Saturday, September 10, 2011
Jobs... The Final Frontier
The word on everybody's lips has been, and should continue to be, jobs. That were certainly the word on President Barack Obama's lips on Thursday when he outlined his $450b stimulus package. Naturally, the pundits are running their mouths, and the back-and-forth has begun. So, what's the take-away?
Let's start from the most basic question: Do we need anything at all? Yes, stupid question. Why did you ask it? The Fed is out of gas. We're in a liquidity trap because no one wants to borrow. No one wants to borrow cause no one wants to invest. Why would you increase investment, if you're a business, if no one wants to buy your crap in the first place? This is a financial crisis (did he just say crisis??!) of demand. Hence, time for some stimulus to get people off their couches and into their shopping malls.
The most talked about part of this bill has been the increased emphasis on infrastructure spending, from $32b to $140b. This will create some blue-collar jobs as well as add the obvious benefits of improved infrastructure to the economy, a good bet by all accounts. What about the rest though? Lots of tax credits, which I'm not to crazy about, especially because they're targeted at business. As aforementioned, business is sitting on its hands waiting for consumers to show some life.
The extension in jobless benefits I reluctantly accept. Even as a liberal, it's hard to argue with the incentives issue here. People can just continue to rely on their government checks, so why look for a job? But ending up with a whole bunch of people with no income is worse, so we'll take that point.
Pumping demand is the golden egg here. The home buyer tax credit worked before. Construction companies were doing better than the general economy during that period. The government should be looking to invest in certain industries and new companies in places like green energy and tech firms (except Solyndra... Shhhh.). It's a tough question: How to make jobs? If I had the answer, I wouldn't be a student blogger.
I'll tell you what I see, though. As I said, it's a demand side problem. Consumers will not spend until they have the money and feel decent about their finances. They will not feel good about said finances until they feel secure with the direction of employment. The direction of employment will not improve until businesses see the economy improve (read: people start spending). And around and around we go... I get headaches thinking about this shit... But I promise I'll think some more and get back to you whenever I find a solution (never).