There is lots of troubling news around about the economy, much of it focused on the short-term. For example, most economic prognosticators don’t think that job growth will resume until next year, and even then, they believe, any employment growth will be anemic.
That’s bad enough, but there are also hints that the long-term picture won’t be rosy either. Consider this nugget from The Washington Post:
The number of private-sector jobs is now slightly below the level of August 1999 — meaning that a decade has passed without any net creation of non-government jobs, even in a span during which the population grew substantially.
“We gone 10 years with zero employment growth,” said David Shulman, a senior economist at the UCLA Anderson Forecast. “This has been a lost decade.”
That’s the term — “lost decade” — that economists use to refer to Japan, which has been in a slump for more than a decade now.
As our manufacturing base continues to erode, the country faces substantial structural problems, beyond this recession (which, in fact, is worse because of those structural problems). What will be the next great economic engine?
President Obama has emphasized “green jobs,” or creating a new sector around environmental needs. That’s not a bad vision, but the recession has frozen lending, so new companies are having a hard time getting started. The recession has also cut into new purchases; few businesses or individuals are thinking about spending money on green technology right now.
Still, some economists are optimistic. James K. Galbraith, son of the famous Galbraith and a professor of economics at UT Austin, told McClatchey News Service recently that this country won’t tolerate a lost decade.
“There’s no way we’re going to tolerate a Lost Decade in this country. It’s a fantasy, because the House of Representatives has elections every two years. The country is not going to tolerate 10 percent unemployment indefinitely. People (in power in Washington) need to be aware of that. If they don’t take the opportunities now . . . someone else will.”
But there’s a serious flaw in that line of thinking. If Democrats are voted out of power because they failed to restore jobs growth, they’ll be replaced by Republicans, whose only economic policy is this: Cut taxes.
They did that in the Bush years, and it didn’t create an expanded base of well-paying jobs. It created much higher profits for big companies and dividends for stockholders, but not much else. America’s jobs growth over the last decade came from a housing boom, which created millions of jobs in construction and real estate. But that turned out to be a bubble which couldn’t be sustained.
So the question remains: How will those well-paying jobs be created?