Right-wing economic policy is about profits, not jobs

“Jobs is a funny word in the English language. It’s a way of pronouncing an unpronounceable word. I’ll spell (that unpronounceable word) . P-R-O-F-I-T-S. You are not allowed to say that word, so the way you pronounce that is jobs,” said Noam Chomsky in an interview with Democracy Now.

For decades now, right-wing politicians have said that, creating jobs is their number one priority, and in order to create jobs, they needed to cut government funding, reduce government services, and give tax breaks to businesses. But what they really mean, as Chomsky says, is that “profits are our number one priority, and in order to maximize profits we need to reduce government services and give tax breaks to businesses.” 

A recent report on the proposed Texas state budget shows just how little right-wing politicians are concerned about jobs. The state’s Legislative Budget Board reported last Thursday that the state budget proposed by leaders of the Texas House of Representatives will cost the state 335,244 jobs by 2013.

The proposed budget seeks to close the state’s projected $23 billion budget shortfall for the next two years by slashing funding for public education, health and human services, public safety, and public higher education. These cuts, according to the Legislative Budget Board, would result in 188,787 fewer public sector jobs, mainly public school teachers and other education workers, and 146,457 fewer private sector jobs. The job losses would mean a 2.3 percent decline in the number of jobs in Texas, a state where the current unemployment rate is 8.2 percent

The state’s right-wing politicians seem unconcerned about these job losses. A spokesperson for Gov. Rick Perry said that the governor “firmly believes that government doesn’t create jobs; entrepreneurs in the private sector do. However, the government has a key role to play in cultivating a favorable climate for job creation.”

This right-wing talking point has become conventional wisdom in today’s political discourse, but it doesn’t hold up to close scrutiny. During the first ten years of the 21st century when business taxes were low and regulation was lax, the private sector did an awful job of creating jobs. The Washington Post called the period between 2000 and 2009 the lost decade partly because job growth during that period was zero. That’s right, despite modest job growth between 2003 and 2007, the overall number of jobs created was zero.

Doug Henwood writing in the Left Business Observer says that the  rate of job growth steadily declined during the first decade of the 21st century until it dipped into negative territory in late 2009, which caused “the share of the adult population working (to fall) back to 1983 levels.” The only other time in modern history that the rate of job growth declined, according to Henwood, was during the Depression.

The first decade was bracketed by two recessions, but even when the economy was expanding, job growth was unimpressive. During 2006, the peak of a weak economic expansion, average monthly job growth was 147,500, 53 percent below the monthly average job growth in 1999 (225,300) when the technology fueled expansion of the mid 1990s was beginning to run out of steam. The economy needs 150,000 new jobs each month to absorb new entries into the job market.

The right wing’s conventional wisdom holds that higher profits translates into more jobs, but in 2010 that didn’t prove to be the case. The US Commerce Department reports that US corporations’ profits in the fourth quarter of 2010 were up 29.3 percent over 2009, but these profits generated only an average of 60,000 new jobs in 2010. There was better news in February when the economy generated 192,000 new jobs, a welcomed but still modest figure. 

“US corporations are “sitting on over $1.5 trillion of cash right now, writes economist Robert Reich on his blog. “They won’t invest it in additional capacity or jobs because they don’t see enough customers out there with enough money in their pockets to buy what the additional capacity would produce.”

If states like Texas continue to cut public sector payrolls, there will be even fewer customers out there with enough money to buy what the private sector produces and there will be even fewer new jobs for our growing population.

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3 thoughts on “Right-wing economic policy is about profits, not jobs

  1. We have to smash this ridiculous right-wing myth that “government doesn’t create jobs.” Rick Perry “firmly believes” it. Apparently he doesn’t believe public sector jobs are real jobs; only private sector jobs are real. Tell that to all the teachers, clerks, maintenance workers, social workers, health care workers, etc., etc., who are getting terminated. And, as you point out–what should be obvious to anyone with basic economic knowledge (that apparently excludes Rick Perry)–whenever you eliminate public jobs, you lose private jobs as well.

  2. Pingback: Eye on Williamson » Economic disconnect, we need jobs

  3. Pingback: Republicans attack ObamaContent as “socialized meaning” « fauxphilnews

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