Thursday, November 10, 2011

What would you do for creating jobs Mr. President?

Every time I hear these stupid words from someone I cannot take myself to feel deep disregard to him/her and the institution or country he/she is representing. But it seems like all those narrow minded but well-connected small elites of money managers, called “investors” in the economy news, and money markets they control, called “markets”,  are looking right into the mouths of political leaders to hear an answer to a question containing these words: What would you do for creating jobs Mr. President?  And they cheer when Mr. President announces new plans to create more job half of which to open holes of all kind and rest fills them back in without creating no net positive goods and services!

On the other hand ordinary US citizens tend to think that the jobs are lost because they are moved by evil corporations to China, India and the rest of Asia. More and more turn their anger to free-markets since they think the ultra-corporatist, to buddy to fail clowns in The Wall Street are free market. They occupy the Wall Street and demand many things which would be summed up as: “Bankers suck the blood of tax payers, throw them out and let us suck the rest”.

West seems to look like they have forgotten its past. People there have forgotten that accumulated savings of the generations of their grandfathers, converted into capital and investment under capitalism and efficiently allocated to its best use by free markets, has created hundreds of millions of jobs for generations. They are now trying to fool themselves with Keynesian tales: They believe capital can be created by printed money instead of real savings and job creating investments depend on spending not savings!

US economy does not generate enough jobs because (a) US households, companies and governments does not save enough and (b) they do not let market forces to clear out too big to fail suckers so that all those resources misallocated would be reallocated to productive jobs. It is getting worse not better because the wealth-destroying and highly out-dated financial services giants hand to hand with US government are not allowing free market forces to rearrange the misallocated resources to their best use.

Imagine all those too big to fail financial services suckers has been let to fail, then all those bright alpha males wasting hours to make trades which would eventually destroy wealth like they did repeatedly past few decades will be out of work. Do not fool yourself, these people are bright, they always do wrong bets not because they are all idiots, it is because they have big bonuses when they do those kinds of bets.

Once US realizes that “too-big-to-fail” giants are actually “too-rotten-to-live” many competent and fresh financial services companies deprived of sunlight under thick canopy (and million dollars thick lobby power) of too big to fail suckers will flourish. Many of the bright minds of finance will be employed by these better financial services companies which would survive and grow. And many would be absorbed by other productive industries. And yet many will be entrepreneurs and develop new industries.   

Reallocation of resources by free-market forces is sure painful. But that is the only way for a prosper future along with private saving and investment.

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