Jobs and Stimulus
The US employment picture is bleak, and it's likely to remain bleak for a long time. Krugman, Reich and others are calling for more fiscal stimulus, and perhaps a new WPA to provide jobs while the underlying economy recovers. I think this is misguided.
In the 1930s, the US was "minimally globalized" - fiscal stimulus was virtually certain to remain within the domestic economy. Further, the US economy was "labor-centric" - economic growth produced large numbers of productive, medium-skill jobs within reach of most of the unemployed.
Today we are massively globalized: US fiscal stimulus will still be beneficial, but the benefit flows through our economy into other connected economies; it will take far more stimulus to generate the same domestic benefit (since we are stimulating all of our trading partners).
Today our economy is much more "knowledge-centric" - economic growth produces fewer jobs overall, with a heavier tilt towards higher-skill jobs out of the reach of many unemployed workers.
The government cannot become the long-term employer of a major segment of the population. And it is not the US taxpayer's job to provide fiscal stimulus to the economies of all our trading partners. What we are facing is a long-term problem, not to be solved with short-term programs or reflexive replays of the New Deal.
We need a 20-year vision for the American workforce, insuring that our schools are turning out workers capable of competing in a 21st century globalized economy.
We need a 20-year vision for American industry, insuring innovation in key areas and re-establishing the US as a leading exporter.
We need a 20-year vision for American competitiveness, addressing the key problems that our industries face (health care costs especially).
If we go after more short-term stimulus, or just reflexively replay the New Deal, we won't solve the underlying problems. The political ramifications of failure here are truly horrifying. Mr. Krugman, Mr. Reich - you guys are both brilliant; please stop pitching short-term solutions and focus more on the long-term changes needed to restore our economy!
In the 1930s, the US was "minimally globalized" - fiscal stimulus was virtually certain to remain within the domestic economy. Further, the US economy was "labor-centric" - economic growth produced large numbers of productive, medium-skill jobs within reach of most of the unemployed.
Today we are massively globalized: US fiscal stimulus will still be beneficial, but the benefit flows through our economy into other connected economies; it will take far more stimulus to generate the same domestic benefit (since we are stimulating all of our trading partners).
Today our economy is much more "knowledge-centric" - economic growth produces fewer jobs overall, with a heavier tilt towards higher-skill jobs out of the reach of many unemployed workers.
The government cannot become the long-term employer of a major segment of the population. And it is not the US taxpayer's job to provide fiscal stimulus to the economies of all our trading partners. What we are facing is a long-term problem, not to be solved with short-term programs or reflexive replays of the New Deal.
We need a 20-year vision for the American workforce, insuring that our schools are turning out workers capable of competing in a 21st century globalized economy.
We need a 20-year vision for American industry, insuring innovation in key areas and re-establishing the US as a leading exporter.
We need a 20-year vision for American competitiveness, addressing the key problems that our industries face (health care costs especially).
If we go after more short-term stimulus, or just reflexively replay the New Deal, we won't solve the underlying problems. The political ramifications of failure here are truly horrifying. Mr. Krugman, Mr. Reich - you guys are both brilliant; please stop pitching short-term solutions and focus more on the long-term changes needed to restore our economy!
