I suspect that my take, as is often the case, will differ from that of both the financial punditry and the political commentators.
My grade for the proposals is an “A” and the speech gets an “A-”. My grade for the pundits is a C-.
My perspective is simple. I want the US economy to improve. I want my unemployed friends to find work. I want businesses to succeed. I want investors to achieve their retirement goals — something that will not happen if we stand still. My goals are shared by nearly every American citizen.
Since that is true, why do I feel so lonely on the Internet, where cynicism is far more popular?
Yesterday I explained the job creation problem. Few are paying attention, including the experts on the Obama team. Their proposal would have been stronger if they had used the data I cited. This would have helped to clarify the task.
We need to increase job creation by 5% and reduce job losses by 5%. That’s it. That would be enough.
The first step is understanding that this can be done. The second step is realizing that the issue is not the 2012 election. Waiting for another eighteen months could be fatal. We need action right now.
What elements should we look for in a jobs proposal?
- Combine a macro economic effect and specific targeting.
- Include direct incentives and tax cuts.
- Have direct help for new businesses.
- Help now, payment later.
The Obama proposals included these elements, so it is a good start.
The Pundit Blunder
As I watched the speech I monitored my twitter feed, a combination of liberals and conservatives. Both groups were critics, and that is the heart of the problem. If you are a pundit, you seem so smart when you are telling the President what he did wrong — criticizing the plan, the speech, the presentation, or whatever.
This was mostly BS. I have been watching Presidential addresses for over 40 years. There is nothing wrong, for example, with including a rhetorical flourish about “pass this bill.” Some pundits who know nothing about rhetoric or speech did not like it. The President addressed both the audience in the room (mostly Republicans) and the nation. He chose the setting. There was a lot for most people to like, and a good challenge for Congress.
Some pundits complained that the costs of the program were delayed. Guess what? They should be delayed. Every economist who does a GDP estimate says that immediate austerity reduces GDP and tax revenues, making matters worse. When Republicans were in office they accepted the same logic (and I agreed with them then).
People should understand both the long-term deficits and also the near-term challenge. It should not be a partisan matter. At “A Dash” I have frequently cited centrists from both parties who understand this point.
Who Should Decide
Here is a theme that deserves more attention. Much more!
A few weeks ago I wrote that the S&P had blundered in their downgrade of US debt. Some readers missed the point, telling me that I was “blaming the messenger.” In fact, everyone already understood the US debt situation without the dubious help of S&P, so the messenger argument was irrelevant.
The point I was making was completely missed: Who should decide US policy?
We live in a pluralistic society. We give exaggerated respect to minority viewpoints and struggle for consensus before reaching decisions. We do not have dictators nor Parliaments with major consensus votes.
This system has worked very well for over 200 years, and most US citizens like it just fine. Meanwhile, the investment world is embracing opinions from a variety of questionable sources, people who should not be involved in dictating US economic or foreign policy.
- A semi-anonymous Bulgarian. Enjoy his conspiracy theories if you get off on that, but why should US policy follow his ideas?
- A French-Egyptian executive for a bond fund. Do we want to emulate those governments? Why should we listen to his advice about US policy?
- A ratings agency catering to European board members. The immediate reaction from the Chinese was that we should be cutting defense spending! Great idea! Let’s curry favor with the S&P and weaken our defenses.
- Assorted sources that are obviously cashing in when most of us lose. Many of the fear peddlers, who bombard my inbox, are selling gold, ammunition, and dubious structured produts with a lot of fine print. They are exploiting the distress of many Americans for their own profit.
What people involved in the investment debate do not understand is that this is not just about bulls and bears, although the bearish pundits rate to make serious money from selling fear. This is about how the United States makes decisions. Who makes them. Who gets respect.
It is not a partisan issue, it is an issue of patriotism.
If Congress passes some portion of the Obama proposal, it will be a good start on the jobs problem. My initial take is that there are enough GOP tax-oriented incentives to get the job done. I hope that there are enough centrists from both parties to make progress.
UPDATE: I see a WSJ report where Mark Zandi, chief economist at Moody’s, estimates that the plan would add 2 percentage points to real GDP growth and 1.9 million payroll jobs, while reducing the unemployment rate by a percentage point.
This post originally appeared at A Dash of Insight and is reproduced here with permission.
10 Responses to “Obama on Jobs”
Here is where the disagreement begins:
"I want the US economy to improve. I want my unemployed friends to find work. I want businesses to succeed. I want investors to achieve their retirement goals — something that will not happen if we stand still. "
Speak for yourself: the developed world requires a sea change. Why? Because the human race is already in the middle of the sea change, anyway!. It isn't El Erian or Soros who are driving the bus but resource inputs that are being repriced due to scarcity. The inputs are scarce enough to effect pricing because of our past economic success.
Please put those energy wasting businesses and investors out of their misery before it's too late!
The US and the rest of the world is caught in an entropy vice of its own making. There is no possible way to outmaneuver or negotiate with entropy. We adapt or are destroyed by it, there is no other possible way.
The establishment refuses to recognize the situation as reflected in our president's speech.. Business as usual demands more waste, more destruction of resources for zero gain. You don't understand?
How much money does your automobile(s) earn? Do you drive a taxi? Of course not, your toy is pure demand which must be supported by shrinking real output (in non-demand sensitive sectors). You can watch Greece and the other PIIGS become automobile- free as their new, post-euro currencies will be unacceptable for buying imported petroleum fuel!
What does the establishment suggest? More loans and bailouts as the president begged last night! What is happening in Greece and elsewhere in the EU is paralleled in the US: your "unemployed friends" either cannot or soon will not be able to afford a car. If they have a car they won't be able to afford fuel. We are immersed within 'conservation by other — crueler — means' yet we refuse to see this process taking place right under our noses.
The sea change needed begins with stringent resource conservation. Nothing else will do. By stringent, I mean reduction to less than one-third of current. What happens otherwise, any 'increase' in 'GDP' will bankrupt us faster than the current rate of non-growth, which also bankrupts us! There is really no escape.
Don't believe me, just sit back and watch and remember you heard it here, first.
Hello, thank you for good post. Bookmarked.
What i do not realize is actually how you are not really much more well-liked than you might be right now. You’re very intelligent. You realize therefore considerably relating to this subject, made me personally consider it from a lot of varied angles. Its like women and men aren’t fascinated unless it’s one thing to accomplish with Lady gaga! Your own stuffs nice. Always maintain it up!
Online tyres shop in internet.
Interesting article. I have bookmarked your site!
I have enjoyed perusing your site and going through various pieces. EconoMonitor : EconoMonitor » Obama on Jobs is a well written post about a very interesting issue. I anticipate your upcoming updates.
I was looking through StumbleUpon for websites on this very issue so I really appreciate your well written piece. I enjoyed your writing style and have subscribed to your feed so I can read future posts on this and other matters.
Saw a link to this post over on Delicious. Thanks for posting it. Im sure Ill be back one day.
A feature I would like to see (in the pro version, if it goes that route) would be subtitle creation support with localization That way, viewers that are not fluent in the native language of the screencaster can still understand what is going on in the video
Thanks , I’ve just been searching for information about this topic for ages and yours is the greatest I’ve came upon so far. But, what in regards to the bottom line? Are you positive concerning the source?