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Customers, not ‘job creators,’ the actual source of economic growth

Customers, not ‘job creators,’ the actual source of economic growth

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Filed on 18. Oct, 2016 in Business Toolkit, Contributors

By Mike Cook
For The Bellingham Business Journal

Once upon a time, not so long ago, America was a nation made up almost entirely of self-employed individuals. The numbers from that time tell us that the level of self-employment was not far from 90 percent. This would have been true right up until the onset of the industrial revolution, which concluded right around 1840.

From that point on, America experienced a dramatic and fairly rapid shift from self-employment to other-employment. In other words, Americans became a nation of job seekers. By the early 1970s self-employment had dropped to roughly 10 percent and other-employment, well, it had risen to 90 percent. An outcome of this transition was the emergence of the notion of “job creators” and their value to the economy. In the eyes of many, “job creators” became a protected class and the source of economic growth in America.

Self-employment, when it was very high, was primarily agrarian, with thousands of individuals using their own muscle and that of their neighbors to produce food for themselves, and in many instances enough for other portions of the population who were employed producing hard goods. Hard work for everyone for certain is not something that most of us would willingly return to as our way of life.

Over a period of time — several decades really — a nation of self-employed, self-reliant citizens raised their children to become literate and seek out the relative security of a job. In the process we gradually abandoned our foundation of self-reliance. In large part, we stopped thinking for ourselves when it came to economic responsibility; the “good job” became the answer to life’s uncertainty.

And so the nation prospered, at least in terms of dollars and material things. But the progress did not come without consequence. Skills not used eventually are forgotten. The same is true for senses, and over time, while Americans remembered that they had inherited a legacy of self-reliance, their behaviors began to reflect a population that was increasingly reliant on someone else creating opportunities for economic security.

Hence the myth of the “job creators” was created and along with it the notion of entitlement replaced self-reliance.

Unfortunately, over time this employer/employee relationship became something of an unholy alliance.

As a nation we developed an addiction to jobs and the false security they would eventually be shown to provide. We developed an undue deference for “job creators.” Those muscles of self-reliance became weakened. We were not necessarily content to be employed: witness traditions like TGIF and living for the weekends. But we settled for a false sense of security and invented the struggle between labor and management.

We still can’t make up our mind who wears the white hat in that drama. Somehow along the way the notion that government could/should create jobs became part of the folk lore and so today politicians talk about job creation as though they somehow have the magical power to create demand for goods and services, which is after all the real source of jobs.

So now when we experience a period of economic lull we look to the politicians to cheer or blame for our personal economic fortunes. So now we have that red-herring to chase. The purpose of government never was the creation of economic opportunity.

Lately there has been lots of talk about “the system” being broken. Is there something broken? I’d say yes but it isn’t the system, it’s our understanding of it. Over the years there have been a few voices crying out for understanding. Edwards Deming, the father of the quality movement in America urged us to think about the goal of business as being to provide the most economic return to the most people for the longest period of time possible.

What that meant to him was put out a quality product that someone really wanted.

Peter Drucker, by many credited as the father of modern management, told us his view in 1968 in his book “The Age of Discontinuity.”

He said the purpose of a business was to create a customer. Both Deming and Drucker subscribed to the notion that the customer was the true source of economic opportunity.

In large part our education system does not address the responsibility each of us has for creating a customer for ourselves, which is another way of framing self-reliance.

We educate for skill, not self-reliance. The consequence: a populace that predominantly looks to someone else to provide them with economic opportunity. And so we have the conspiracy we live with today.

The only way out of the conspiracy we have created is to acknowledge our interdependence and know that none of us makes it solely on our own. Employers need employees and vice versa ….and both need customers.

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