James Gattuso of the Heritage Foundation applies Bastiat’s “broken windows” fallacy to the arguments of David Michaels, OSHA Administrator, to shattering effect. From “Jobs, Regulations and Broken Windows“:

[Michaels] cited OSHA’s recently withdrawn proposal to limit workplace noise. The standard was criticized for imposing excessive costs. But Michaels argued the requirements would be a boon to private enterprise. “[B]ecause OSHA has a weak noise standard…,” he explained, “U.S. employers have no incentive to buy modern, quieter machines, which means that U.S. manufacturers don’t build them, and there are few jobs in the United States for engineers who could design them.” Imposing mandates would presumably create those jobs, boosting the economy.

That would be a good thing if true. Think of how easy it would be for regulators to rev up the economy. Just place more burdens on businesses, and see the economy grow as they spend money to comply with them. That, however, is simply not the way the world works. Michaels’ argument is nonsense on stilts.

Frederic Bastiat, the 19th Century French economist, refuted the argument that breaking windows produced net economic benefits. Yes, glaziers did well in the repairs, but the work misallocated capital that could be better spent on more productive investments.

It’s not only regulators who base their arguments on jobs without the context of productivity or greater economic good, Gattuso notes.

[Some] have argued that pending FCC “net neutrality” rules would destroy jobs because the marketplace “losers” would be telephone and cable firms who employ large numbers of people, while the “winners” would be lean Internet content firms such as Google and Amazon.com, who have relatively small workforces. But such arguments completely miss the point. The problem with net neutrality rules has nothing to do with protecting fat telephone and cable payrolls. The problem is that, by interfering with innovation and investment, the recently-adopted rules will stymie growth of the Internet. That will probably mean fewer jobs for the economy as a whole – but certainly it would mean fewer benefits for society.

The goal should not be jobs, but wealth creation.

From AP, “In Tuesday speech, Obama to promote new job ideas“:

WASHINGTON — In his latest job creation effort, President Barack Obama is trying to find practical and politically feasible ways of spurring hiring among skittish employers.

Among the ideas expected in his economic speech Tuesday is an expanded program that gives people cash incentives to fix up their homes with energy-saving materials, senior administration officials have told The Associated Press. Obama is leaning toward new incentives for small businesses that hire new workers and new spending on roads, bridges and other public works, the officials said.

An impressive effort by the White House to synthesize the results of Thursday’s jobs forum so swiftly.

In a letter to President before the forum, the NAM identified spending on transportation and energy infrastructure as good policies to encourage private-sector jobs creation, and the hints above are encouraging.

Irwin Steltzer of the Hudson Institute, writing at The Weekly Standard in “Recovery on the Horizon?“, sees positive signs of private-sector recovery — more manufacturing activity, declining inventories, even jewelry sales. He also identifies a dichotomy to come out of the jobs summit that will shape the President’s speech Tuesday.

It is fashionable these days to talk about “take aways,” what attendees take away from a conference. My guess is that President Obama’s “take away” is consistent with his view that activist government cannot leave job creation to the private sector, but also that he must dispel the notion that he is hostile to the private sector — something that some of his staff want him to do. So a mix of spending and incentives for small businesses to hire will be laid out in the Tuesday speech.

Obama’s goal will be to keep the unemployment rate heading down, even if he has to create government-funded jobs to do it. My Hudson Institute colleague, Diana Furchtgott-Roth points out in a recent column that in 1850 Frédérich Bastiat noted that jobs provided by the government are seen, those displaced by higher taxes or snatched from private sector firms are not. At least, not in the short run. And the president’s congressional allies have no interest in the long run — in which they will be dead, electorally, if the economy suffers a relapse. They want action this day. Which is just what their president intends to give them.

More …

• ABC News, “President Obama to Pitch More Job Creation Proposals on Tuesday”
• New York Times, “Obama Eyes Bank Bailout Funds to Spur New Jobs”