Changing the Subject: Where Are the Jobs?

The Republicans, deeply dinged by a politically damaging foray in badly designed Medicare reform, are trying to shift the conversation to jobs. Based on my post yesterday on excess capacity in the job market, I'm all for that conversation. (Wow, Eric Cantor must be reading my blog...cool! Yo, Eric...whassup!?)

But as Ezra Klein and Paul Krugman point out, there's nothing much in there that we should expect to help much. Tax cuts, deregulation (the Obama admin is going there too), trade deals, and that job-creating juggernaut: patent reform.

The important question here is what should we be doing on the jobs front? Or, more specifically, what should we do that we could do.

One can and should wax about optimal ways to rev up the American jobs machine, which has thankfully shifted out of reverse but remains stuck in low gears. Yet given our political dynamics, if those ideas represent traditional Keynesian stimulus, they'll be... um... hard to get through Congress. I'm all for a good fight, but with unemployment at 9%, and underemployment at 16%, we need more than a fight. We need a win.

[Brings to mind the great Tom Lehrer lyric: "Remember the war against Franco? That's the kind where each of us belongs. Though he may have won all the battles, we had all the good songs."]

Are there any ideas that might pass muster in this climate? One way to think about the problem is as the intersecting circles in a Venn diagram where one circle contains job-creating measures D's typically favor and the other one has measures R's favor. Is there anything in that vanishingly small intersection?

Tax cuts are in there, and they're of course part of the R's plan, but given the difficulty of enacting truly temporary tax cuts -- remember, stimulus should be temporary -- and given the fiscal need to raise more revenues once the jobs machine is fully up and running again, I wouldn't go there.

Infrastructure is in there too -- R's like to cut ribbons as much as D's, and the country has deep needs for non-porky investment in this space.

David Leonhardt offers some good ideas, suggesting that policy makers, including those at the Federal Reserve, need to take out an "...insurance policy on the recovery." He adds:

The White House and Congress, meanwhile, could begin talking about extending last year's temporary extension of business tax credits, household tax cuts and jobless benefits beyond Dec. 31. It would be easy enough to pair such an extension with longer-term deficit reduction.

I agree but there's an important and underappreciated concept to be mindful of here: fiscal impulse. Keeping things going that are already in the system don't give you any more boost. They can, of course, prevent an air pocket by not going away, but we also arguably need more than we're already doing.

A few other ideas:

• Help exports by continuing to put pressure on countries like China that manage their currency to boost their exports and block ours--this one's very attractive because it doesn't add to the deficit. I think this Levin bill is interesting and it has bi-partisan support.
• Do not go gentle in the current spending cut debates! Whether it's food stamps, unemployment insurance, tax credits for low income kids and workers, TANF benefits, etc., this is very bad time to cut resources to beneficiaries of these programs -- and if we want fiscal impulse, we should expand them. For one, the recipients of these benefits have been hit the hardest by the downturn so they'll spend, as opposed to save, the money. That helps generate more economic activity -- high multipliers and all that. For another, with unemployment high, some of the usual arguments that expanding these programs creates the wrong incentives are particularly dubious. And again, any such expansions of benefits could be temporary until things improve.

This post originally appeared at Jared Bernstein's On The Economy blog.

 

Comments

[TREKMIND]

12:16 AM on 05/31/2011

It's all a joke now democrats had two years of complete control and they didn't do enough because most of them lack the courage to do anything bold and now with republicans in control in the house and in complete control in many states they are doing everything they can to ruin worker rights and destroy Unions. Also don't forget the war republicans are wagging on woman's reproductive rights. These things are keeping republicans too busy from creating any jobs just like health-care did for democrats.

[Lolie Culley]

11:48 PM on 05/30/2011

Most of the jobs that were created are under contractors sector. These contractors hired and still hiring illegal immigrants for less so they can put more money in their pockets. Our government need to inforce E-Verify to solve one of our countrys' problem.

[USAFree1]

09:28 PM on 05/30/2011

I keep asking my state and federal representative that same question. So far none has been courteous enough to reply.

[ANGEL53545]

07:35 PM on 05/30/2011

CONGRESS DOESNT LEAD , THAT'S THE PRESIDENT'S JOB.

[Andy95]

12:45 PM on 05/30/2011

Bastiat's Broken Window Fallacy refuted Keynesian economics in 1850:

http://www.youtube.com/watch?v=gG3AKoL0vEs

Govt stimulus simply doesn't work. Whether the money comes from borrowing, taxing or printing all forms harm the economy.

[Ellamenta]

12:21 PM on 05/31/2011

Not really. Bastiat assumes as a necessary condition that, had the shopowner not needed to spend money on a broken window, he would alternatively had spent the same money on some other, possibly more efficient or beneficial, endeavor. However, in our real world, the plutocrats do not necessarily spend or invest their money in any way that benefits this economy--and especially not in a way that improves the national well-being. Instead, they either retain the money, or possibly invest it out of the country, or possibly invest it in some inherently non-productive paper-shuffling enterprise--like derivatives based on low-quality home mortgages.
A well planned stimulus, in contrast, actually circulates money in the national economy--increasing the opportunity for benefit to the national population.

[Andy95]

11:06 PM on 05/31/2011

The baker would have spent the money on something of greater value to him than repairing a window so he ends up with a higher standard of living. People spend their own money very carefully for themselves. In contrast, people do not spend other people's money for the benefit of other's very carefully (think Congress, school districts, defense contractors). The stimulus money must come from somewhere. In our case, the $787B ARRA program came from borrowing and the $2.6T QE1 and QE2 came from printing. Borrowed money must be paid back by future generations and debt service already consumes over $200B every year. Printed money causes inflation and reduces the value of everyone's assets. The increased govt expenditures do not provide lasting stimulus but do some lasting harm. You can argue that everyone in the town would prefer to keep all glaziers employed but this is really a charitable endeavor rather than a stimulative one.

[Group 8807]

10:17 PM on 05/29/2011

Undoubtedly President Obama inherited an economic mess.  Also undoubtedly, he’s made it worse.  Barring substantial revisions to recent job loss estimates, we have now crossed the line where as many jobs have been lost during this recession under President Obama as under President Bush.  From the start of the recession, in December 2007, until President Obama took the oath of office at the end of January 2009, there have been 3.36 million nonfarm payroll jobs lost.  From February 2009 until now there have been about 3.36 million nonfarm payroll jobs lost (estimates from ADP employment report).

[any mouse]

09:58 PM on 05/29/2011

Where are the customers?

This is the entire problem with the US job situation in a nut shell.

At this very moment, most US businesses can easily produce every product they can sell with their existing employee base.

Why add employees when they will just sit around and watch American Idol on Hulu?

The reason there are no new jobs is theer is NO DEMAND for products.

The real current situation is:

- Taxes are historically low (for some companies pay less than zero)

- most companies have tons of cash with nothing to invest in.

- Robots and computers have permanently eliminated the need for whole classes of workers

- product demand is low.

Until the DEMAND problem is fixed, there will be no need to hire any more workers and even if demand increases, companies will invest in robots rather than humans which get sick and demand more money every year.

[fapescia]

06:18 PM on 05/29/2011

To take advantage of any Republican created jobs you need to get a passport and move to a third-world country and have no dependents, and have good enough health that you can survive with no health coverage.

[LisaViger]

05:07 PM on 05/29/2011

Well, I'm tired of playing the good cop bad cop game with the Rs and the Ds. I'll be voting third party and hoping a Democratic Socialist runs where I vote.

[MiddleMolly]

05:38 AM on 06/01/2011

So, like the Nader voters in 2000, you might be responsible for giving the White House back to the Repubs. Which of the Supreme Court appointees do you think have done a better job: Those appointed by O, or those appointed by Bush? We can thank the Nader third party voters for the Citizen's United decision.

I wonder what Nader voters think about the Citizen's United decision... and all of the other Repub Supreme Court decisions.

The Supreme Court should be one of the major reasons for even those unhappy with O to vote Dem in 2012.

[MayorsRevenge]

04:38 PM on 05/29/2011

When the Fed stops blowing bubbles and corporate America puts down the flat/one-world elixir, we might have a fighting chance. Until then, US standard of living will decline and 3rd world standards will rise.

[Soulsurfer]

07:31 PM on 05/29/2011

Bingo. Fanned.

[MiddleMolly]

05:40 AM on 06/01/2011

The big problem is that we don't have a motivated, educated, and really active electorate. It's not the job of corporate America to become more progressive.. It's the job of the people to push everybody off center.

[thefacts22]

03:55 PM on 05/29/2011

This article ,with just about everything the huff is pushing is wrong,the medicare reform is not the abomination of an Obamacare,unsustainable and discriminatory for those that contribute,but a realistic and practical plan,that will need much less "corrections"than the congress ram down on us,i have lived in europe many years ,and health care is really a game of waiting for attention,in almost all this nations private insurance is used by those of us that think.....John Maynard Keynes,economic theories have flop,and failed everytime it has been used,as matter of fact most of Europe is now "changing again"to more modern and realistic approaches...hope americans do not get confused

[Soulsurfer]

07:38 PM on 05/29/2011

Actually, Milton Friedman's theories have flopped, every time. Unregulated capitalism and corporatism, absence of labor and environmental regulations, have proven to be a disaster for everyone except the Chinese, who have a dictatorial police state with few personal freedoms. Keynes was correct that government must push business to invest in specific areas with tax incentives and invest itself when the private sector sits on its collective butts, like they are doing now. Government debt reduction can only come from a large, adequately paid, employed middle class, not the ridiculous counter productive austerity plans now plaguing Europe with slow growth and high unemployment.

[DFD CPA]

10:04 AM on 05/31/2011

F/F

[UtahSlim]

12:04 PM on 05/31/2011

F/F I'm a CPA too. What has flopped if the concept of 'free trade' and the free flow of capital that roams the world like a plague of locust.

[robert horwitz]

03:30 PM on 05/29/2011

Now don't get me wrong I like Barack Obama but lets face it he is in a really tough spot. Long before he came into office we had a Lemonade Stand Economy and even now the price of Lemons are going up. So what's the guy supposed to do? Well the first thing you don't do is come up with a catchy slogan like "Winning The Future". I can't even figure out what that means. The future is an indefinite time yet to come but it is always on the verge of or always arriving. How does anyone win that? Even if you could figure out how to win it where would you put it and even if you could find a place to put it would you really want it? But I digress. Well as I see it the closest I have seen this country get to creating any good jobs lately are jobs for the slogan writers hired by our politicians telling us how great a job our politicians are doing creating jobs. Also as I see it the economy that we now have once worked pretty well but like everything else eventually its usefulness is all but over. I think that its time we tried something else.

[thefacts22]

03:58 PM on 05/29/2011

I really do not understand......What is your point?

[MayorsRevenge]

04:39 PM on 05/29/2011

Prices go up when the Fed injects fungible credit into the economy undermining the purchasing power of existing dollars forcing people to incur debts for everything. The entire system has been undermined by a handful of Princeton Keynsians who are going to be vilified when the whole thing goes under (and it will).

[JDinSeattle]

09:40 PM on 05/29/2011

Yeah, you all been sayin that since 2008 and massive amounts of $ have gone into the economy from the Fed. Hasn't happened yet. At the scale it has occurred, it shoulda happened big time by now if your theory is correct. We've had inflation before, will again. You just gonna wait and feel vindicated then, point your fingers

[MNinWI]

02:51 PM on 05/29/2011

Quit complaining, Proles, and go back to work. And never ever dance http://youtu.be/PWeF6lwg4aY

[nastywolf]

02:32 PM on 05/29/2011

Stop foreign work visas now! One million a year are handed out for every excuse, including the big lie: "We can't find enough skilled workers!". Well, if they can't find enough skilled workers then employers that hire foreign workers should be made to pay NO LESS than the highest wage for the same job AND a 10% surcharge that goes directly into relief programs for unemployed Americans.

I guarantee you those employers will find enough skilled American workers.

[Transomme]

02:47 PM on 05/29/2011

I've met myriad 'visitors' here on 'Einstein's Alley' in Princeton, NJ. Perhaps it's an anomaly, or perhaps not, having so many here in this cosmopolitan nexus on the East Coast; though I also know that there're qualified American technicians and specialists unemployed at present within a 40 mile radius of this area.

[nastywolf]

03:07 PM on 05/29/2011

Along with direct hires of overseas workers, Washington allows anyone willing to invest $50K, $100K and higher, a variety of opportunities to open a small business in the USA and bring your immediate family. Many open legitimate businesses. Too many use these visas to gain a foothold for extended families who are forced to work illegally, simply to make ends meet.

[mashtoe]

03:49 PM on 05/29/2011

It's doesn't matter if the business is legit or not. What DC is doing is called wage suppression. The current polices of both parties lead to further concentrations of wealth into fewer hands. It's not a natural part of capitalism because in a natural economy we would either have open borders or nearly no immigration. The American family makes decisions about having children based on their estimate of wage potential for their children. So Americans have fewer kid's with the hopes that wage pressure would cause higher wages. Unfortunately our government looked at lower birth rates and decided that ...yes that would lead to higher wages...and therefore DC started increasing immigration! This is how our government works against American families.

[William Dawson]

02:28 PM on 05/29/2011

Both parties are between a rock and a hard place. If either party really wanted to create jobs, they would start by getting rid of Obama care which is a job killer and get some sort of tax reform in place so that job providers could know what their tax liability was going to be for the next 6 or 8 or 10 years. Neither party has the b*lls to do it.

[huff reader]

03:39 PM on 05/29/2011

Uh huh.

What job (I suspect I don't even need to use a plural, here) is getting killed by the healthcare law?

[William Dawson]

04:56 PM on 05/29/2011

Ten's of thousands. You need to catch up on what's going on in the country.