Yipee! The government is going to create manufacturing jobs by giving researchers $500 million dollars.
“Today, I’m calling for all of us to come together… to spark a renaissance in American manufacturing and help our manufacturers develop the cutting-edge tools they need to compete with anyone in the world,” Obama said in a written statement. “With these key investments, we can ensure that the United States remains a nation that ‘invents it here and manufactures it here’ and creates high-quality, good paying jobs for American workers.”
The president is expected to highlight several specific initiatives this morning, including a $70 million project to award grants to companies that are making major advances in robotics and a plan to invest $100 million in “material genomes.”
But wait. Wealth is created when private industry produces a product that can be sold for more than it cost to manufacture it for the simple reason that the consumer of the product values the product more than they would value retaining the money required to buy it.
You need two things: A product and a customer for that product. Generally speaking, in order to create NEW manufacturing jobs, the product has to be something new or an innovation people find attractive. In other words, you need an entrepreneur who is being creative (or an entrepreneurial company being creative).
I wonder if the President could explain to me how giving money to a government (no creativity there, certainly)-industry (you can bet these are established companies that should be doing R&D on increased manufacturing capabilities on their own dime)-and academia (where a final product that can be sold in the market is a low priority compared with pure research) will create one job… or even one product.
I honestly don’t mind some government funding for academic research, despite how it turns what should be pure research into a political game–giving power to bureaucrats and politicians and turning researchers into beggars. I’m not in favor of government giving money to companies to do what they should be doing anyway. If R&D is a good investment, make the investment yourself. You don’t have to be a crony company utilizing taxpayer dollars.
My question is this: If the government wants to help create jobs and insists on spending $500 million to do it, why not provide grants to entrepreneurs? Don’t give money to existing entities. Give it to people who are creating something new. Somewhere out there are innovators. Someone is sitting with a brilliant idea and no funding. If you gave 250 people $2 million apiece, you’d likely have 225 failures, but you’d have 25 successes that might end up employing enormous amounts of people, not to mention bringing things to the public that they want and need–things that increase their prosperity by making their lives easier, or better in some way.
Of course, the best way for government to create jobs is getting itself the f-en-heimer out of the way. Lower taxes, increase incentives for investment, particularly risky investment (imagine my 250 entrepreneurs having easier access to private capital from people willing to risk with them rather than taking government money), and get regulation under control. It’s not difficult. And it actually takes LESS government and government spending rather than more.