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What to do about jobs
Today, the White House focuses on the country's unemployment rate with a jobs summit designed to generate solutions. Newt Gingrich is offering his own rival "Real Jobs Summit." As usual, there's widespread disagreement about how to make something happen.
The unapologetic Keynesian Paul Krugman is still pushing for a large-scale job stimulus program:
It's time for at least a small-scale version of the New Deal's Works Progress Administration, one that would offer relatively low-paying (but much better than nothing) public-service employment. There would be accusations that the government was creating make-work jobs, but the W.P.A. left many solid achievements in its wake. And the key point is that direct public employment can create a lot of jobs at relatively low cost.
The chairwoman of the president's Council of Economic Advisers, Christina Romer, is calling for a more middle-of-the-road strategy -- more direct government stimulus plus gov't incentives to small biz:
This could include measures to restore the flow of credit for small businesses and targeted tax cuts. In these types of ways, a moderate and targeted investment by the government might be leveraged into significant employment gains and purchasing power by small businesses.
Marketplace commentator David Malpass writes at Forbes that Romer and Krugman are both wrong:
Romer and Krugman are advocating public-private partnerships and government jobs as America's path to lower unemployment. That's not the way America is used to doing it. The president may end up using their ideas to fill the policy vacuum, but he would be more effective (and popular) if he rethought the problem.
The great American jobs machine depends on small businesses, relatively free of government, yearning for after-tax profitability, earned in dollars that hold their value over the decades. The president could deliver this, but not based using the current economic program.
There are more radical solutions out there. Bruce Krasting proposes suspending payroll taxes for a year to grease the wheels for business.
Tonight on Marketplace, we'll be looking at the converging events that have created this vexing job pickle.
Have any job solutions of your own?
Romney formerly headed a private equity firm, but now he's the guy that's going to get average Americans back to work?! Like Bush, the constituency Romney's out serve is made up of the haves, the have-mores, and the uber-religious, and no one who doesn't fit in the previous three catagories.
The job market should have been the focus all along. We've wasted time and money trying to rescue Wall Street fat-cats and Corporate goons. People with JOBS buy houses and cars. People without JOBS lose houses and cars (see: http://www.repofinder.com). At least the Government is finally waking up to this. Romney 2012!
David Malpass is a Forbesian not a Keynesian. In the article he states: "The answer lies in small businesses that take advantage of freedom, a sound currency and low tax rates. Anytime those three things are available, they hire like crazy." In other words, government is the problem not the solution and reduce marginal taxes on business. Perhaps by "a sound currency" he means a gold standard?
But of course businesses of any size will not hire unless they believe there will be demand for their products or services. With saving rates up to 4 percent and unemployment over 10 percent (BLS U3 metric, but about 18 percent U6 metric) and rising small business would be crazy to hire unless government paid them to do so. Perhaps that's Malpass's idea of "freedom".
The fundamental insight of Keynes is that when an economy is in this condition the way to rescue it is through government spending to create jobs. That much should not be controversial, unfortunately it is.
