Monday, November 29, 2010

The Cause of High Unemployment: Still Due to Dwindling Job Creation | The Heritage Foundation

What is the problem with our economy?  It is worth reminding ourselves of graph The Heritage Foundation put out on job creation.

click to enlarge, double click to reduce
Job creation is the issue with the economy
Job Creation, not job losses, is the leading factor in unemployment


The Cause of High Unemployment: Still Due to Dwindling Job Creation | The Heritage Foundation

It is not the job losses.  There is just no job growth.  Regulation which prevents whole industries from hiring (e.g., fossil fuels) must be at least part of the answer.

A graph outlining major regulation in the last 20 years would be highly illuminating, especially if it targeted specific industries.  We have a suspicion that anemic job growth is industry specific.

Marginal cost is instructive here.  Jobs are sticky.  That is, they tend to remain until the economy worsens and produce lay-offs.  Those jobs have a tendency not to come back if they can be out sourced in the face of oncoming domestic regulation.

The graph also shows why Keynesian government spending will not solve the problem; it will not create long term job growth.

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