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June 7, 2010
Government Doesn't Create Jobs...
... at best it borrows them, and while I certainly hope I'm wrong, I'm concerned that we're just not going to experience significant job growth for the foreseeable future:
A burst of government hiring of temporary census workers pushed the nation's unemployment rate down a fraction in May, but private-sector employers added a mere 41,000 new jobs last month — a figure so disappointing it sparked a huge sell-off on Wall Street and sowed fresh angst about the economy's future.Adding to the worries was the fact that, so far this year, the bulk of the new private sector jobs have been going to workers with a high school education or less instead of to the middle-class workers on whom any long-term return to prosperity depends.
On the radio, Friday, I heard President Obama claiming the gradual success of the economic policies that "we" put in place over the past year, but I didn't get the impression that he was referencing the hiring plans of the Census. The reality, at the national level, is that the Democrats have made advancing their agenda and preserving past gains (as with public-sector growth) a higher priority than jobs and the economy. At the Rhode Island state level, the Democrats are shuffling chairs around and hoping for some sort of windfall miracle.
It may or may not be reasonable to extrapolate local evidence to national government, but one interesting aspect of the local debate is that the General Assembly clearly understands what sorts of noises it needs to be making. The budget is notable in its attempt to wash state government's hands of tax increases; the tax system "overhaul" makes some revenue-neutral tweaks without addressing the fundamental problem of too much government confiscation; and the legislation "making business easier in Rhode Island" cleans up some government-imposed nuisances but doesn't touch the mandates and regulations that create the real disincentives to economic activity, here.
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Jobs or no jobs is not something that can be determined by either the President of the USA or Congress. The world economy and regional economies are so much bigger than that.
What they can do it inject some antibiotics into the suffering patient, which they have already done. This may help with a kick start, it may help things not fall as far....but in no case could it make us regain full employment.
Although we are all reading the tea leaves, it looks to me that 10% unemployment might just be part of the future. We have sent too many factories overseas and built too many houses of cards in the financial "industry" and other endeavors which are simply not needed.
As a wise man once told said "how many hairspray factories do we really need?".
So here we are in the technological future where robots, for instance, are doing spot welds on cars perfectly, quickly and much better than any human can. The same is true for MANY other jobs - it was not that long ago that companies needed typing pools!
We are in a transition period for certain. Where we end up, though, is somewhat based on government setting a general direction. An example of this is immigration policy. Another example is alternative energy...if we get a GOP Congress or Prez, there is a good chance they will do away with the idea that we have to become the leader in new energy technology - that is easy to see just by looking at past history and reading Moniques posts!
As far as "high" unemployment, that is also a relative thing. Germany has had about a 9% unemployment rate over the last decade, yet is considered one of the most successful economies in the world. Truth is, our "full" employment was mostly a mirage....as you know, lots of people had jobs refinancing peoples homes and giving home equity loans! Lots of people had jobs spending those home equity loans!
So low unemployment could be a bad thing...if those people are not productive!
Now, keep in mind that worker productivity in the US has doubled in the last couple of decades. In theory, that means 1/2 the number of people could be working and the economy would be just as good.......yes, in theory! In reality, the increased productivity means larger bank accounts for those at the top, McMansions, SUVs and other wasteful spending.
Anyway, I know that the "job" of the Republican party is to try to make everything look as dire as possible, so forge on! We know when it will get better, though! That is as soon as a GOP President and Congress gets elected. You will then find some stats about how things instantly turned positive in National Review and quote them word for word.
You didn't know I was a soothsayer, eh?
Posted by: Stuart at June 7, 2010 8:00 AM