It Isn't About Jobs

It has become more than a little annoying to hear politicians proclaim that what we need in this country is jobs. Even worse is when they have to repeat the word, as if they were firing a clip from a rifle; we need jobs…jobs…jobs. Further, they usually finish this proclamation of insight by suggesting a simplistic solution such as building bridges and roads. In an economy which has been service oriented for decades I am struck by an image of laid off teachers, bank tellers, carpet salesmen, and…oh…say…accounting executives, all donning hard hats and heading off to some dilapidated corner of the country to lay asphalt.

Virtually any economist or even broker can tell you that employment is a lagging indicator of the economy. By the time employment improves or declines the factors that have led to the change have probably long been in place. That applies in times of both peace and war, since the steps taken to war usually ratchet up well before the application of resources and employment (Iraq being a notable exception).

The solution is not jobs - that’s the outcome. Maybe I should put it this way: the solution is not jobs…not jobs…not jobs. That’s not to say that public policy cannot have an impact on employment, it’s just that it can’t magically generate employment by some carefully directed expenditures or by somehow increasing the wealth of the top 2% of the nation that already currently owns 50% of our entire National net worth (excluding housing).

With no more rationality than Michelle Bachman saying gas prices will drop below $2 a gallon as soon as she is crowned, our leaders and contenders say whatever it takes to create an image that will garner them support. Majority Leader Eric Cantor (whose most notable Congressional achievement was getting a name approved for a Post Office in Richmond, VA - the Tom Bliley Post Office) is currently spending hundreds of thousands of dollars from his campaign war chest running ads reaching most of Virginia television viewers. He is proclaiming himself in the forefront of bringing good jobs to Virginia, even without competition for his Congressional seat. What is he really selling?

Public policy (aka Government) is essential to create the atmosphere in which the American style of Capitalism can thrive. That necessary atmosphere is called predictability, the most important ingredient for investment. The lies the Republican Right deliver endlessly, such as taxes are an inherent evil or that the free market will always do the right thing do nothing but instill fear and exacerbate the deleterious concentration of wealth in the United States. They create confusion because the 298 million people, who own less than 50% of the Nation, are deterred or reluctant to take risk because they don’t know what to count on, what is safe, or what is fair.

Free Market health care may be the single biggest drag on the economy since it transfers huge amounts of assets unproductively, burdens business, and renders workers nearly immobile with fear - and those are the healthy ones. Although Obama touts what he got passed (a massive health insurance reform bill) it has or will do little to elevate the control free market health care has due to the continued high level of uncertainty for the average US citizen. It was his worst failure, followed closing by approving the Bush tax cuts extension.

There are two areas to look for a true turn around in the economy. The first is stabilized real estate values; the second is an increase in real wages. The part of the population that own their own home need to be able to comfortably predict that the value of that home will rise at a more or less constant rate slightly ahead of inflation and that the house they may want to buy will do the same, and all workers need to predict that continued work and accumulated experience will result in increased wages at least slightly better than the rate of inflation.

For public policy to assist in those two areas it needs to trim expenditures, especially internationally, and create revenue (taxes) which will both reduce debt and the disparity in national wealth ownership. The objective is not to make the rich poorer, rather, in an expanding economy, to have the bottom 98% increase their wealth at a much faster rate than the top 2% (which currently is the exact opposite).

It also needs to include simplified regulations (not reduced regulations), the reinstatement of the pay-as-you-go policy (enacted during Clinton’s balanced budget Administration and ended under Bush), and start the process toward a single payer health care system by adding a public option to the current health care law. That creates the atmosphere; the free market will take it from there, and leave the Fed to keep inflation at a minimum with a balanced monetary policy. The jobs will come.