Wednesday, January 11, 2012

Please Please Me

Are jobs really what we care about?

The number one, two, and three issues facing our country today is jobs, jobs, and jobs, right?   I have heard Obama say it, I have heard endless chatter from Congress about it and all the Republican candidates running for President have varying plans to address it. 

I understand the grand divide in the theories of how to stimulate the economy.  The left wants to pump up government spending until there is enough consumption that new jobs are required which sparks more demand creating more jobs, etc... The right wants to reduce the burden on job creators allowing them to risk more of their capital igniting new investment, creating jobs.  Demand Side vs Supply Side.  And while I am a heavy supply-sider, I at least respect this philosophical disagreement.

However, beyond my comprehension is the way the President's Administration actually treats cases where jobs are at stake.  Here are a few very popular examples:

Boeing (NLRB)
The National Labor Relations Board blocking Boeing from building a plant in South Carolina because it is a right to work state and will reduce union labor.  Estimated 1000 jobs at risk.

AT&T - T-Mobile (DOJ)
The Department of Justice preventing AT&T from buying T-Mobile from the Germans citing Anti-Trust laws.  AT&T cited 5000 jobs were to be created from the deal.

Keystone Pipeline (EPA)
Pressure from the EPA has prevented the building of the pipeline.  Estimates anywhere from 8000-20,000 constructions jobs at risk.  Administration wants to wait until after the election to decide.

USEC Loan Block (DOE)
Delaying of $2B loan for a Uranium Enrichment project.  Not the type of energy wanted by the administration.  Potential of 400 jobs at risk.  Also, missing out on about 2000 construction jobs to build the new plant.   

Solyndra failure (DOE)
Losing $500 million in taxpayer money to make a poor investment in a solar company.  The impact on jobs here is that the government or taxpayers don't have that money to invest in something else.

Gulf Drilling Moratorium (DOI)
Since the BP oil spill, the Department of the Interior granting of permits to drill in the Gulf of Mexico have been virtually non-existent.  Obviously reducing potential job activity in energy sector.

Obama Care & Dodd-Frank
Two bills that are expected to have big negative impacts on job creators.  The first raising costs to start and maintain a small business and the second increasing hurdles for financial institutions to extend credit.

For each and every one above, the administration made a decision that pleased some constituency.  However, what is unmistakable in each case is that ANOTHER PRIORITY WAS CHOSEN OVER JOBS.  Whether it was environmental concerns, union rights, clean energy, health coverage or consumer protection, they were chosen over jobs.  No matter what your political view on these issues, if employment is really THE top issue, why would all of these other priorities keep trumping it? 

In fact, the only things I have seen the administration do that would be an effort to directly impact jobs is to implement a massive government spending bill, extend the Bush tax cuts, and go for this payroll tax holiday. All three just add to our massive unsustainable debt burden, or better put, pushes the problems down the road to the next guy.  Hopefully, the next guy is sooner rather than later.    


Howie said...

Why worry about the next guy? That's his problem. I would imagine that this is how politics have been run for some time.

Andrew Blankenship said...

I hear you Howie. I would say you are exactly right. This is why I advocate people voting for and supporting those that promote solutions that require then to sacrifice. If Paul Ryan suggests cutting medicare for those 55 and younger, that impacts me, but I know the country will benefit from the reduced expense. We cannot believe those that ask others to sacrifice while enhancing our benefits.

Andrew Blankenship said...

A good illustration of over regulation:

Ken Mertes said...

Although it would be nice if jobs were created at a faster rate, unemployment has been steadily declining for over two years. The bulk off the job loss occurred in 2008 and I believe, regardless of which party had won the 2008 presidential election, either would have had the same hole to dig out and neither would have done it as fast as jobs were lost. Yes... if you lower the corporate tax rate, you'd expect the capital to be reinvested and jobs created. However, what happens when the money is invested overseas (Brazil, Russia, India, China, Korea) or not reinvested at all?

Andrew Blankenship said...

Ken, the point of this post is not to argue the benefits of spending more vs taxing less, but rather to show that our president prioritizes other issues over jobs. Case in point, released today...

Keystone Pipeline Set to Be Rejected by Obama

AdamJShepherd77 said...


Just getting around to reading this. Indeed the issue is priorities. While I have a personal leaning toward conservation and cautious restraint when it comes to development in sensitive areas, I believe there is a time for hugging trees and a time for cutting wood. For Keystone, there is very little attention paid to alternative routes which might be environmentally more responsible, while also allowing for economic development in areas which desperately need it.

In 1906, T. Roosevelt (Republican) was pressed to allow damming and mining in the Grand Canyon in the vein of "National Interests" as the US struggled through a deep recession. It was only preserved through a Presidential Proclamation in that year. So contentious was the Grand Canyon between "conservationist" (not known as such at the time) and industrial interests that the Canyon wasn't declared a National Park until 1919. It was the 15th park to be brought in to the Park system, yet is now considered one of the 7 wonders of the world.

I am not saying the Sandhills in Nebraska equal the Grand Canyon, however, I do think holding to assess and discuss possible alternatives (which I think happened in Nebraska)is a prudent choice over short term gain for long term impact.

As to Solyndra, certainly a debacle. However, the program this came out of is one that came out of a feed in tariff program from 2005 (and further supported by stimulus funding in the O. Admin), to continue developing renewable energy technology. Indeed it is embarrassing, but should the US stop supporting all other viable companies that are developing technologies that can potentially be integrated into our energy policies (not replacing gas/oil, but as an integrated system)? If the answer is yes then we, as a Nation, will continue to be looking at the tail end of countries like Germany, Italy (yes, Italy), Japan, and China which will hold the valuable patents and intellectual property rights of the technology (which will be ironic because their scientist were/will be most likely educated here and then we will kick them out).

I guess the long and short (too late) of my point is that I am not certain that job creation should be the main priority. There have been 37 recessions and depressions combined since 1800 and there will be many more to come. I err on the side of Keynsian caution when it comes to accounting for negative externalities that Laissez-Faire policies(formal or informal) can create (like the financial meltdown from lack of regulation enforcement).

Andrew Blankenship said...

Great thoughts Shep. A couple of retorts:

First, as far as Keystone is concerned, I do not dispute that environmental concerns can be legitimate. I do dispute that it takes more than the two years they have already been evaluating the route to decide on an acceptable alternative. The inaction is politically motivated and that is very troubling in this tough economic climate. Be a strong leader, force the right evaluation to get a low impact route and do it. Obama needs to quit the never ending posturing.

Also, while the jobs may be a short term impact, the pipeline will provide a much needed supply of oil from a friendly nation reducing long term supply instability. This is very important to our ability to grow as a nation.

Second, as far as Solyndra is concerned, yes I think the US government should stop trying to pick winners in the energy sector. Let the innovators and private investors figure it out. Let China and Germany waste trillions of dollars to get ahead in fields that the market does not and will never pay for before finding the right one. Governments suck at these sorts of investments, and further we already spent those nickels on other things, we are tapped out.

Finally, check out some of the history on those deep recessions and depressions. Most all of them were caused by monetary policy decisions to relax the money supply to the point that too much money was chasing too few goods creating speculative bubbles (1929 - securities, 2001 - tech stocks, 2008 - housing). These were not Laissez-Faire policies, they were policies of a central banks and/or governments.

On the whole your points are well taken and I can respect your opinion that job creation is not your number one concern. However, you haven't been roaming the countryside talking about getting America back to work. Obama has stated jobs are his number one priority, and I wanted to illustrate that his actions do NOT back up his words.

AdamJShepherd77 said...

I understand your points here. I also have concerns about the "picking of winners", however, I do believe that providing government support for innovation is important in helping companies overcome the economies of scale issue. The pay off, if there is any, will unfortunately be a long play. The space race produced NASA (government program) which produced spin off industry that contributed significantly to American technology and production. I see supporting renewables as no different than the government supporting oil and gas companies with "subsidies" (which are actually just tax incentives specific to the industry like deductions for dry holes). The difference here is that both lefties and righties are dug into their ideological corners and have a hard time understanding why coming to the middle on such an important, inter-generational issue, can't happen. Perhaps it is because those on the right do not want to be painted as tree-hugging hippies and those on the left don't want to be seen as oil chugging environmental despots.

Andrew Blankenship said...

Economies of scale is an issue, but only when we accept that the investment being undertaken has a high likelihood of failure. So high in fact that private investment will not take on the risk. This means, just like with NASA, billions upon billions of taxpayer funds are spent with few discernible results.

No matter how we land on principles, practicality dictates our current bloated government cannot afford it. If you asked me to choose between paying for entitlements for the unproductive or spending for future progress and prosperity, I choose the future. If you ask me to increasingly grow government to do both, I shiver at the thought.

I agree that lefties and righties have their ideological differences, and thus why federal government is a terrible decider of environmentally sensitive issues. I guarantee that localities could make a stronger rational choice as to whether the ratio of job gains to tree loss was worth it for their community.

Reduce the size and scope of federal government and these choices will get easier to make.

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