There is a Senate Banking Subcommittee hearing today on the US as a global competitor, and my old friend Leo Hindery is giving testimony (found in the extended entry here). I don't agree with every single point in it, but taken as a whole it is a powerful argument for a fundamentally different kind of jobs and manufacturing strategy than we are pursuing right now. Leo accurately drives home the point that every other industrialized country, including China, has an industrial policy, a manufacturing strategy, and their own version of a buy domestic policy. With an effective unemployment rate of 19% (the officially unemployed, plus those too discouraged to work and the under-employed), and manufacturing jobs continuing to be decimated, we are not going to climb out of this deep recession without getting people working again in good jobs.
A couple of especially scary things from Leo's testimony:
-a quarter of the nation's remaining manufacturing companies are now deemed severely at risk. That means that manufacturing jobs, which traditionally are not only better paying but have a bigger multiplier effect in the economy and reduce our critically important balance of payments deficit with foreign countries, could shrink far lower from it's current abysmally low 8.7% of American jobs.
-a high level Obama administration economic adviser is quoted as saying that America's export future resides in exporting "consulting and legal services, software, movies, and medicine." If that's the view of how we are going to get out of our balance of payments mess, we really are in deep trouble.
The last time our economy faced this kind of deep and enduring economic challenge, in the Great Depression, FDR understood that the only way to climb out of the pit we were in was to fundamentally re-align the way the federal government's economic policies worked, to invest in a truly bottom-up economic strategy that involved the government creating jobs and putting income into the hands of the poor, so that they would spend that money and make the economy grow again. That is what it is going to take this time. We need jobs. And then we need more jobs. And then we need more jobs. Oh, and I think we'll need more than just consultant jobs and lawyers- we will need construction jobs and road building jobs and green energy jobs and factory jobs.
The trickle down strategy of making sure the big banks are healthy so that they will lend money to everyone else? Guess what, it is not working. What we need to try now is investing in good jobs for regular people.