NCPA - National Center for Policy Analysis


February 1, 2010

Politicians in America and around the world like to talk about creating jobs.  Their dark secret is that none of them know how to do it, says James Sherk, the Bradley Fellow in Labor Policy at the Heritage Foundation. 

Look at the centerpiece of President Barack Obama's newest proposal: spending billions on home weatherization and highways.  What will that do for the millions of Americans without construction or caulking skills?  If the president had better ideas for creating jobs, he would have proposed them, says Sherk. 

In fairness, no one should blame Obama for lacking a good plan to create jobs.  No president -- Democrat or Republican -- could do much better.  Why?  Consider where jobs come from, says Sherk: 

  • An entrepreneur has an idea.
  • Investors provide that entrepreneur with funding.
  • The entrepreneur then hires workers to help put his idea into action.
  • If the business competes successfully, those jobs last. 

A real-world example: 

  • A decade ago, two graduate students at Stanford -- Larry Page and Sergy Brin -- had an idea for a better way to search the Internet.
  • They persuaded venture capitalists to invest $25 million in their new company: Google Inc.
  • Today, millions of Americans use Google, and 20,000 employees work there.
  • Page and Brin's successful idea created thousands of jobs. 

Of course, Google might not have succeeded, says Sherk.  The economy works through decentralized trial and error as millions of entrepreneurs try to make their ideas work.  That is why labor market freedom is so important.  Both workers and entrepreneurs need the freedom to adjust to new market realities as they unfold.  No one knows what business ideas will work before an entrepreneur tries them, explains Sherk. 

That's why Obama can't create jobs.  What politician could come up with even 20 good business ideas, much less the tens of thousands needed to get millions of Americans back to work?  No one person has that expertise, says Sherk. 

If Obama wants to create jobs, he should start by passing policies that encourage the millions of potential American entrepreneurs to take the plunge and their potential investors to fund them.  That's the not-so-dark secret of how jobs are created, says Sherk. 

Source: James Sherk, "A Dark Secret About Creating Jobs in America," Heritage Foundation, January 29, 2010.


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