The Key Issue for the Economy? It's Jobs, Stupid


Bill Clinton's leadership and programs have come under harsh scrutiny. A common criticism levied against the president is that he is unfocused, possessing a poor sense of priorities. And yet, for all of Mr. Clinton's faults -- presumed or real -- there is one issue on which he has not wavered and where his instincts have been absolutely sound: that is, his insistence that the nation sorely requires a high employment economy.

Maybe "It's not the economy, stupid!" (the title of a well-publicized piece in the Atlantic Monthly decrying the futility of economic policy making). But it is jobs.

The country can get by if it doesn't fully resolve the issues of the public debt, taxes, the financial system or the North American Free Trade Agreement. But it positively must move forward on the job front.

Whatever else in the world has changed, a job still remains the ticket needed for legitimate entrance into our society. We live in a tense, divided country: young against old, city dwellers vs. suburbanites, rich vying with the poor. It is hard to imagine the return of social peace without an adequate supply of well-paying jobs. To his credit, Mr. Clinton fully appreciates this point.

What's wrong?

Most stress the need to deal with two basic problems that are built into the structure of the economy. First and foremost is the issue of technological displacement. We are in the midst of a raging technological revolution, which, like the technical change undergone since the onset of the Industrial Revolution in the mid-1700s, carries, along with its vast potential for good, the threat of severe social dislocation.

It's odd that while the experts harangue us on the decline of American productivity growth, we observe on all sides that the electronic and computer revolutions of our era vastly increase the efficiency of the average worker, in many cases destroying more jobs than they create. Obviously, we have to make sure that our educational system is up to the task of providing young people with a set of flexible skills that will enable them to remain employable in a job market that alters its requirements at a rapid pace. And we'll have to make retraining and skill enhancement a permanent part of everyone's work life.

Of almost equal significance is the question of sharpened international competition, both in foreign and domestic markets. Both technology and politics have combined to push the process of industrialization to the far corners of the globe. In the long run this offers the exciting prospect of a world of increasingly affluent peoples generating an unlimited demand for American products and American labor. The immediate impact for many of our workers is job displacement.

Nevertheless, as pressing as these structural issues appear, they are not at the core of the problem. The trouble is old and familiar: We lack sufficient aggregate spending to fully employ our labor force. And if we continue to tolerate excess industrial capacity and heavy unemployment, then all of the elaborately planned and lavishly funded schemes for education and retraining will come to nought.

When the economy booms, employers see to it that workers possess the skills needed to take advantage of opportunities for profit. The genius of capitalism is that the lure of gain creates societal changes unattainable by other means. But capitalists require an optimistic environment within which to work their miracles.

How are we to create such a milieu? First, we must reduce the power of central bankers, whose fear of inflation has placed a severe limit on our prospects for growth. Secondly, we have to bite the bullet and let our government stimulate the economy with borrowed money. The reduction of the deficit must take second place to the generation of a powerful fiscal stimulus.

Both of these moves are admittedly risky. But what about the risks linked to the enforced idleness of youth, wasted resources and gaping social needs? Delay would be catastrophic; the woods are burning.

The United States is fortunate to have placed Labor Day at the end of the summer. Returning from vacation, we begin to think anew about what lies ahead of us, individually and collectively. There is no question as to what should be No. 1 on this year's Labor Day agenda: restoring the American economy to the point of full employment -- and quickly.

Irvin Weintraub is associate professor of economics at Towson State University.

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