Mr. O’Reilly (December 01, 2009) claims that the “new” root cause of the housing crisis is the (lack of) “jobs, jobs, jobs.”  So the solution to the crisis must be (the creation of) “jobs, jobs, jobs.” 

I agree. But the next question is this:  What sort of jobs?

Consider a proposal for two, complementary jobs programs. 

The first is called the “Litter Scattering Brigades.”  Workers are paid to strew trash along the nation’s highways. 

The second jobs program is called the “Litter Gathering Brigades.” 

Workers are paid to collect the trash strewn on the nation’s highways.  The workers of the Scattering Brigade have jobs, and thus can afford a home.  The workers of the Gathering Brigade have jobs, and thus can afford a home.  And if the supply of houses still exceeds the demand – why, expand the Brigades . .

To solve the housing crisis, workers must be employed in jobs that augment our society’s overall wealth.  Jobs which merely shift about existing wealth – like the Litter Brigades – do not.   Jobs which increase the total wealth in our society fall into three inter-related yet distinguishable categories.

  1. First, some jobs capture value.  We can capture the energy of the sun; we can capture it directly with solar panels, or indirectly,with wind turbines.  Derivatively, all of plant life captures the energyof the sun:  plants that we eat (or animals that eat plants, and which we then eat), or plants fermented into ethanol, or lumber harvested for construction.  Hunting and gathering capture value.  Drilling for oil, and mining coal, capture ancient solar power.  And of course there are non-solar sources of energy – geothermal, and radioactive.  Rocks and minerals can be used in building and manufacturing.  What is common toall of these “captures” is the investment of labor.
  2. Second, some jobs create value.  Think here of the entirety of manufacturing, broadly construed.  At every step of every efficient manufacturing process, we find value-added activities.  And the value that is added is human labor.
  3. Third, some jobs conserve value.  The essence of conservation is this:  we can preserve a given standard of living, while reducing the need to capture or create value.  This includes the recycling of materials, and enhancing energy efficiencies, ranging from individual appliances to transmission lines to the entirety of the electrical grid.   

The American Insurance Group – AIG – was brought down by its Financial Products Unit, a participant in the financial products industry.  But this is not an “industry” in the usual sense, and it did not produce “products” in the sense of capturing or creating wealth. These people engaged in elaborate and complex transfers of wealth.  For that, they paid themselves extraordinary commissions.  But they were not engaged in the augmentation of wealth.

This preoccupation with the shifting of wealth, while neglecting the augmentation of wealth, explains our entering the ongoing crisis. Reversing that emphasis explains how to exit it.  

The financial “industry” attracted clever and creative thinkers. Most unfortunately, they were creating novel and complex financial instruments whose risks they did not understand.      

We need to redirect that obvious talent, away from shifting about the wealth created by others, and towards sustainable, environment-friendly ways of capturing, creating and conserving wealth.  Otherwise, we’re just forming Litter Brigades.