Wayne O'Leary

Eating Our Peas

Regardless of whether Congress enacts President Obama’s American Jobs Act, solving America’s jobs crisis is likely to be a long, uphill slog. Respected economist Mark Zandi of Moody’s Analytics estimated at the end of August that the national unemployment rate would probably not improve much until 2015 at the earliest and perhaps not until 2017, a half-dozen years from now.

As if to confirm Zandi’s grim forecast, almost no jobs at all were created in August. The once-great American economic engine, sputtering since 2001 and wheezing uncontrollably since 2008, is not close to operating on all cylinders.

Analysts like Zandi, who don’t hold office, can at least offer honest, if pessimistic, evaluations. Elected politicians, on the other hand, deal in hope; they have to suggest ways out of the morass even when, as presently constituted, Washington can provide no workable answers.

Republicans, for their part, are not serious players in this process; their faith-based employment proposals, running the gamut from A to B, consist of just two hardy perennials: reducing taxes and deregulating business. Taxes have already been lowered to the point that government can barely function, so the GOP has simply doubled down by calling for their virtual elimination. Deregulation, despite the pending Dodd-Frank banking exception, has likewise been so fully implemented systemwide that there’s little left to deregulate.

The radically low Bush taxes, still in effect, have produced no net jobs for a decade, and, lest we forget, deregulation of the energy sector brought on the Enron disaster, while deregulation of the financial sector paved the way for the Great Recession. When it comes to employment, Republicans can’t comprehend the obvious — namely, that abolishing taxes and regulations wholesale may cause company profits to soar, but rarely affects jobs one way or the other.

In the real world, as opposed to the Republican world, jobs are created when demand for products rises, necessitating new hires to manufacture and sell those products. The new hires then spend their earnings, creating a series of outwardly spreading concentric circles of economic activity that contribute to an overall snowballing effect.

The question of how to stimulate initial demand is the key to job creation. Democrats understand this better than Republicans - - in theory at least. In practice, they’re increasingly reluctant to buck the demand-killing trend towards austerity, or to counter the big GOP lie that the 2009 stimulus created no jobs, which it absolutely did, even in Rick Perry’s Texas.

President Obama’s new jobs proposal is a stimulus of sorts, but in yet another attempt to garner Republican support, it’s largely (60%) geared towards tax cuts of various kinds. That’s the least effective form of stimulus, and inclusion of FICA tax reductions will fiscally weaken Social Security in the long run. But at least it’s a stimulus, perhaps the only kind with a chance of passage, and it includes at long last an infrastructure component.

What’s notable about the Obama plan is what’s absent from it. There’s no mention of public jobs, no suggestion of a modern-day WPA or CCC. In our devolving economy, public jobs are essential to address long-term and youth unemployment. Such jobs cost federal money, yes, but they offset comparable outlays for unproductive unemployment insurance and create new taxpayers; so the Government recoups much of its investment and, as employer of last resort, rescues workers whom private industry would in all likelihood not hire.

Most significantly, the president’s jobs initiative ignores the huge (non-Republican) elephant in the room, outsourcing and offshoring, the main factor in the closing of 50,000 US factories since the start of the Bush years. Globalization and its trade agreements have been decimating American workers for a generation, allowing corporate job shifting first to the Southern Hemisphere and later to the Far East in quest of low-cost subsidiary assembly lines and cheap reimportation of US goods.

Under NAFTA, Mexico still does a record $400 billion in maquila business with this country, accounting for 12% of our imports. But it is China, with nearly 20% of US imports, that now absorbs most lost American jobs, and not just in manufacturing. Andy Stern, former president of the SEIU, estimates that American-based multinationals have shed two million US jobs since 2000; they are, he rightfully adds, neither true American companies nor domestic job creators, and offer no real answer to the employment crisis.

Yet, most national leaders of both political parties maintain the fiction that corporate tax cuts and free-trade deals beneficial to the multinationals will produce domestic jobs. President Obama, supported by GOP stalwarts like World Bank President Robert Zoellick, touts the Columbia, Panama, and South Korea trade accords negotiated by his predecessor, the latest additions to NAFTA, CAFTA, and PNTR with China, as key components of his jobs package. In so doing, he subscribes to globalization orthodoxy.

No establishment figure with a megaphone, it seems, views globalized free trade, internationalized finance, or corporate labor stratagems as integral to the disappearance of mass employment in the Western world. Instead, blame is placed at the feet of governments that supposedly promised their peoples more than they could afford to deliver (healthcare, pensions?), thereby precipitating economic catastrophe.

Fareed Zakaria, CNN’s fair-haired boy and a confidante of the president, points accusingly at center-left politicians. It was Britain’s postwar Labour government, he recently told his nationwide audience, that deserves censure for the UK’s current problems. Its crime? Why establishing democratic socialism, of course. The solution: adopt austerity measures, slash public spending, and reduce long-term debt, a prescription increasingly congenial to politicians of both parties on this side of the Atlantic. As President Obama advised fellow Americans, it’s time to “eat our peas.”

Curiously, elite opinion steadfastly avoids fingering the real culprit: economic globalization, which is undergoing its first worldwide crisis. The disappearance of US jobs has little to do with the national debt, the federal deficit, government spending, corporate taxes, or business regulation; it’s a product of global capital following its own narrow interests in a profitmongering race to the bottom.

Americans instinctively grasp this truth. An April poll by GlobeScan indicated only 59% still think the free-market system is best, down by a fifth in less than a decade and only slightly above the average (54%) for 25 countries. Perhaps it’s time for the multinationals to eat their peas.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two books.

From The Progressive Populist, November 1, 2011