Congress has coughed up seven-hundred billion dollars so far to cover the bad bets made by the high-rolling denizens of Wall Street. Henry Paulson and Ben Bernanke have managed to scrape up a few hundred billion more here and there to shore up and bail out companies they deemed to be “too big to fail.” Despite the infusion of this tsunami of taxpayer and governmental largess, the stock market is still in free fall because investors realize that we are in the early stages of a recession that threatens to become a second Great Depression. The actions taken by Congress and the present administration address the effects and the most proximate cause of the current financial crisis (the dramatic increase in the number of bankruptcies and foreclosures), but do very little to address the root cause - job loss.
Now, in an attempt to address public anger related to The Great Wall Street Rescue Mission, there is discussion among our elected representatives about cutting taxes or sending out another round of stimulus checks. While these measures may enable over-extended debtors to make ends meet, or credit-starved consumers to go on one last spending spree, we need to realize that we can not consume our way out of a crisis that was created, in large part, by over-consumption. We need to work our way out. We need to put a solid foundation under our economy by putting every able-bodied worker to work.
The loss of jobs due to outsourcing, downsizing, and a faltering economy was the first domino to fall in the present financial crisis. Putting people back to work will reduce the number of foreclosures and give newly employed workers the means necessary to rent or purchase some of the houses that are now sitting empty. The private sector is not going to create jobs in the face of a serious, possibly long-term, downturn in our economy. The government is going to have to step in, as it did during The Great Depression, if we hope to reverse the downward spiral of job losses and avoid a serious recession.
In an essay in Newsweek George Will quotes, approvingly, the response of a fictional Republican candidate for president on NBC’s “The West Wing” to the question “How many jobs will you create?” His response: “None. Entrepreneurs create jobs, businesses create jobs. The president’s job is to get out of the way.”
It is true that entrepreneurs and businesses create jobs when they believe that economic conditions are such that they will realize a reasonable profit from starting or expanding a business. On the other hand, when economic conditions lead them to experience or expect lower profits, or monetary losses instead of capital gains, businesses don’t create jobs, they shed them. Working with Congress, a president in such a situation should take up the slack and find meaningful employment for people who are unable to find work on their own.