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Andy Kessler Takes on Job-Destroying Mandates

Andy.KesslerIn my interview with Andy Kessler (TOS Summer 2011), Kessler said, “There is always room for new creators to make the world more productive. Don’t buy the argument that technology will lead to massive unemployment and an underclass; just the opposite happens every cycle.”

Recently, in The Wall Street Journal, Kessler elaborated on this point. He observed that in doing something in the marketplace better, more efficiently, or more productively, entrepreneurs may initially cause some people to be unemployed, but ultimately they create many more jobs or wealth than previously existed. Quoting from the article:

Since 1986, Staples has opened 2,000 stores, eliminating the jobs of distributors and brokers who charged nasty markups for paper and office supplies. But it enabled hundreds of thousands of small (and not so small) businesses to stock themselves cheaply and conveniently and expand their operations.

It’s the same story elsewhere. Apple employs just 47,000 people, and Google under 25,000. Like Staples, they have destroyed many old jobs, like making paper maps and pink “While You Were Out” notepads. But by lowering the cost of doing business they’ve enabled innumerable entrepreneurs to start new businesses and employ hundreds of thousands, even millions, of workers world-wide—all while capital gets redeployed more effectively.

Kessler is right that in paying attention to the seen layoffs, and ignoring the unseen increase in productivity or wealth, economically illiterate policymakers have punished innovators for innovating, encouraged businesses to produce things that consumers don’t want to buy, and (via a host of regulations) locked in the status quo.

Kessler is also right that the solution is for the government to, as he puts it, get out of the way.

Every government-mandated low-flow toilet, phosphorous-free dishwasher detergent, CFL light bulb, and carbon-emission regulation is another obstacle on the way to a productive, job-creating economy that produces things consumers really want.

It’s hard for people to argue with any of this; after all, if consumers did want something the government would not have to mandate it. But of course that won’t stop leftists (or unprincipled “rightists”) from arguing with it, and it won’t stop policy-makers from enacting ever more mandates in the future.

What will?

While educating people about economics may help, such madness will end only when Americans—and their elected officials—come to recognize each individual’s right to property and the pursuit of his own happiness as sacrosanct. The ultimate solution, then, is to educate Americans about the source and nature of rights.

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