Thursday, September 1, 2011

What can the Government really do to create jobs?

This is an interesting topic. What can government legislators and bureaucrats do to actually create jobs. Productive tax-paying jobs in profitable private enterprise, and not just government make-work jobs funded by tax dollars. 

Some of my right wing friends and co-workers might jump in right there and point out how anytime the Government even tries to help free enterprise, it only makes things worse and that its silly to even think the Government can do anything to create jobs.  On the other hand, some on the left think that all we need to do is increase taxes on rich people to fund make work projects to get the economy rolling again.

Neither side is correct and maybe that's why these initiatives never measure up.  The Government has a beneficial role to play for jobs creation, but its not as simple as throwing taxpayer money around and wait for the jobs to just appear.

What the Government can do to help private enterprise create jobs is to remove the impediments to profitability to help the business that employ American workers to become more profitable.   On another front, the Government could help private enterprise by finding ways to increase American consumers' disposable income so they have more money to spend.

I like the plan from Jon Huntsman.  Jon Huntsman's jobs plan: lower taxes, simplify code I hope that even if Huntsman doesn't become the nominee the basic elements of his plan are adopted by other GOP candidates.  The plan removes some of the impediments to profitability which is the only way to create long-term jobs.  The best part about great ideas is that they propagate on their own so look for Huntsman's plan to influence and work its way into the others.
But because I like to think out of the box here are a few other thoughts about how Government can help create jobs and get the economic engine spinning again. 

1)  Gasoline should be treated like a public utility.  It is the universal raw material with its price baked into every product on the market.  There is excess oil production capacity and excess oil refining capacity as well.  Speculators buy and sell tankers of oil like its a game of poker and they're gambling on a jackpot.  They track oil and gasoline inventory levels as if they were some sort of independent bellwether for future demand while refineries control production to manipulate the inventory levels to psyche out the speculators.  Who can tell what controls it all, but one thing for sure, its not a free market so free market forces don't apply here. 

We don't allow speculators to buy and control futures in the municipal water supply so they can make windfall profits during periods of emergencies.  Gasoline is just as important to us as all of the other public utilities and it makes sense to stabilize and regulate the supply in a manner similar to the other utilities. 

2) America needs to become conserve-ative.  I've made this point many times before.  We need to find a thousand ways to cut waste in our fuel usage to create a glut in the market.  It wouldn't be that hard to do.  Improve traffic flow by timing traffic lights, 4-day schedules for public schools and Government offices, 3-day US Mail delivery, carpooling, public transportation, etc.. Through the housing crisis, we have all seen first hand what happens to the market price when there is a glut in supply.  Lets make a glut happen in the oil market.   

3) We need to minimize the trade deficit. We can't sustain any economic recovery while the trade deficit is $40 billion a month.   That equivalent to building a new Dallas Cowboy's Stadium every single day.  How can any economic expert not recognize this is a huge problem for a nation hooked on debt to support operations?  The dollars need to roll around a few American paychecks before heading offshore.  And no we don't fix it all by across the board protectionism.   We should eliminate tariffs on incoming raw materials (like sugar) and energy (like ethanol) because these make manufacturing here more costly and kill jobs.  But we should increase them on high value products that were subsidized by developing market labor rates and lax environmental laws.  However we do it, it needs to happen or any jobs plan will fail.

4) We need to close down many of our US Military bases in Foreign nations.  We won't need to worry about our global influence if our financial system goes belly up.  Besides, its time to do some Nation building right here at home in the USA instead of borrowing money every month to maintain these bases all over the world.

5) We need to allow long-term homeowners who have been chugging along with their payments through the recession some leeway to refinance mortgages without requiring a current appraisal exceeding the loan value.  Mortgage rates are at an historical low and many homeowners could lower their house payments by refinancing but due to the housing crash, the comparatives used in the home's appraisal are foreclosed homes sold at auctions, so for most home owners the current appraisal will negate the chance to refinance and it is going to be that way for years to come.   This is holding a lot of money out of the recovery. 

Add to that the effect from American consumers who were squeezed in the last recession and when their job went away and their savings ran out they lost their good credit rating.  Now even as they regain employment and purchasing power, they are still considered bad risks and are not allowed back in the economy to make major purchases that require financing.   Main Street can't get back to full speed with so many re-employed consumers stuck on the sidelines because of what happened to them during the last recession. 

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