Job creation seems to be the Big Deal in the upcoming elections. It's the issue that most concerns the American people, more than health care, more than illegal immigration more than the war in Aghanistan, more than the national debt. And the politicians talk endlessly about private sector job creation as if it were the only alternative. In fact the Obama administration dares not even to mention the alternative of public sector job creation even as states and municipalities lay off thousands of teachers, firemen and policemen. To even mention public sector job creation is seen as socialistic and hence anathema.
However, everything that has been done to create jobs in the private sector has been a complete and utter flop. Reagan with his emphasis on supply side economics made everybody believe that only tax breaks for the rich, who after all were the "job creators", could bring about private sector job creation. But now the historical record has shown it just didn't work. Tax breaks for the rich did not create jobs. This Republican mantra has been shown to be an utter sham. But still Republicans continue to go on trying to sell it. Even the Obama administration goes along with it devoting a huge portion of the stimulus package to tax breaks. When are they going to wake up and admit that the only thing tax breaks have accomplished in the last 30 years is to drive the US more and more into debt without creating any jobs. In fact one third of all manufacturing jobs in the US have disappeared since 2000 and manufacturing jobs are the backbone of a middle class economy.
What other alternatives are being mentioned for creating jobs? Well, nothing really. Monetary policy, printing money, making the prime interest rate zero, has done nothing to create jobs either. It has only served to enrich Wall Street even further. Republicans continue to mouth a policy that has been historically shown to be a total failure and Democrats continue to espouse a policy of a lite version of this agenda because they are too timid to get up and say that what we need to do to create jobs is for the government to create them directly instead of giving tax breaks to the rich in the hopes that they will create jobs. At least, this would be a distinct alternative that hasn't really been tried in recent history. FDR tried it in the 1930s with some success. Nobody on the Democratic side has the guts to say that we should try this alternative because the Republican alternative, that has been tried for 30 years, has been a complete and utter failure.
To espouse a public policy that the role of government should include the possibility of using taxpayer money for the direct creation of public jobs would seem like anathema in the current climate of concern over the national debt. To borrow money and then use that money to create jobs would only drive the government further into debt. Well, yes, if the government uses borrowed money. However, if the government enhances its revenues and uses this money to create public jobs, the job creation project could be revenue neutral. There are many ways that the government could raise money which I have gone into at some length before. Since our economy has largely become financialized, a tax on financial transactions seems most appropriate. US corporate profits in the financial sector stood at 41% of all profits just before the crisis hit in 2008. There are many other ways for the government to compose a healthier balance sheet, and these ideas are not new.
The other objection to government spending to create jobs directly is that they would be make work jobs, that is, jobs not really needed but just made up as excuses for funneling money to jobless people. This is a patently false excuse as American infrastructure literally falls apart before our very eyes. The American Society of Civil Engineers' infrastructure report card gives a D to practically every manifestation of US infrastructure including aviation, roads, bridges, dams, energy, levees, hazardous waste, schools, transit, solid waste and wastewater - all Ds!! They calculate that a $2.2 trillion investment is needed to bring these infrastructure components up to par. Well who's supposed to do this? Private enterprise, the private sector? Give me a break. The private sector only makes infrastructure worse by not paying for the degradation of infrastructure that it causes. So there's a good area for public sector jobs just as it was when FDR built the Hoover dam or funded the Tennesse Valley Authority with public money in the thirties. Many schools and parks were built by the WPA in the thirties as well as repairs to all kinds of infrastructure. Here is a fruitful and much needed area in which publicly created jobs, that is jobs created by the Federal government, could put people back to work and make a real and substantial difference in the viability of American infrastructure. In its wake private industries would be more likely to develop just as they did after the building out of the railroads in the 19th century and the building of the interstate highway system in the 20th.
No one can argue that direct government creation of jobs would not actually create jobs while waiting for tax breaks to work is like waiting for Godot. No one can argue that jobs repairing and creating infrastructure are not necessary. So what is the hold-up or the hang-up? It is basically ideological. The direct creation of jobs by the government would be decried as socialism by conservatives. So what? The question isn't whether or not it's socialism but whether or not it would work. And it's clear that it very well would work as long as the money for it is revenue neutral. It would work to create actual jobs that would put middle class Americans back to work, and it would work to build and repair much needed infrastructure. It would help reduce foreign dependence on oil from the middle east which drives up our trade deficit. It would improve the private sector of the economy by putting money into the pockets of people that would create a demand for consumer goods. It would improve the private sector by providing new business opportunities based on an improved infrastructure, and it would improve government revenues by increased income tax revenues as more people are employed.
So why wouldn't anyone want to try this alternative? Vested interests don't want a changed dynamic in the American economy. They are making money by keeping things just the way they are. Never has the gap between the rich and the poor been so great. Never have corporations been sitting on so much cash. Vested interests and ideology are standing in the way of not just making the economy and the US, in terms of its infrastructure, stronger, but they are standing in the way of Democrats even mentioning the public creation of jobs as a viable alternative to tax cutting. Wouldn't it be a shame if the US descends to Third World nation status just because its ideology prevents it from even thinking about creative solutions to its problems. Meanwhile, other nations which don't have these hang-ups, are surging ahead.