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Free Market Forces Will Create the Needed Jobs
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by PIM of SPAIN | October 21, 2009 at 09:17 am
257 views | 20 Recommendations | 18 comments
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Converse in his view nowadays unemployment is structural, in other words it won’t be solved as easily is it was done before, which is entirely correct. However it further shows how unprepared the government is to tackling this problem.
Tangled in the debate of health care and bleeding political capital, the White House may find itself too weak and distracted to deal with the dangers of joblessness. But it cannot afford to wait the longer someone is unemployed, the harder it is to come back into the work force. As the Peterson Institute explains, “It is entirely possible that what started a cyclical rise in unemployment could end up as an entrenched problem.”
Those various statements show that no reliable approach has been developed, and certainly not a clear view is obtained to tackle a problem that could define the outcome of Obama’s presidency the way George W. Bush was caught by the 9/11 events. Still the papers are not gifted by a sound grasp of this problem, and only present the imperfect view of the government, without coming up with other alternatives:
"The free market is not up to the job of creating work."
"Only massive programs are equal to the challenge of restoring stable growth to our economy," says a headline and conclusion in The Financial Times.
It describes an "infrastructure bank." It also could have mentioned a war. WWII worked wonders for unemployment after Great Depression 1.0. Back then all of a sudden, anybody who wanted a job could find one.
An "infrastructure bank" is utterly nonsense and claptrap. The Soviet Union put everyone to work. Meanwhile it is known where that got them. It's not the fact that people are sweating on a job site that makes a society prosper; they also have to do things that add to their wealth. Infrastructure, like any other capital investment, makes sense only when it pays off. The Japanese poured more concrete per square meter than anyone before or since. They proved that all the bridges and canals that were constructed and digged still wouldn’t restart the economy.
Of course, they look at the facts and come to the wrong conclusion.
Zuckerman, editor of US News & World Report, provides the unemployment details: “Of people who are out of work, more have been jobless for longer than at any time since 1948. More exhaust their unemployment benefits before finding a new job than ever before. And if they are lucky enough to find work, they'll work the shortest workweeks since 1951.”
In other words, the baby boomers have never seen times so rough, for themselves as well as for their children. “One American in nine depends on the government for his daily bread. There are 6.2 million more people on food stamps than when the recession began. And there are 6 people waiting in line for each job opening, up from 1.7 when the recession started.”
The baby boomers meanwhile figure they will have to keep working longer than expected. “Sixty-three percent of them say they expect to delay retirement in order to build up more retirement savings.”
This is bad news for younger workers, who were hoping the boomers would get out of the way to free up some jobs. Among young Americans, unemployment hasn't been so high since 1945.
The free market is the only force that can create valuable work. Because the free market knows perfectly, by sales and earnings, which projects make sense to be taken-on.
Apparently the public prefers soothing lies, instead of learning the consequences of the honest truth and subsequently is fighting a losing battle.
To complete this essay, I just read a very true comment from djermano on my previous essay:
“Jobs can not be created without trust. The only thing that Americans trust it seems is the Military...America traded it's wealth and soul for a gun... because that is the only trust they have... Sad I think...”
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PIM of SPAIN
San Pedro de A, Malaga, Spain
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Most RecentMost Recommended Comments (18)
at 09:37 on October 21st, 2009
Well, we've got two wars going simultaneously, that are off balance sheet I might add, and I don't see all those jobs for the taking. What happened to the theory?
at 10:24 on October 21st, 2009
I didn't say that a war should come, it may be still possibility. But the theory was that after WWII there were sufficient jobs, that's true. No idea what should happen this time. Don't hope it will be war, but anyhow Obama's Presidency is on the ropes if not tackled adequately, that is the center point of this essay. But nanute anyhow thanks for yr appreciated comment.
at 10:42 on October 21st, 2009
Iran and Afghanistan are no longer wars. The wars in those countries lasted only a few weeks at best.
Former times, we would be in the colonization stage, but we don't do that. Nation building, or stabilization, isn't cheap, nor do we get the raw materials that would have flowed, were the countries colonized.
Want to boom the economy with war, you need a big'un. Go thru weapons and materiel in massive quantities, push a large part of the workforce into the military, government contracts handed out without much thought to costs.......... etc., etc.
at 12:05 on October 21st, 2009
Not all wars are created equal, I guess? The amount of money being spent on the two wars that only lasted a few weeks is astounding. And, remember, the cost are not even being counted as part of the deficit. McCrystal's plan calls for a commitment of at least another 4 years on the low side and 8 or more on the long end. Are you advocating re-instituting the draft?
I do see your point though.
at 12:26 on October 21st, 2009
uh, ummmm, i was kinda set on visiting Canada anyway, so go right ahead with that draft thing if you want.......
at 12:37 on October 21st, 2009
The draft age starts at age 20 and goes to age 26.
People who turn 20 years old, during that year, are in the first priority for the draft.
If not drafted, you fall to the second priority. IE: if you are in the 2nd priority, all the eligible males in the 1st priority would have to be drafted, before you would be. Each year, you fall one priority, untill you reach age 27, where you are no longer eligible to be drafted.
at 12:45 on October 21st, 2009
Is this the same Larry Summers that worked with Alan Greenspan in the Clinton Administration who is one of those responsible for deregulation and denial of Brooksley Born when she tried to warm Washington in 1998 of this economic disaster in which we find ourselves now because of derivitives? I am asking myself why Obama chose him based on his history. : (
From wikipedia
Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass-Steagall Act): "Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Summers said.[14] "This historic legislation will better enable American companies to compete in the new economy."[14] Many critics, including President Barack Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass-Steagall Act.
at 12:54 on October 21st, 2009
"The free market is not up to the job of creating work."
The excuse for socialism. Very, very scary.
Get out those oil drills and those atomic reactors, those wind mills and start making stuff. Block the crap from China coming in and, Voila!, we will have jobs.
Central planning can never manage a system well.
Even the Europeans don't have central planning. They have a big, big welfare state.
at 00:51 on October 22nd, 2009
Where did the quote come from, and what's the context? Are you telling me that under the current conditions the free market is up to the job of creating work?
at 14:26 on October 21st, 2009
Really?
If we take the extreme example of the Scandinavian social-welfare states, namely Denmark, Finland, Norway, and Sweden, these have much higher rates of government spending than the US. In 2006, the social welfare countries spent around 52% of GNP on government spending as opposed to the US who spent around 38%. This allowed the US to keep taxes low (though consumer saving remained very low and incurred massive debt as compared to other fast growth countries like China ). If one then analyzes the economic outputs, the US has the highest poverty rate at 17.1% versus 5.6% for the social-welfare states. There is naturally greater economic equity in the social welfare states with poorer households having greater share of the national economic pie. These factors however do not impair wealth creation in the social welfare states regardless of the free market rhetoric. The social welfare states have on average a higher per capita GNP than the free market countries, rank higher in the technology rankings at 6 versus a free market rank of 16 (think Sony, Ericsson, Nokia etc), spend more on international aid as a percentage of GNP, and rank better on entrepreneur risk rankings as there is a social welfare net to fall back on.
at 17:53 on October 21st, 2009
The Scandinavian countries also have small, homogeneous populations, with a shared cultural heritage and goals. That insures low crime rates, but their car makers went broke before ours did.
Got any examples with large mixed populations?
at 18:00 on October 21st, 2009
What? The free market only works in mixed populations and centralized planning only works in homogeneous ones? Base hypothesis is incorrect in that logic
at 18:23 on October 21st, 2009
So, what are the examples with large, mixed populations?
at 18:49 on October 21st, 2009
France, Germany, Australia for a few
at 03:10 on October 22nd, 2009
So, exactly how mixed are they? Hardly comparable. The hispanic population here, by itself, is larger than the immigrant mix in those countries - but you can check the figures if you like.
It is fascinating to see the persistent immigrant flow to the US. When coupled with the lack of out migration by US citizens, we really do have a tasty stew here. Not flavored to everyone's tastes, but tasty none the less.
at 04:45 on October 22nd, 2009
On a percentage base Australia has far more immigrants than the US. If you are meaning absolute numbers then you would be correct, but in terms of mix your numbers are not correct.
The US is only unique in total population size not mix, low savings, absence of central planning and poor industrial policy in comparison to these countries. Those, excluding population numbers as that is only a scale issue, are the drivers that are dictating the poorer economic performance by comparison
at 14:43 on October 21st, 2009
rng
Additionally, the Scandinavian countries were in the top ten most desirable countries to live in.
The U.N. Human Development Report 2007/2008 rated the countries in terms of their "human development index": a statistical analysis of factors that influence a person's quality of life, such as per capita gross domestic product and life expectancy.
In order of desirability
Iceland
Norway
Australia
Canada
Ireland
Sweden
Switzerland
Japan
Netherlands
France
U.S. (ranked 12th)
at 00:00 on October 22nd, 2009
Roy indeed when I read the Head line "The free market is not up to the job of creating work." it struck me to the bone too, and initiated this essay.
a211423 Larry Summer is the same Larry Summers that worked with Alan Greenspan in the Clinton Administration.
All involved in the lively discussion sincerely thanked for the fruitful contributions. The draft should be reinstated to get the youth employed, to teach them discipline. and motivate to acquire a profession. I suggested this many years ago, because the youth delinquency is rising due to the lack of discipline and sufficiently being busy with a professional occupation. Instead of an army of fighters an army of social developers that will be deployed in under developed countries to train poor people to take care of themselves by teaching and establishing the conditions of survival, expansion and self sustainability. The money spent on developing countries is sufficient to finance this army and there is the assurance that the money does not disappears in the wrong pockets.