Tuesday, June 8, 2010

Goodbye BP

So, good old Mr. Bernanke, the grand vizier of high finance in this country, has pronounced the economy to be gaining strength and is on the road to recovery . . . except for one minor problem, trivial really . . . the “recovery” seems to be without any jobs. Now don’t that beat all . . .

So, our economy is on track to begin growing again, but our unemployment rate will continue for the foreseeable future to be over 10%. Just to be clear, that’s 10%, or more than double what it was under President Clinton. Black unemployment was over 15% in May, while Hispanics were 12.6% unemployed.

I am tempted to say, “so what would cause us to grow jobs as well?”

The problem seems to be that we don’t actually make anything anymore. What burst last year? Two things happened; the housing bubble, hyperinflated by fraudulent banking practices, imploded and collapsed, along with the banking industry—at least that part of banking connected with defrauding the public. Those twin collapses threw millions of people out of work. So we have the people who were carpenters, roofers, electricians, etc, suddenly out of work, and the guys who engaged in issuing fraudulent loans also out of work (well, some of them anyway). Then, of course, all the people who provided services to those people, were also tossed into the street, since nobody needed their services.

So what will it take to get those people back to work? Well, I assume they will gain employment once the housing market goes from a surplus of housing to a scarcity of housing in, say, five to ten years. We’re talking about people with either a limited skill set, or no skills. It was never easy for them to become employed, and it won’t be any easier any time soon.

But, since we don’t make anything, having decided that low cost was the sole criterion of goodness, and we can’t match the low cost of the Chinese, we’re unlikely to be able to build a jobs base quickly. Unless that is, we begin building things nobody else is building, i.e., things that have no established cost base yet. So, maybe the path to a growing economy with a growing jobs base is public investment in new technology. During the First Great Depression, also brought to you by our grand financial wizards during the 1920s, we had to begin using public investments to re-employ people. Then we did things like build roads. We could I suppose repeat that experience (we've tried the other solution--making War, but that isn't really helping as it did during the 1930s and 1940s). But, I think that public investments in technology that leads to clean, petroleum-free energy would be a preferable course. Watching a PBS broadcast about recent happenings, they showcased an island in Denmark that has eliminated their petroleum based economy and gone exclusively to solar and wind power, supplemented by other minor approaches’ such as burning hay, which they produce normally. Perhaps we need to rethink our dependence on the BPs of the world, and begin to move forcefully past the energy of the 19th and 20th centuries to the energy of the 21st century. We’ve done it before in other fields. It’s way past time we started to renew ourselves as a nation of innovators, and shed our recent past as a Nation of Ponzi Masters.
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