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Post details: Three Elephants in the Situation Room

Three Elephants in the Situation Room

The unemployment situation is not getting any better. Two years after the recession officially ended, the job creation has stalled and there is little hope that it will pick up any time soon. While the economists point their learned fingers at each other's theories, the vertebrates of the political circus inside the beltway focus on what they do best: running around in circles like a claque of clueless clowns, facing the crisis with protracted smiles and unwavering sense of bewilderment. "There won't be any real jobs without the housing recovery" declaims one half of the choir, while the other one intones: "there won't be any housing recovery without jobs".

Unfortunately most of our elected ephemera use the heat of the current debate to warm up their own political soup. Private agendas are being huckstered for short term gain. No issue is far fetched enough not to be hitched to the glimmering bandwagon of job creation. But instead of rationally addressing the problem, our beloved public servants hide behind platitudes and vapid tautologies, parrot the phrase 'job creation' ad nauseam and beg the central bank to print still more money, hoping that a miracle will mysteriously transpire. Of course, the less they understand the problem the more they bang their gelatinous fists against the table. Shockingly, to no avail. Yet despite of all the verbal and theatrical fireworks, three root causes of the present crisis are conspicuously missing from their ruminations.

1. Global wage arbitrage. We cannot place Asian workers willing to work for a slave wage in the same market place with Western workers who expect safety standards and a basic health care coverage. Something has to give. Globalization has certainly lined up pockets of the top economic elites, whose only innovation consisted of sending the manufacturing to cheaper labor markets, but it did very little to improve the life of the working stiff. Exploiting foreign work force at the expense of your own is subpar. We are no longer in Dark Ages. None of the obvious solutions will be popular or painless, but this question needs to be addressed. We will either protect our work force or throw it out to wolves. Globalization and its profit distribution have to become a part of a new paradigm, Adam Smith 2.0 so to speak.

2. Income inequality. Sorry supply side gurus, but we need a vibrant middle class to generate consumption. The income distribution is way too lopsided at the moment. The ultra rich people are cool and cultured and all, but they can't consume enough basic goods and they park too many of their funds in passive assets and overseas markets where they get much better return on investment. No matter how many times John Boehner beseeches us to give the financially obese folks even larger share of the common pie, jobs won't be created unless there is an organic demand for goods. The trite song about trickle down economics needs to be retired. If the wealth gap continues to widen at the pace of the past few decades, we'll soon end up being the world's largest banana republic, and those - as is widely known - have much better track record generating bananas than generating jobs.

3. Education reform. We have to produce and export more to offset our consumption. By now it must be clear to everyone that we can't globally compete in the area of low skilled jobs. Our best chance rests in retraining the population for technologically advanced manufacturing; new materials, new technologies, renewable energy - you get the picture. To wake it up from its slumber we need more designers, machinists, technicians, scientists, engineers and less lawyers, politicians and financiers. The public schools are in disarray. The basic pay of teachers in math and hard sciences is pitiful. We cannot waste potentially brilliant minds just because their parents cannot afford private schools.

Global wage arbitrage, income inequality, and education reform. Would it be too much to ask for a politician to stand up and coherently address those three crucial points? For once, forget the posturing and positioning and pandering and prevaricating and politicking and just acknowledge the real problems and maybe suggest what we could do about them. This is not the first time this nation has been in a bind. And it won't be a first time it pulls itself out of it - if only it can find a Churchillian character on the Capitol Hill who won't be afraid to add a pinch of blood, toil, tears and sweat into our collective soup. Adding more and more water won't do - the pot is already overflowing.

I guess for politicians having to walk the fine line between well being of their constituents and financial interests of their deep pocketed sponsors presents a confusing dilemma. Perhaps, the first thing we need to do is vote them out of the office in the next election. Something is telling me that a little first hand experience with unemployment would make them see the whole job situation rather clearly.


Comment from: Mary [Visitor]
Very good line

"we'll soon end up being the world's largest banana republic, and those - as is widely known - have much better track record generating bananas than generating jobs."
Permalink 08/07/11 @ 22:09

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