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Sen. Bernie Sanders, Vermont independent, stated last week that an “economic bill of rights” is central to Democratic Socialism. In the same speech where he rightfully railed against corporate welfare, Mr. Sanders made clear that the Democratic Socialist vision for America involves guaranteed “well-paying” jobs for all. By all means, Mr. Sanders is right that we need to end the Washington culture of cronyism and industry subsidies, but jobs only add value if they lead to production.
Not only did Mr. Sanders make a promise he can’t and shouldn’t keep, he showed his age and displayed a profound ignorance for what a modern job is. If Mr. Sanders had his way, America would remain stuck in the labor market of yesterday.
It makes sense then that Mr. Sanders, like many of his septuagenarian colleagues from both sides of the aisle, wants to guarantee the jobs of yesterday for all. When the Vermont presidential candidate stated that he would “finish what [FDR] started,” he meant it. Mr. Sanders seeks to solve what he perceives as the problems of today with a New Deal-esque solution straight out of the 1930s.
Thanks to advances in automation, tomorrow’s economy will reward creativity and human ingenuity over hours on the production line or at the plant. As the U.S, economy moves away from manufacturing jobs and toward a service economy, why would it make sense to guarantee jobs in industries that may soon become obsolete?
Risk is the cornerstone of innovation. Economic progress occurs in a competitive marketplace where only the most productive, efficient and adaptive firms and jobs survive. Investors only put their money toward industries or firms they think have a strong long-term forecast that will pay returns. A government that subsidizes yesterday’s industries with guaranteed jobs will artificially maintain failing industries that waste resources and crowd out the market.
We don’t know for sure what the jobs of tomorrow will look like. Free market innovation has led to an increasing prevalence of jobs and industries that we would never have imagined in the past. Why then would we want to guarantee the jobs of yesterday at the price of the jobs of tomorrow?
The American economy of tomorrow won’t be driven by adding more workers to the assembly line, but by a business climate that rewards risk-taking and enables free enterprise. Creativity and human ingenuity are more valuable today than entire factories were in the past century. A jobs guarantee can promise you a job at the steel mill or the automobile plant, but it can’t unlock the potential of a single human mind.
Tech start-ups are where innovation is born, but European start-ups, or the lack thereof, highlight the problems inherent to a jobs guarantee. Employers are forced to jump through hoops to fire poor-performing employees. At the same time, innovation is depressed because firms are often required to set aside years worth of pay for each new employee. How could an environment akin to Silicon Valley exist if every start-up was forced to hang onto underperforming employees, as well as bank two years worth of salary for every new one who comes on board?
Instead, a real economic bill of rights would make innovation easier. Austrian economist Joseph Schumpeter coined the phrase “creative destruction” to explain the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” When firms are allowed to innovate and strive for the newest and best, economies progress and the standard of living increases for all. We need an economy that looks forward, not backward.
A jobs guarantee as a part of Mr. Sanders‘ economic bill of rights removes risk from the equation and inhibits innovation. You can’t guarantee a job in an industry that doesn’t exist yet, so naturally a jobs guarantee would support old, out-of-date industries that lack the impetus to innovate. To guarantee everyone a well-paying job is to set up people and communities for failure.
For all the talk of systematic oppression on the campaign trail this cycle, Mr. Sanders‘ government-mandated support for the economy of yesterday would make life worse for all Americans by freezing economic progress. Mr. Sanders‘ economic bill of rights would keep in place the economic status quo by guaranteeing jobs for the sake of doing so, regardless of whether or they not they add value. If Mr. Sanders really wanted to make life better for the American worker, he’d understand that government is not the answer.