Jobs!

Apparently, Obama is set to start talking about jobs now that the debt ceiling fiasco is over.  My first reaction is that it's about time.  Jobs are definitely the most pressing economic issue the country faces.  Deficits right now are a made-up problem.  There's a long-run health care cost problem, and a short-run growth problem.  Logic and reason say we should address the short-run growth problem, and deal with the long-run health care cost problem later.  But politics says we ignore the short-run growth problem and... pass a deficit-reduction plan that doesn't restore growth or fix the deficit.  The worst part is it doesn't have to be this way: most Americans' primary concern is (rightly) jobs, and it's what the political system should be dealing with.

This article provides two competing solutions, one of which makes sense, the other of which doesn't.  The correct suggestion is that the government subsidize private-sector jobs.  This has two positive effects.  First, it gets long-term unemployed workers back to work, which keeps their skills from eroding and thereby improves their long-term productivity.  Second, it is a backdoor way to get demand into the economy-- if the government pays workers' wages, those wages will be spent, which stimulates demand and encourages other firms to hire.  The obvious alternate demand-side policy option is for the government to hire workers directly. There are benefits and drawbacks to the subsidy approach in this regard.  The benefit is that, by getting workers into private sector jobs, it better prepares those workers for the kinds of jobs that they will be doing when the economy returns to something resembling full employment (whenever that might be).  The biggest drawback, though, is that you're left with the same chicken-and-egg problem as you have with tax cuts: sure, hiring workers is cheaper, but hiring workers means expanding, and if consumers aren't buying products, there's no market to expand into.  So you'll be making it easier to hire... but companies don't have any reason to hire anyway because the demand isn't there.  So the effects are less direct than if the government hires workers directly and puts them to work.

But this option is still superior to the alternative, which is government-sponsored job training.  This approach is pretty nonsensical, given the nature of the issue.  Does improving workers' skill make them more attractive to hire? Sure.  But the training does absolutely nothing to resolve the demand problems the economy has.  This approach would make sense if our economy had some sectors with too many workers for too few jobs, and other sectors with too many jobs for too few workers.  That's not our problem.  Our problem is an across-the-board lack of demand in all sectors, a finding which is borne out by the data.  So training workers isn't going to do any good if the demand isn't there.

But, while the latter approach is a waste of money, the former approach would have to be implemented on a large scale to be effective.  Given all the deficit scaremongering, it's not going to happen.  Never mind that fixing the employment problem is the best way to shrink the deficit...