Where are the jobs?

So I came across an article yesterday in the Investor's Business Daily website that discussed an op-ed released by Obama's new Jobs and Competitiveness Council. Obama promises he really is concerned about the massive unemployment in the country, and to prove it, he's put together this council dedicated to finding every potential for job creation. He's vowed to "leave no stone unturned" in his quest to putting America back to work.

Unfortunately, the path he seems to be taking on this is mimicking his approach to everything: top-down, centralized power, and over-reliance on government power.

On the council are some of the biggest heavy hitters from the largest American companies: CEOs from GE, American Express, Time Warner, Kodak, Facebook, and more. Noticeably under-represented are members from the small business community. Granted it might be hard to come to the notice of the President when you employ fewer than 200 people, and yet they deserve a voice, seeing as small and medium-sized businesses employ more than half of U.S. Workers.

So what solutions has the Council come up with?

• More training and education.
• Provide more loans.
• Require more energy efficiency, forcing people to hire construction workers to retrofit buildings.
• Cut red tape by streamlining the permitting process.

Wait! What was that last one?? Really? Big business wants us to allow new businesses to acquire new permits, thus allowing them to legally work? That sounds like a step in the right direction. Granted it's a fairly small step, considering the number of regulations hindering the creation of new companies and even new jobs. Let's see what the op-ed says:

• Streamline permitting. Cut red tape so job-creating construction and infrastructure projects can move forward. The administration can take a few simple steps to streamline the process of obtaining permits, without undercutting the protections that our regulatory system provides.

Um, does anyone know what that really means? Could it possibly mean that government needs to every once in a while get out of the way so businesses can do what they need to do to make money and expand and grow? And is that for all sectors of the economy, or is that inclusion of "construction and infrastructure projects" deliberate? And wait. What exactly is involved in the permitting process that they're willing to cut?

Between the permits construction workers alone must get, they have to get "permission" to work from everyone from the IRS, EPA, HHS, OSHA, NAHB, NHBC, and that's just at the National level, and is in no way exhaustive. For other businesses, the permitting process can be just as long and longer. There are countless impediments to creating and expanding business, let alone conducting the day to day work of the business, that many (like me) shy away from any thought of entrepreneurship.

Perhaps the Jobs Council should take a look at this article published by the Cato Institute, which describes regulation as the hidden tax on job creation. At the very least, the article exhorts the federal government to at least make their regulations clear and concise. As it is, you can spend years in a business and be shut down by a single audit, due to the confusing, arcane, and often contradictory regulations on the books. The contradictions range from one regulation agency contradicting another to a single agency contradicting itself.

It's no wonder job creation has stagnated and then plummeted. If by the regulations alone, it's amazing there are ANY jobs anymore.

The World According to GM

Dan Akerson, CEO of GM had many things to say in his interview with Detroit News, published this morning. Naturally, none of them will likely endear him to you as they nearly turned my stomach. A few key points:

• The governments bailout of GM is "beginning to wear" on him and his company. He likens the billions of dollars and oversight the government has "pushed" on his company to a visit from the in-laws that has gone on too long.
• He's worried that government ownership of GM is driving his stock prices down. However he refused to state whether GM would actually buy back that stock from the government, paying the taxpayer back, but not to worry, because "[they] have a lot of cash." Even if they were to buy back that stock, at its current price, the bailout will still have lost over $12 billion.
• Also, don't worry about judging whether the bailout was a good thing or not. He's got you covered. "We are in the midst of transforming an iconic American company so 20 and 30 years from now (taxpayers) will look at this company and they'll say, 'Absolutely it was the right thing to do." We shouldn't evaluate the bailout on economic returns, because this was an "icon" we were saving. "It's a good feel good story."
• He thinks government can still do more for him and his by raising federal gas taxes. That will force consumers to purchase new and more efficient vehicles, providing economic incentive for his company to provide those same cars, without forcing them to with economic penalties. "You know what I'd rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson said. "People will start buying more Cruzes and the will start buying less Suburbans."

So there you have it, folks. I kind of just want to throw this guy in the Detroit River and see if anyone would even think of saving him. Anyone with me?

Sara's Shame

Cameron at The Crossed Pond discussed a quote from Jeffrey Frankel:

“They say there are no atheists in a foxhole,” said Harvard economist Jeffrey Frankel, a former Clinton administration official. “Well, there are no libertarians in a financial crisis, either.”

This quote resonates with me for a number of reasons. One, if you don't know me already or can't devise from my post on the stimulus package or coming posts having to do with economics and/or politics, I am a libertarian. I have worked for libertarian organizations in the past and regularly attend conferences sponsored by the Institute for Humane Studies and Liberty Fund.

Two, I am having a hard time defending the principles of libertarianism in the face of such a devastating economic crisis. I can point to the number of graphs that prove this is (so far) a comparatively mediocre recession. And yet, I feel certain it is only going to get worse in the coming months. I can point out that governmental meddling lead to many of the worst aspects of this crisis (Fannie Mae and Freddie Mac, mandated lower mortgage rates, subsidized risks for the largest banks). And yet, I know that corporations and private speculators contributed as much, if not more to the situation. I can decry the "porkulus" package (*shudders* What a horribly clunky term!) as a slippery slope to socialism and nationalized banks. And yet, I want something done to help bolster the economy as much as anyone.

Cameron at The Crossed Pond laments the fact that libertarians have little real comfort to offer those suffering in hard economic times. We can hardly tell people that for the market to succeed and help everyone in the long run, sometimes people have to fail miserably in the short run. Evolution and Invisible Hand defenses make Libertarians seem cold-hearted and cruel.

Cameron's solution? Shutting up. He assures us his libertarian principles are sound and the imminent failures of multiple markets will not sway his ideology. While this is ideologically admirable, it may be a bit unsound practically.

As I constantly reassure my fiance, I am not an anarchist. While there are components of the theory that appeal to me, it seems to be much too Utopian to think that if everything were to be left alone, the invisible hand would take care of things. In fact, it is because I understand the unsavory parts of the invisible hand theory that I am reluctant to espouse laissez-faire in all things economic. It is part of the principles of spontaneous order and the invisible hand theory that those who cannot compete, necessarily fail. In many situations this is perfectly acceptable. If a pin factory can make thousands of identical pins in a single day, the solitary pin maker who fails to produce as much goes out of business. The competitively and comparatively advantage succeed, while those who lack the skills and management to thrive must find something else to do.

But when entire industries fail because of rampant corruption, misapplication of speculative risk, or just plain mismanagement, thousands upon thousands of people lose their livelihoods. Factory workers are left with little recourse when the only source of income in their town shuts down. They are left with inadequate means to support their families.

The libertarian purist would point out that the factory worker can move to a new town, develop new skills to compete in new industries, develop a new business model, or suck it up and work at McDonald's. And it is true that most of the people in failed industries will find new jobs, sometimes for lesser pay or in new locations. Yet there is a time of adjustment. There may be months or years while individuals learn to cope in a new situation, acquire skills, or relocate. And it is in that adjustment period where the suffering is almost completely unalleviated by the market.

It is to that period that I find myself defending government intervention. I understand that the government is wasteful, inefficient, and ill-equipped to centrally direct the adjustment. I understand that taxpayer money is better left to the taxpayer herself. I understand, too, that the unintended consequences of government intervention in the markets sometimes create horrible disasters down the road.

But I ask myself, which sacrifices am I willing to accept? Do I accept that government spending is too often inefficient, impractical, and ill-applied? Do I accept that support of government programs is ideologically distasteful, possibly causing great harm in the future? Or do I accept that some people may have to forgo basic necessities? That children of those laid-off factory workers may go hungry, get kicked out of their homes, and forgo medical treatments all because of an ideology?

What it comes down to is the fact that there are some sacrifices I'm not prepared to make. If I have to pay more in taxes, forgo building a small business, or cut back on my own consumption, I'm more willing to sacrifice that than thousands of people's lives. Sure, the free market may respond with a much better solution, but the free market takes time. And in that time, a lot of people will suffer. It may be inefficient, impractical, and ill-advised in the long run to run up deficits, stifle entrepreneurship, and pay higher taxes today, but at least tomorrow, some child's father will have a paycheck. And I can live with the ideological inconsistency.

The Stimulus Package

Today the Senate passed the $825 billion American Recovery and Reinvestment Act. While the package of spending acts differs from the package passed by the House, the overall stimulus package is one step closer to its ultimate passage.

As President Obama defends the package and pushes the Senate and House to come to an agreement and push through this huge spending plan, I am struck by just how eloquent he is, even when he moves beyond his scripted. As I plot out a complaining post about the abundance of wasteful spending, he manages to anticipate each grievance with forcefulness and assertiveness. He is a masterful rhetorician and a passionate debater. As he drives home his points, I find myself willing to nod and agree. After all, as he made clear in his news conference tonight, he just wants to do right by this country. He wants to do good, and he cares passionately about helping right this toppling economy. He wants to do the job the American people for which hired him, and he's not about to let partisan bickering or ideological differences stand in the way of stimulating the economy.

And yet not every complaint against this stimulus plan emerges from party politics nor even ideological divides. There are real reasons to remain wary of this package and the speed with which it is being pushed through. While both houses of Congress have debated for days on the floors of Congress and still further in committee hearings, much of that debate has revolved around the insertion of more and more spending programs in the name of "doing something."

This is a very understandable human reaction to crisis. When something bad happens and it looks like things will only get worse, the temptation is to act immediately and aggressively. And yet, with the catastrophic misallocation of funds in last year's bank bailout, we must become aware that accountability and responsibility means caution and deliberate care in any action. After all, the Patriot Act was a piece of legislation that was pushed through because "something needed to be done now."

And there are issues to which nearly all ideologies and parties adhere, which have, even so, failed to receive adequate attention. So I would like to evaluate see exactly what is in this bill. We've been assured that there are none of the ubiquitous earmarks that pepper our normal legislation. No pork has been inserted to direct funds at specific companies or legislative districts. So what is in this bill?

Though the entire text of each piece of legislation that goes through the House and Senate is available to the public, very few of even those who sign the legislation ever read the entirety of most of the bills. Most people settle for the summaries written by the very committees that draw up the laws. It's understandable to want to rely on a short summary; after all most bills are hundreds of pages long. As a graduate student though, I'm far too used to reading hundreds of pages of mostly nonsensical half sentences. So here are some of the things I've uncovered in the bill: (I use the zeros to emphasize and help visualize the extent of the spending.)

• The act reads more like a supplemental federal budget than anything else. With "additional amount[s]" for everything from "tactical communications equipment" for local, state, federal, and homeland security forces as well as the defense department, construction funds for federal buildings, and "property acquisition" funding, it's hard to find the allocations directed at the actual economy beyond the federal government.
• The EPA receives $1,000,000,000 for Hazardous Material Cleanup and Leaking Underground Storage.
• Only $3,250,000,000 billion of the $825,000,000,000 go to "Training and Employment Services" targeted at improving the employability of unskilled workers and providing opportunities for young workers. Also, on top of that, $120,000,000 for community service opportunities for older Americans.
• $400,000,000 must be divided between the fifty states for unemployment benefits. This is understandable, as we want Americans working and not collecting benefits, but it's a "Recovery" act, and this would seem to be privileged over funding for broadband expansion in an economy stimulus.
• Oh, yeah. The broadband section. The Senate has allocated $9,000,000,000 to expanding broadband internet access to rural areas. That doesn't included the $650,000,000 designated for conversion from analog to digital signal. Of that $650,000,000, “$90,000,000 may be for education and outreach, including grants to organizations for programs to educate vulnerable populations...about the transition and to provide one-on-one assistance to vulnerable populations, including help with converter box installation.” Well, I guess that's a good one-off job.
• There is the $1,100,000,000 for the Early Head Start program aimed at educating pre-kindergarten children. That's something I can maybe get behind.

And I'm spent. I got through eight of the sixteen titles of this act. I didn't get close to the official titles on Health Information Technology, the state allocations, the creation of a new advisory and accountability board or read any of the subtitles to this act. I find it hard to believe many of the individuals who have voted for or against the piece have done more.

From what I did read, though, I can conclude that while a majority of the spending may be defensible standing alone, considering the pieces of this legislation in light of the claims of this package, this piece of legislation is merely a supplemental budget for 2009. We already passed a $3.1 trillion budget for this year. With this package, we bring it up to nearly $4 trillion (that's $4,000,000,000,000). I'm not even bringing up the previous bailout nor the proposed $1 trillion that Obama is rumored to be preparing for the near future.

While we've sworn to have more accountability this time around, I have my doubts. I understand the desire to act now, but hasty acts could plunge us further into the red. The intentions are good, and I want to have faith in our elected leaders. Yet, I urge caution and awareness as we take this giant leap forward in federal spending.