Can Big Business Solve the Jobs Crisis?

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Jobs and job creation, White House officials say, remain the top priority of the Obama administration. But with Republicans in Congress blocking new stimulus proposals and forcing discussions on budget cuts, the administration has turned to non-legislative economic measures, which seem mainly focused on encouraging private investment and improving the administration's relationship with corporate America.

To discuss recent job-creating initiatives, outgoing White House Council of Economic Advisers Chair Austen Goolsbee talked with reporters by conference call June 20.

When asked if the administration agrees with economists and commentators who say creating jobs is more important than manufactured worries over the federal budget deficit, Goolsbee hemmed.

"That is a bit of an abstract question. It's a hypothetical, so I can't answer that directly," he said. "The number one goal on the President's mind in my experience for years not just now has been how do we get the country back to work and how do we get the economy growing. That is our most important priority."

"An important component of that is long run having the government live within its means," he added. "I think we will likely see substantial deficit reduction, but that should not take away from the number one priority, being that we must grow and add jobs."

Late last week, after meetings with business leaders as part of the White House Council on Jobs and Competitiveness, which is composed primarily of corporate CEOs, labor union leaders and academics, the Council advised the President to take steps to spur business investments.

Following the meeting, President Obama signed an executive order creating the SelectUSA initiative, which centralizes the federal government's promotional tools for foreign direct investment (FDI) in the Department of Commerce.

The program is designed to help foreign corporations planning to open businesses in the U.S. deal with red tape, to fulfill regulatory requirements quickly, and to gain access to the appropriate agencies needed  to comply with local, state, and federal laws.

“SelectUSA," Commerce Secretary Gary Locke said, "will leverage existing resources of the federal government to ramp up promotion of the U.S. as a prime investment destination to create jobs at home and to keep jobs from going overseas."

In discussing the importance of FDI to the U.S. economy and the promotion of new job growth, Goolsbee noted that FDI grew 49 percent in 2010.

He cited the fact that the U.S. remains the "safest" place for foreign investors. The U.K. and France are tied for second in global FDI behind the U.S., which attracts three times as much investment as those two European powers.

The U.S. also outpaces emerging markets such as China, Russia and India in FDI dollars by five times or greater.

Goolsbee pointed to a trend in the U.S. economy that may have also played a role in making the U.S. an attractive place for FDI, which working-class people will find disturbing. Over the past four years, wage growth in the U.S. relative to other countries that attract FDI has been weaker.

"We've got the most productive workers in the world with the highest wages in the world," Goolsbee explained.

"That said, our competitiveness in the last two to four years has improved quite dramatically as productivity rose a lot in the U.S. relative to other countries, and the relative wage against many of these emerging markets has gone in the U.S.'s favor because those relatively poor countries their incomes have been rising," he added.

Goolsbee inflected his tone ominously when he announced the latter fact as if to say higher incomes are bad for merging economies.

Simply put, the large growth in FDI resulted from the fact that the U.S. economy is more productive but wages are not growing as quickly as in other countries.

Businesses who profit from FDI will be encouraged by falling living standards for working families.

FDI is an important part of the U.S. economy. Close to six million workers are employed by foreign-owned businesses worth some $3.1 trillion, the White House Council of Economic Advisers reported.

Media reports indicate that as whole corporations in the U.S. are holding some $9 trillion in capital that might be invested in job creation. According to insiders that cash is being held to create an impression of shareholder value.

Economic and political implications

To boil this down, corporate America appears poised to increase private investment only when they believe profits margins can return to previous levels. Part of achieving this, the evidence suggests, means reducing the living standards of working-class Americans.

Like the issues of taxes and the federal budget, this economic policy doesn't reflect a "shared sacrifice" of the economic stakeholders in this country.

A reasonable and responsible alternative to this low wages/high profits scenario is to enforce U.S. labor law to protect the rights of private and public sectors workers to join or organize labor unions in order to bargain collectively for their wages.

While President Obama includes support for labor in his agenda, guaranteeing the rights of workers is not on corporate America's radar – except to the extent they can undermine those rights.

Labor and its allies will undoubtedly continue to make collective bargaining rights and the rights of workers a key part of their electoral political action to ensure those rights do not get short shrift.

In addition to support for labor, since entering office, President Obama has won several major economic stimulus programs: the $800 billion economic recovery act, expanded small business tax credits for hiring new employees, a second bill that provided aid to states with budget difficulties, important renewals of the expanded unemployment benefits program, and the "auto bailout." In addition, the President on his own authority initiated two mortgage refinancing program, a program to buy out troubled small business loans, and a program to boost U.S. exports.

Even the President's staunchest supporters say all of this hasn't been enough, as unemployment remains over nine percent and other economic data points to a "double dip" recession.

Last week the Congressional Progressive Caucus, for example, launched a national tour to promote more direct public investment in job creation. The Caucus also rejected calls to slash federal spending, a move, they say, that will spur on a second recession.

The danger posed by an empowered Republican Party to working families has never been more apparent since it pushed disastrous policies successfully in places like Wisconsin, Ohio, Indiana, and Michigan. The broadest, multi-class coalition of center and left forces will be needed to defeat their agenda on a national level. Labor's efforts to both build broader coalitions with social movements and its own political independence may be an effective way to enhance its own influence over the direction of the political balance of forces that must emerge in the event Democrats regain control of Congress and the President is reelected.

Photo by AFL-CIO/cc by 2.0/Flickr

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  • ‚ÄúSelectUSA," Commerce Secretary Gary Locke said, "will leverage existing resources of the federal government to ramp up promotion of the U.S. as a prime investment destination to create jobs at home and to keep jobs from going overseas."

    For all it's power and rhetoric, the US must be ridiculously weak if it has to have a program to prevent jobs from going overseas. Have they not heard of Government Power? Why doesn't the US Government simply step up and say "Sending jobs anywhere outside the borders of the United States is treason and if you support this type of behavior, you can go to Ft. Leavenworth just like your little Fascist friends."

    Why is that so hard?

    Posted by Joey Superzvezda, 06/21/2011 3:20pm (6 years ago)

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