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November 15, 2009
It's been said that if you talk about "jobs," you're a politician. But if you talk about "markets," you're an economist.
The implication is that we should be more sophisticated and think about markets first.
Perhaps.
But right now, a lot of people are getting into a panic about jobs, and it's time the politicians and the economists align their thinking.
President Obama certainly is thinking that way. Before he left on his Asian trip, he called for a White House summit on jobs in December.
Washington insiders hold that a call for a White House summit is tantamount to admitting no one knows what to do.
In this case, it appears to be true.
A summit could be a good thing if it doesn't turn out to be a grip-and-grin public-relations event or a spinmeister extravaganza.
However, the partisan political reality is that a jobless recovery from the recession could boost the chances of Republican gains and Democratic losses in the 2010 elections. That will get the parties moving, but it's unlikely to provide real relief.
Economists warn it will take a long time to bring back the jobs. In fact, some fear that we may have to redefine "normal" unemployment. In recent years, "normal" was a 4 percent rate. Now we should prepare for a "normal" of 7 percent. The reasons are obvious, and they hit home with Delaware:
1. Excess capacity in cars, houses and financial services.
2. A heavy consumer debt load.
3. Continuing globalization.
Despite the recent good news about Fisker Automotive opening a plant here, Delaware's auto industry is an example of what happened to many U.S. jobs: too many cars, poorer customers, and cars made elsewhere.
The financial-services industry is unlikely to reach its same levels, and the housing industry is dealing with excess capacity.
All of this hits state and local revenues hard. Next June's fiscal battle may make this past June's look simple.
In the long run, jobs must be tied to a market demand for them. In the short run, better-targeted aid can boost work and stimulate the economy. Does the economy need another stimulus, job aid or tax cuts?
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