Memo To: Michael Kramer, Time magazine
From: Jude Wanniski
Re: Job Retraining
I came across your 1/15 column, "Job Training Has to Be Reworked," which recommends a government mandate that private enterprise train all its workers in skills if they train some of them. I hire a worker to work on Latin America financial analysis, and because he is weak in his Spanish, I send him to Berlitz and the company pays the tab. Does Uncle Sam determine that my self-interest requires that I offer Berlitz to my other employees and give me a "push," as you put it? When I hire an employee to do filing, clipping and light research, and find after a year that he is capable of heavy-duty work, but needs computer schooling, am I going to be required to offer that training to the rest of my staff?
What I mean to say, Mike, is you should realize how silly you come across when you get warm and fuzzy about the government doing nice things for your fellow man/woman. The fact that you found a Ph.D. economist roaming around a Washington think tank who is willing to be quoted to support your warm and fuzzy ideas is not his fault, but yours. As a columnist for one of America's premiere news magazines, you should spend a little more brainpower thinking through things like this instead of gushing all over your word processor. I'm at least happy to hear that Treasury Secretary Rubin thinks it is a bonehead idea, as Rubin actually worked in the real world at Goldman, Sachs, and realizes the horrors your "little push" by the federal government would create.
The correct answer to the job retraining problem is to cut or eliminate the capital gains tax, which will create so many profit opportunities that employers will go crazy searching for workers and even begin hiring and training handicapped workers when the labor pool has been totally exhausted. The reason Congress has been unable to cut the capital gains tax since it was last increased in 1986 is that both parties have been in the grip of the corporate establishment, which does not want the growth rate increased for precisely the reason I mention. They do not want the unemployment rate to fall because they will have to compete for a dwindling labor supply with higher wages. This is why the capital markets always tremble when there is good news about the economy. If you really would like to do something for your fellow man, inquire as to why the economy is not supposed to grow at more than 2 1/2%. If you would ask Karl Marx, he would advise you, correctly, that the big guys always prefer to maintain a reserve army of unemployed.