Does growth create jobs, or do jobs create growth?
Some listeners were surprised when Morning Edition broadcast an interview with Bill Frezza, a long time venture capitalist and fellow at the libertarian Competitive Enterprise Institute. In it, Frezza argued that many of the policy proposals to encourage business hiring are wrongheaded because business exists to make money, not make expensive new hires. And rightfully so, he said.
"Nobody wakes up in the morning and says, I wanted to increase my payroll because I think it's good for the American economy," he told host Lynn Neary. He added, "Growth causes employment; employment doesn't cause growth."
In other words, what is good for business is good for the country.
"Bill Frezza was a breath of fresh air," wrote Brian Gutherman of Shamong, NJ, typical of dozens of listeners. "Businesses have no inherent social contract to provide jobs simply for the sake of increasing employment."
A blogger at the liberal Daily Kos welcomed Frezza's openness as clear evidence of self destructiveness and wrote: "The second thing you should do [after listening to the interview] is reward NPR for running this, when it's the kind of clear unvarnished speech you will seldom if ever find on the commercial media. Throw some love at your local public radio stations, and contact your congress critters to tell them no way in Hell should NPR, PBS or the Corporation for Public Broadcasting end up on the chopping block."
I haven't done an analysis on whether libertarians are fairly represented on NPR, but do agree that they should be. Their force is particularly being felt through the Tea Party movement, though the Tea Partiers mostly seem to reject the second half of libertarian philosophy. That half believes government should pretty much get out of controlling immigration and trade, as well as marriage and other such individual social, cultural and moral decisions.
I do wish that host Lynn Neary would have given a little more perspective in introducing Frezza by noting that libertarians are a small minority among professional free market economists, and that a venture capitalist is a special kind of businessman.
Even conservative classical free market economists such as Milton Friedman and Friedrich Hayek begin from the base that economics and economies exist for social ends, and that some government regulation is necessary to channel business for the greater good. The debate among economists is over how much regulation. And almost all economists believe, contrary to what Freeza claimed, that growth and employment reinforce each other in a loop. They differ over how and to what extent.
Meanwhile, many businesses—especially established one—spend money on things that have little to do with profit, such as charity, moving corporate headquarters to be close to where the boss lives and, yes, investing out of patriotism. Venture capitalists, however, fund start-up businesses, which by definition are focused on Darwinian survival and thus jealously restrict expenses, including on hires.
But there are a lot of semantics here, and it is not my place to get into ideology and policy preferences. I think all of us recognize that there was some obvious practical truth in what Frezza had to say.
I did like that Neary allowed Frezza to speak at length (the interview lasted nearly five minutes). We thus could hear his arguments in full, better appreciate the values behind his economic prescriptions and arrive at our own conclusions whether to agree with his philosophical approach or not.
Here is Neary's own explanation of what she was trying to do:
I knew the interview with Bill Frezza would be provocative because I had a strong reaction to his piece when I read it. Here is how the interview came about:
I knew when I was filling in as Host on Morning Edition this week that I wanted to do something on jobs, more specifically on the idea of job creation and job creators. It seemed to me that the phrase job creators was being used very strategically in the debate over what to do about the economy so I was especially interested in exploring the idea of job creation from a business angle.
One of the business editors sent me some articles. One of them was Bill Frezza's. When I first read it I was surprised that he called jobs "a necessary evil", an expense that most businesses would do without if they could.
As I talked to people about his piece – there was a range of reactions. Some people were also surprised by his candor. Other's said, yeah, that's how businesses think. It occurred to me that it could be very thought provoking to hear someone lay out this argument totally honestly and unapologetically, with no political hedging. If this is a legitimate business perspective I figured, then why shouldn't we hear it as part of the discussion around job creation?
I know NPR is sometimes criticized for being too polite in interviews and some people may feel this interview falls into that category. I think I did challenge him...perhaps not as forcefully as some might have liked. At the same time, I wanted to hear what he had to say. I wanted LISTENERS to HEAR it. And yes, I thought by hearing it l listeners could make up their own minds about his ideas...talk back to radio, rail in the comments section, discuss it with their friends. I wanted to start a conversation and it appears I did that.
Andrew Maddocks contributed to this post.