"Jobs - Everybody's Focus"

Sydney M. Williams

Thought of the Day

“Jobs – Everybody’s Focus”

June 15, 2011

Even though the election is almost seventeen months away, it seems obvious that the key to electoral victory will be jobs. President Obama wants to keep his. Seven republicans were in Goffstown, New Hampshire Monday night at St. Anselm’s College vying for a chance to take Mr. Obama’s job. According to the Bureau of Labor Statistics, there are 24.6 million Americans either unemployed or underemployed. On the other hand, there are more than a million jobs, primarily in healthcare and technology, for which qualified people have not been found.

Unemployment in May was 9.1%. Other than Franklin Roosevelt, no American President has been reelected with unemployment above 8%. However, the absolute level of unemployment will not be the key, it will be the trend. And, regardless of our political preferences, we hope, for all our sakes, the trend will be toward improving job growth.

But, keep in mind, the lack of job growth is a symptom, not the disease. The disease results from policies that have damaged economic growth. A manifest of the problems facing the country is long and has become embedded in our culture over several decades. Sole blame lies neither with the current administration, nor with the former; though both share in responsibility. It is one for which we all share blame. The following is a partial list of some of the problems, in no particular order. Some will disagree with the ones I’ve named, while others will note ones I have omitted.

          * Debt – As a nation we have too much. Corporations and consumers have begun to reduce theirs’, but federal and state debt has expanded and is unsustainable. Our $14 trillion in debt is scheduled to rise to $25 trillion by the end of the decade. Short-dated maturities and artificially low interest rates have masked the costs of our debt. By 2020, normalized interest rates would cost $800 million, more than 20% of today’s federal budget.

          * Education – Our public schools are failing too many students, especially in inner cities. Unions have been adamant in support of teacher’s rights, at the expense of our children. Their political contributions place them among Democrat’s largest donors.

          * Entitlements – The people, thanks to Congress, have come to expect government care and support that is no longer affordable. Contrary to protestations, Obamacare will only intensify the problem. It is the reason so many unions, states and businesses have been granted waivers.

          * Taxes – The problem is not rates, but its complexity. It favors the very wealthy at the expense of the middle class, and large corporations (i.e. GE) at the expense of small and mid-sized businesses.

          * Income disparities – While disparities have narrowed somewhat since the heyday of option grants in the 1990s, they remain unhealthily wide.

          * Infrastructure – Our bridges, roads etc. are not only a national disgrace, they impede our economy and discourage foreign investment. Photographs comparing Hiroshima to Detroit is a visible manifestation as to how little we have done and how far we must go.

          * Global competition – Excessive regulation and an immigration policy that is an insult to a nation of immigrants have hindered our ability to compete globally. Opposition from a handful of union leaders has prevented the President from signing free trade agreements with South Korea, Colombia and Panama.

Some of these problems are being addressed, most notably the effort of charter schools and programs such as Teach for America. But progress is slow, with the teacher’s unions fighting reform every inch of the way. President Obama said he wanted an “adult conversation;” he then slammed Congressman Paul Ryan for proposing changes to Medicare, while offering none of his own. As Clifford Asness of AQR Capital Management wrote in an op-ed in yesterday’s Wall Street Journal, the problem with the Administration is not the “uncertainties,” it is the policies put forward. But Republicans, other than Mr. Ryan, have not offered any real alternatives either. A pox on both their houses, say I.

David Brooks had an op-ed with which I agree. In yesterday’s New York Times, he wrote, “Pundit Under Protest,” in which he called for a “Hamiltonian agenda” that would be multifaceted and reinvigorating, combining the best of pro-market policies, while not ignoring the need for government.

Brazenly (and with no hint of a mea culpa,) the co-author of low interest rates, Fed Chairman Ben Bernanke said yesterday that “first we should do no harm.” Then added: “The status quo is not an option.” But he said nothing to relieve the financial squeeze people feel, or anything that would alleviate the belief of a lot of people that the decline we are in is not cyclical – that it has become secular.

I found myself thinking of Coleridge’s poem, “The Rime of the Ancient Mariner,” only with different words:

“No jobs, no jobs, not anywhere;

All Congress did was shout.

No jobs, no jobs, not anywhere;

So kick the bastards out.”

If only it were that easy. The situation in which we find ourselves is due in part to a political system that has evolved into a Congress that feels entitled to a permanent seat in Washington. Most Congressional districts are considered “safe”. Men and women who sit in Congress no longer represent the people who elected them; instead, they work for the special interest groups that fund them. Term limits remains the best answer. Jobs are needed.