Last Friday’s dismal payroll report once again underscores what many economists and business people already know: when it comes to creating jobs, President Obama and his administration are clueless. Only 113,000 jobs were created in January, a deeply disappointing number that Obama’s spin-masters are now trying to attribute to the weather, demographic trends, shifting global competitiveness, and anything other than the reality that they have failed miserably at getting our economy back on a solid footing.
More of the same is not going to produce different results. We all know the popular refrain that such behavior is the very definition of insanity.
- Raúl Mas Canosa
That the unemployment rate has fallen to 6.6 percent is largely attributable to the sad fact that millions of American have dropped out of the workforce altogether. They are unable to find decent jobs and the longer they remain without work, the more their skills atrophy and the greater the likelihood that they will become part of a growing class of permanently unemployed individuals. Many of these men and women are not the poorly-educated members of our society who were unfortunately born into poverty. Instead, large numbers of middle-aged educated professionals, as well as young college graduates, are unable to find meaningful work at salary levels commensurate with their education, experience, and expectations. Increasingly, many of them are being forced to accept the cold reality that a job – any job – is preferable to being unemployed or living with your parents indefinitely.
Is this the new normal for America? Why is the president not treating this as the urgent national crisis that it is?
It is obvious to me that the president has little or no idea about how the economy works or how jobs are really created. This little snippet from Bill O’Reilly’s recent interview with the president clearly shows how misguided he is:
O’REILLY - All right. Keystone pipeline, new study comes in, environmental impact, negligible. Forty-two thousand jobs. You’re gonna okay it, I assume.
PRESIDENT OBAMA - Well first of all, it’s not forty two thousand. That’s — that’s not, uh, correct, it’s a couple thousand to build the pipeline, but —
O’REILLY [OVERLAP] – Forty-two all told.
PRESIDENT OBAMA - Well, that, bottom line is what we’re gonna do is to, uh, the process now goes agencies comment on what the State Department did, public’s allowed to comment, Kerry’s gonna, uh, give me a recommendation, uh —
O’REILLY [OVERLAP] - All right, so I assume we’re gonna do that, after five years...
O’Reilly’s 42,000 number is more closely aligned with the State Department’s own analysis that the project would create roughly 4,000 direct construction jobs and support upwards of 40,000 ancillary jobs.
Evidently the president’s educational background was sorely lacking in basic economics. Perhaps he missed the crucial lecture wherein the multiplier effect was discussed; particularly as it relates to spending on large scale construction projects. Either that or the president is simply being disingenuous, stressing the smaller direct jobs number to assuage environmental activists (and his political base on the left) who are vehemently opposed to the Keystone project.
Whatever the case, the president would be wise to hit the “reset” button when it comes to his administration’s attitude towards business and job creation. He is five years into his presidency and what he has been doing so far has not been working. More of the same is not going to produce different results. We all know the popular refrain that such behavior is the very definition of insanity.
So what should the president do? Allow me to propose a few remedies:
1. Acknowledge that what you have doing so far hasn’t worked … and change course. This is hard as it requires a) humility, b) taking on your own political base and c) reaching out to others, including Congress and business leaders for better solutions.
2. Ditch your misguided policies calling for higher minimum wages, more industry regulation and higher taxes. These hinder job creation instead of incentivizing it. Income inequality should be addressed …when people have incomes.
3. Scrap the Affordable Care Act and start fresh on a new way to provide affordable health care for all Americans. Obamacare is proving to be a disaster for individuals and businesses. The nonpartisan Congressional Budget Office just warned that the negative effects of the law were “substantially larger” than previously estimated and likely to result in 2.5 million fewer jobs over the next decade.
4. American businesses are sitting on $1.9 trillion of cash reserves, the highest number ever. Work with Congress to revamp the tax code to provide American corporations with incentives to repatriate overseas profits and invest in American productivity and export capabilities.
5. Gather our best and brightest business and economic minds to study how government policies can better support new and growing domestic businesses that can sustain long-term competitive advantages. We don’t need to spend more government money picking winners and losers, but we should make sure the right incentives are in place to encourage and support the next generation of job creating businesses.
6. Work with states and their governors to custom-tailor regional solutions to America’s unemployment crisis. There is no “one size fits all” solution for a country as diverse as the United States. Pay particular emphasis to those regions hardest hit by the economic downturn. Detroit isn’t the only place in dire straits.
7. Part of our unemployment problem is indeed structural. Many manufacturing jobs have been lost forever and will never return given advances in automation and technology. We need a workforce that is trained (and re-trained) for the 21st century .... not the 20th century. Any national strategy to put Americans back to work must emphasize the right kinds of educational opportunities and vocational training. We need engineers, scientists, software writers and CNC operators. We do not need more lawyers, lobbyists or reality show producers.
It is not too late for President Obama to change course and become the pro-jobs president we so desperately need him to be. It will require courage but it is critical that he do so; for our sake and for restoring credibility and relevancy to his presidency.
Raúl Mas Canosa is a financial adviser and a frequent commentator on radio, television and digital media. He can be reached at email@example.com