth hiring, so this kid doesn’t get the job. Even if he’s perfectly willing to work for 15 cents, the government won’t allow it. So there he is, out of a job, unable to buy that superhero coloring book he wants. Until those other kids come along and offer to pay him 10 times the money he’d make cleaning cars to sell drugs. (Yes, the government does know how to create high-paying jobs.)

Finally, if the government was involved, the kids would pay taxes on their earnings, because, well, someone has to pay the salaries for all the jobs created for the people the government hires to enforce all these laws and regulations.

Yes, this is all imaginary, as far as my kids were concerned. They were completely free to offer a service to their neighbors who were free to accept it or not.

But stripping the job creation conversation down to this simple example does make me wonder what would be different if government did not interfere so much in peaceful voluntary trade between supposedly free individuals.

— When it comes to politicians, Clark County resident Debbie Harbeson doesn't even want to pay attention, let alone a salary.