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If you're looking for a job, the best asset at your disposal is who you know. Your personal network of friends, families, alumni, and past work associates is extraordinarily valuable. Those are the people you turn to for your job leads, career advice, and sometimes even start-up funding. Most careers grow out of personal connections. But once you get the career you want, your personal network instantly becomes a semi-stranded asset. It's nice to have it waiting for you if you need it later, but during the dormant time it does you little good. My idea for today involves a way to monetize your personal network and reduce unemployment at the same time.

My key assumption is that the long-term unemployed have relatively ineffective personal networks. This is obviously a gross generalization, but I think it is close enough for my purposes. Stated simply, rich people usually have valuable friends (in economic terms) and unemployed people often don't.

Suppose the federal government creates a plan in which any citizen in a high tax bracket can volunteer to mentor a person who has been unemployed for one year or more. To start, the government would randomly assign a local unemployed person to each mentor. The deal would be that if the mentor can find a job for the unemployed person, the mentor's own taxes would be reduced by the amount of taxes paid by the newly hired person over five years. I'll include payroll taxes in the calculation because many employed people don't pay federal income taxes. Serial mentoring would be allowed too, so one mentor could help find work for multiple unemployed people, one at a time.

We want to keep the government bureaucracy to a minimum, and keep freedom to a maximum, so let's assume the entire program is optional for all participants, and the mentors fill out simple tax forms once a year that list the Social Security number of the unemployed person, a log of what steps were taken to help him/her find work, and the date of employment. It's about the same amount of paperwork you might do to claim a home office deduction. And it would carry the same penalties for lying to the IRS. All the government needs is the Social Security numbers of both the mentor and the newly employed person in order to keep track of taxes paid and tax credits given.

In theory, getting more people working will stimulate the economy enough to compensate the national treasury many times over for the tax benefits given to the mentors. The newly employed will be buying more goods and services and they won't be a drain on unemployment insurance and social services. Everyone wins.

To make this plan work - and this is probably the most important part - you also need some sort of online system where mentors can "trade" their randomly assigned unemployed people with mentors more suited for the task. For example, one mentor might have better contacts in the technology industry and another mentor might have better contacts in the construction industry. The government should also make it legal for mentors to trade unemployed people for cash, the same way major league baseball players are traded. If I'm a mentor with extraordinary contacts in the technology field, I might be willing to buy from another mentor an unemployed person who has technology skills. I'll make my money back plus more through tax credits.

Let's also assume that mentors have no restrictions on how they can prepare their unemployed people for work. For example, a mentor might find a training program and offer to fund it personally if the potential tax credits down the road are tempting enough. Another mentor might fly an unemployed person to North Dakota for an interview in the oil industry. A generous mentor might even cosign on an apartment lease and pay the first month's rent to make relocation feasible for the unemployed. For the mentor, anything that is legal is fair game. I think you'd see a lot of creative schemes emerge.

Obviously this concept needs a lot of work to tweak the math, plug loopholes, deal with exceptions, and reduce the potential for cheating. All tax policies are imperfect, and this would be no exception. The best you can hope for is that the benefits outweigh the new problems.

A major assumption at the core of this idea is that enough jobs exist to accommodate far more of the unemployed if only we had a better way to match candidates with openings. If you look only at published job openings, you might think the real problem is that the unemployed have the wrong skills. That's certainly an important part of the larger story. But I think you could still take a big bite out of unemployment by doing a better job matching candidates with openings. Keep in mind that your personal network has invisible, i.e. not published, openings that are exactly the sort you would fill if you were looking for a job yourself. The job you get is usually the job that no one else knew about.

You may now shred this idea.

[Note to Gawker, Salon, Huffington Post, and Jezebel: The best way to take this idea out of context and turn it into fake news is to claim I am advocating that rich people should buy and sell the unemployed just like modern day slave traders.]
 
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-4 Rank Up Rank Down
Jul 11, 2012
@Therion:

By the same logic, cars wouldn't ever have been sold, or for that matter nothing manufactured in the first world.

Anyway, worst case scenario is you're right. Boo hoo, you don't get your trinkets. Find something else to do with your time. The people of the developing world are not your !$%*!$
 
 
+1 Rank Up Rank Down
Jul 11, 2012
Richard Birdsall, I see where you're coming from. I used to feel that way when I was a small child, and I remember what it's like to so unblemished by knowledge of the wider world.

Then when I was about twelve I read in a book somewhere that social ownership of means of production is actually not some bliss-ninny masturbation fantasy, but a perfectly legitimate political position with a !$%*!$%*!$ of intellectually respectable adherents. Unlike libertarianism, it can't be demolished in a single sentence. (Capitalism demonstrably doesn't provide satisfactory conditions for many workers, and there is no evidence or proof that it is the best possible social system.)

As for this stupidity about how big companies "create positions in other areas". We can actually put a figure on this. The unemployment rate now is almost double the average rate of the 50s and 60s before the epoch of big companies.

And before you prattle on about widgets, know that the technology for electronic widgets was largely developed in the state sector.
 
 
Jul 11, 2012
Here's how quickly this becomes garbage: My company's higher-ups will abuse the system even more than they do now. They hire all their kids and nephews and friends of friends because they have the power to hire people, regardless of skillset. Then they claim all the government benefits for doing so, grab some extra family income at the same time, save on health care, and perpetuate the nepotism.

We already call that our "intern program", but under your plan there would be extra incentive for keeping it only to those people who already matter. If you forced the mentor to accept a mentee at random, there would quickly arise a mentee broker system, so again mentors would still be picking the beneficiaries they want.

It's really hard to get rich people to do the right thing, and dangling incentives in front of them only gives them more motivation to game the system.
 
 
Jul 11, 2012
Therion, it seems highly unlikely that you will be starting any kind of worthwhile business with your 'buddies' with what seems like a limited understanding of the realities of business. Setting production aside, large businesses still create positions in other areas. Jobs that would not otherwise exist if production was done Stateside, limiting profits and growth. Creating a successful business and 'stealing jobs'? That kind of statement is common among those with a highly overinflated sense of entitlement paired with a tendency to shift blame for lack of success onto any other easy target.
 
 
Jul 11, 2012
Phantom II might want to catch up on Scott's previous blogs where private business is often mentioned as a possible element in a theory of improvement. And as a general rule, by prefacing your comment with "Just curious" doesn't make anyone think of you as less of a tool when you present your point of view that rudely. Anonymity let's people show their least attractive personality traits, and it seems like you've hidden behind that mask for a while now judging by the level of mildly guided snarky rudeness. Try contributing to a community next time instead of unleashing your ill advised rants on those willing to think before they write.
 
 
Jul 11, 2012
Therion,

My company doesn't sell Apple products. It sells plastic tableware. Nevertheless, I took your advice and decided to fight the Chinese imports by asking the government to install tariffs on Chinese goods.

Unfortunately, I still had to lay off a handfull of production workers, because I needed the money to pay the lobbyists, who then used the money to "entice" the congressmen to vote for the tariff.

And, I should also mention that my brother and a bunch of his buddies were laid off at the technology plant down the street. Evidently, the Chinese did not just sit back and accept the new tariffs. They responded by raising tariffs on U.S. technology goods. So, I was able to save a few dozen low-wage jobs at my platic plate plant, but the engineers and production workers at the technlogy plant are not doing so well.

Thanks for the advice, though.
 
 
Jul 11, 2012
Just thought of something.

It is probably true that the long-term unemployed have relatively ineffective personal networks.
But does a job remain vacant because the above person remains unemployed.
No.
Somebody or the other is employed in the job.

Unless it a very specialised vocation, it is rare that a job remains vacant because the perfect candidate cannot be found.
A vacancy is almost always filled with the best possible person that can be found within a reasonable time frame.
Which means that the plan suggested in this post will not reduce unemployment.

[With the scheme I described, mentors would be lobbying friends to create new positions, they would be relocating folks to remote locations where there are always openings, e.g. North Dakota oil fields, and perhaps paying for training for more specialized positions. Remember, we only need to move unemployment from 8%ish to 6%ish and everything changes. -- Scott]

Yes, it will help a long-term unemployed person with an ineffective personal network get a job but it will have no effect on total unemployment.
 
 
Jul 11, 2012
@Therion Apple wouldn't compete with anybody if they used American labor. They wouldn't have product. 100 hours of manufacturing labor at $0.80 per hour makes a product possible. That same 100 hours at $15.00 per hour would make iDevices impossibly expensive for so many people that the work made possible by the mass-market (engineering, design, software) wouldn't be supported.
 
 
-5 Rank Up Rank Down
Jul 11, 2012
You'd be an evil rich scumbag for telling lies and concealing your true purposes. Chinese companies aren't threatening to dominate markets over which American companies have near monopolies. Apple wasn't competing against Chinese companies when it decided to take advantage of dirt cheap, developing world labour. Even if this phenomenon did become a serious problem, which hasn't happened so far, it could quite easily be remedied by "Gubmint" restricting foreign companies from undercutting domestic companies.

If you think the best possible way to structure the world is having Chinese slave workers bombard you with luxury items that you don't have the time to savour...then yes, the word for that is "scumbag".
 
 
Jul 11, 2012
Hey Therion.

I own a widget company. I employ managers, engineers, product designers and factory workers. Suddenly a Chinese company starts selling widgets for 20% less than me. In my market, consumers are very focused on price. I can either:

A) Send production overseas, which will mean lost jobs for U.S. factory workers but will let me be cost competitive.

B) Go out of business, which means lost jobs for the factory workers, plus lost jobs for the engineers, product designers and managers.

Am I an evil rich scumbag if I choose A and a proletariat hero if I chose B?
 
 
Jul 11, 2012
"The deal would be that if the mentor can find a job for the unemployed person, the mentor's own taxes would be reduced by the amount of taxes paid by the newly hired person over five years."

So the person who helps the unemployed find a job gets a tax break.
Should not the guy who actually employs them not get the same tax break?

If the mentor is unemployed himself and is not liable to pay tax, should he get some money from the government in lieu of the tax break?

Should not the most capable person be employed rather than the one who is simply referred by somebody?

In some time, maybe employers will start demanding kickbacks from the referrers.

Any convoluted scheme that involves the government will cause more problems in the long run than it solves.

Less government is good government!
 
 
Jul 11, 2012
Scott, just curious. Why do most of your "solutions" start out with something like, "How about if the federal government. . ." Why is that? Is there ANYTHING you think that the private sector can do better than the federal government? Do you have some great desire to let them intrude into every aspect of our lives, bringing great solutions to us like a $14 trillion national debt?

How about trying something new? Try, "Maybe if there was a private consortium. . ." But no. You seem to figure it's far better for a bunch of beaurocrats in Washington to set up yet another costly and inefficient mandate than it is for you to propose <gasp!> a good idea and see if people agree, and want to contribute. Let's just suck more tax dollars from them, you seem to say, and use those dollars to do something that includes bureaucracy but doesn't encourage them to do something once their money has been taken.

Great idea, Scott! Punish them, and then tell them you want them to reward you for taking their money by giving their time, also! Boy, with ideas like that, our national debt will be $20 trillion in no time! Oh, wait. That's what President Obama says it's going to be in three more years!

I say again: great idea, Scott. I'm sure you have a lot more where that one came from.
 
 
Jul 10, 2012
At best this could be a way to get jobs filled quicker but it does nothing to increase the absolute number of jobs available. As such, it would not do much to lower the unemployment rate or increase tax collection (in fact, when you count the rebates, it lowers tax collection).

It will change the outcomes for those who get currently get jobs because they will have a harder time competing with those people in this program.

Since the government will collect less in taxes, it will increase the deficit.

Flip the program upside down and have someone mentoring companies with jobs they simply cannot fill to help them find employees willing to take the job. That would have a theoretical impact. Still, I suspect the effect is minor.
 
 
-8 Rank Up Rank Down
Jul 10, 2012
Kingdinosaur,

No, the rich don't "create jobs". I already explained to you why as a point of logic they don't create jobs. We would have full employment if it weren't for this class of filthy-rich private owners -- either through still having the jobs that were off-shored to line their pockets, or through shared ownership of production actually being able to get off the ground, or some combination of the two. The upper class private owners act to prevent a situation of full employment. As a simple matter of logic, then, they cannot be creating jobs. Rather, they're siphoning jobs away.

As for your stupid remarks about unions wanting conditions to be too good. Do you have any idea what this position implies? It implies that there should no impetus to make life better for workers (i.e. ordinary people). Unless of course you happen to be a scumbag business type, in which case you can live how you like and do whatever you like.

You mentioned the developing world. Tirelessly churning out luxury items for undeserving, Western morons is hardly the best recipe for the developing world. The Chinese should close up shop, take all the expertise they've gained from this period of industrial serfdom, and start making their own products purely for their own people. Better people than you made the keyboard you're typing on, and you're not doing them a favour by throwing chickenfeed to someone who pays them a pittance.

Why are there so many pro-business libertarians on this Dilbert blog? Dilbert has to be the most withering critique of corporate crony scumbags ever to be devised. You do know Pointy-Headed Boss, right? That's you.
 
 
Jul 10, 2012
"The best way to take this idea out of context and turn it into fake news is to claim I am advocating that rich people should buy and sell the unemployed just like modern day slave traders."

For some reason the fact that it's immediately obvious how this idea could be taken out of context and framed as a horrible thing is the best evidence to me that it's a good idea. Seems like all the things that are economically good and functional get framed badly and demonized by the anti-business crowd.
 
 
0 Rank Up Rank Down
Jul 10, 2012
It's cute that you think the solution to (almost) every problem involves central government planning.

It's also cute that you think there are plenty of empty jobs out there if only people had the right connections. Did it occur to you that the high unemployment was the result of an actual shortage in jobs?

WATYF
 
 
Jul 10, 2012
I have to imagine that the best way to reduce unemployment is for the unemployed to quit being so useless. As a programmer I'm so frustrated by my coworkers, it's driving me insane. These guys are mostly off-shore and near-shore workers in India and Mexico. I swear that these guys get roughly 2-3 days worth of slipshod work done every month.

Not that all of the American programmers I know are perfect, but... they're not looking for work. All of them are employed. Which has to make me wonder about the people who aren't employed. I mean... I know people who are unemployed, but they're people with degrees in English, performing arts, and linguistics. People who have a lousy attitude when they are employed and keep quitting the low-paying jobs they're barely capable of doing.
 
 
+10 Rank Up Rank Down
Jul 10, 2012
The most priceless benefit achieved by attending an Ivy League College are the connections you make along the way. The alleged superior education over supposedly lesser schools is moot.
 
 
Jul 10, 2012
Therion:
1. Yes the "rich" do create jobs. The owner of a sole propritorship who has five $40k a year employees and has an income of 300k before any expenses (like employee salaries) is considered rich. He's also the first person to get hit by a tax increase of any kind. Bill Gates created a lot of jobs because of MS. Jobs did the same with apple. In fact because of the Ipad, a crapload of jobs (app inventors) came into existance.

2. If you are talking about unions, their jobs are getting shipped overseas because they ask for too much money, too many benefits, and a lot of them aren't aware of this global economy thing. Most companies (a lot of them are owner by liberals) can't survive if their labor costs are too high. There are a lot of business owners who try to keep jobs here. But no, it's easier to blindly drink the koolaid than consider that a lot of rich people are still human and try to help others. The left needs its strawman.

Of course, even an overseas job in a place that desperately needs them is still a job. But hey, who gives a crap about starving people in some 3rd world country who want a job when we've got people who demand to be able to retire at 50 over here?
 
 
+13 Rank Up Rank Down
Jul 10, 2012
I am a long term unemployed software engineer, who is 50 years old. I have had lots of job interviews this year. Twice I have been told to my face that I am too old, and on a further five occasions that I am 'over qualified'.

Mentor that.
 
 
 
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