Thursday, August 18, 2011

Unemployment: Finding Immediate Solution to a thorny national problem?

Keywords or Terms: Sluggish Economy; Unemployment; Presidential Politics; Acrimony; State of Texas; The Feds Chief; Federal reserve Bank; Keynesian; Monetarists; President Obama; Rick Perry; Dr. Bernanke 

There’s more to the unemployment problem than many of our lawmakers are willing to accept. Now that the economy has tanked from the sluggishness in response from congress and probably the Whitehouse, some opportunistic presidential aspirants are using the unemployment issue as a political kick ball. Governor Perry, yes that Texas Cowboy, who was a lackluster student at Texas A & M, just labeled President Obama as a job killer, a stretch at best; as the private sector has been creating jobs in the economy, but not at the pace needed to catch up with a huge 9% and more, unemployment problem. Could you imagine a Republican governor or lawmaker lambasting President Obama as a job killer after what happened with the recent congressional debt ceiling debate?

Can you imagine any Republican, congressional lawmaker, governor or public, being able to wash his or her hands off the downgrading of America’s credit worthiness by Standard and Poor? Can you frankly say that Republicans pulled out all the stomps in the current congressional session to ensure that the fiscal health of this country was not jeopardized? Can you doubly imagine another governor from the state of Texas leading this country; or, advocating against expending federal stimulus funds to create jobs? A three-term Republican governor of the State of Texas, who once wrote a letter to Dr. Bernanke, Federal Reserve Bank Chief, asking for stimulus fund for his state, after initially turning down the advancement from the Feds, is accusing the same Feds Chief of possible treasonable felony? This is how low some delusional Republicans are willing to go to unseat President Obama. To put it very bluntly, the Republican leadership in the 112th Congress has failed to address the paramount problem facing America today: Jobs creation; whether they believe it or not, the congressional instrument that could help create jobs for the more than 25 million unemployed Americans, will have a tough time going through the acrimony of the current congress.

Once again, the nation’s unemployment problem is not only turning many homes into disarray, it is now serving as a ping-pong ball for Republican political juggernauts, including those who hardly could spell the term: Supply-side Economics, to advance their selfish and undisciplined end. The quantitative easing approach from the Federal Reserve Bank which has been followed in the past is hardly making much of a difference; and, to stop the vulnerable market mayhem, the onus is now on Obama’s administration to explore alternative strategies for jobs creation. Maybe that is why the President has indicated that he will be releasing a new approach to combating the unemployment problem come September. However, why wait till September, why not today? The public’s expectation has been so high that things will soon change. However, it seems the more they remain optimistic, the more they get wimped by the performance of the stock market and the ever acrimonious war between Republicans and Democrats in congress; a difficulty that seems to be standing in the way of solution to unemployment.

Some economists have advised government investments in infrastructure, including light rail, electricity grids, green jobs, roads and bridges. Others have suggested fiscal policies like reform to the taxation regime, hoping that this may influence aggregate demand, hence demand for increased manufacturing goods that can stimulate jobs in the economy. The debate over whether to address the unemployment problem with short-run, Keynesian approach, or long-run, Monetarists approach, in policy formation will ever continue; however, we are getting to a threshold where fear is about overcoming common sense. Whether the nation takes the Keynesian approach or route of stimulating demand through transfer payments, tax cuts and unemployment insurance, or the Monetarist supply-side policies, tight fiscal policies, to help improve efficiency of market and hopefully reduce unemployment, there is still need for consensus among our lawmakers as to the best route to take without the long and unyielding acrimony that we have had in the past three years in congress.

Republicans are insisting, like monetarists, the control of money supply will help temper inflation. Incidentally, we do not have any inflation and the feds is about scared of the possibility of deflation with the way prices are tumbling in the real estate and housing markets. Nominal interest rates are rather low; the Feds has kept it at zero, since inflation is very low. By now, we can all agree that unchanged unemployment rate and unchanged real wages will continue to draw down on the economy. What the nation is suffering today is what Keynesians refer to as unemployment disequilibrium. To get out of this slump, we are going to need increased government spending; first to increase employment and second, to increase national income. A higher national income will increase transactions and precautionary demands for money, which can help further encourage private investments in jobs' creation.

We are not having the multiplier effect of private investments as many corporations, out of fear of the unknown, are seating over a trillion dollar cash in their various bank accounts, waiting for the Federal government to take the lead. Without private injection of money into the market and or job creation, the only alternative remaining is the federal government injection of money, for us to have the multiplier’s effect necessary to expand national income. Increased government spending in public works, including infrastructure spending, will go a long way to kick start the economy. Unfortunately, the Republicans have not been forthcoming; congressional Republicans have refused to work with the Democrats and without a cordial working relationship it will be hard to pass another stimulus bill that can help create jobs. Republican lawmakers are anticipating that Democrats will get blamed for the high unemployment and this will facilitate their being kicked out of congress and the Whitehouse. To put it in Republican’s estimation: A bad unemployment rate will ensure that President Obama is a one term President, since the nation can hardly stomach a deplorable unemployment rate as what obtains today. And there lies the politics of the current unemployment situation in America.

It is such an irony that Republicans who led this country into the current economic mess, through their fiscal and monetary deregulation and voyeurism into two foreign wars, to ensure that the military industrial complex continues to fester, are holding the nation to a ransom over finding solution to the problem created initially by them. This is how unfortunate things have gotten in this nation. Imagine, we are in the midst of the worst recession in recent memory, yet multimillion dollar American Corporations are seating over the largest cash reserves ever known to modern banking, rather than invest in job creation?  Imagine if the roles were reversed, will Democrats do the same? There are those who believe that Democrats may not do the same but have been guilty of similar hold ups in the past; and that what is being seen in current congress, is part of the usual business of American Politics.

If the last suspicion is correct, Republican and Democratic lawmakers must help us, as a nation, understand how to better leverage our votes such that our will as a people, does not continue to be compromised or altered, including a heart wrenching unemployment problem across the federation:

1)      What matters most to our lawmakers, the work of the people or a desire to uphold their place in congress? As much as lawmakers may want to hold on to their legislative offices, is the welfare of the people as voters, not of equal importance, if not more than an individual lawmaker’s interest to preserve himself or herself in office? Not every fight over legislative issues is as important as ensuring that citizens have a job to go to, pay taxes and hold on to a roof over their family. Lawmakers must identify what exactly is their priority vis-a-vis, those people who voted them into office. It is imperative that voters understand their interest is being taken into consideration and legislators are not standing in the way of progress when it comes to issues that directly impact their welfare.
2)      What specific economic model, Keynesian or Monetarist, is more appealing to political party leaders? Sometimes, the issue of public policies cannot be defined by ideological affiliation or contemporary hologram, as party politics are often subscribed. The nation’s problems are multifaceted and a diverse knowledge area and background are needed to profess solutions to them. No matter how entrenched a lawmaker maybe in his or her party’s affiliation and ideology, it is probably advisable to identify with the issues that affect the every day lives of the electorate or voters, if the legislator wants to be returned back to office in the upcoming election.

3)      How and why is it that politicians, though from different parties, yet from the same state, are unable to work together in the interest of the public in congress? Sometimes, political lawmakers with probably the worse adverse effect of the problem(s) at hand, look away from finding solution, just in the name of party or ideological affiliation? For example, since lawmakers know that an increase in government spending can substitute for private spending, although not always advisable, to help stimulate activities in the economy, hence increase in equilibrium level of national income, why then are politicians not willing to set aside their differences, in the interest of the people, who are badly hurting?

4)      What is the expected turn over rate of the composition of congress, when a stalemate as what we had over the debt ceiling debate or the long unyielding debate over health care reform takes place? It is important to know, how long legislators anticipate that they can continue to take the voters for granted, by refusing to address important issues that directly affect voters’ welfare. How long do lawmakers think the voters are willing to tolerate unnecessary hold out by lawmakers on issues that is paramount to the people’s welfare?

5)      How much room is there for compromise in the 112th congress? Lawmakers must let us know the current status of their relationship with other lawmakers in opposing parties, for the voters to appreciate the dynamics in congress or, be able to determine if they will want to return the same legislator back to congress in the subsequent congressional session. Each lawmaker must assess if his or her inability to work with other lawmakers is standing in the way of doing the people’s work. How much compromises are each willing to engage in; or, how much grounds are they willing to yield to other lawmakers who do not necessarily see a problem the same way, they do?

Post a Comment