Roubini: Jobs Are Dead, Long Live Jobs
Nouriel Roubini, the economist Gawker calls a "vampire who feeds on the hopes and dreams of the unemployed," makes a leap of logic so impossible it can't be seen by the naked eye.
In a New York Daily News column, Roubini rehashes bits that will now be familiar to regular roubinoids: The unemployment picture is going to get worse and worse; the official rate of unemployment could remain above 11 percent for years; the monthly job loss rate is still higher than it was in the post-dotcom era (when doctors still treated flu patients with bloodletting). A typically chilling vision:
The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.
This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.
Sounds like a situation society can't really solve and should instead be looking to manage, right? Wrong. Roubini has a solution:
There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.
If the job losses are as permanent as Roubini says, and if 25 percent of American jobs would be more economically done overseas, that's a structural problem that will not be turned around by spending on "labor-intensive, shovel-ready infrastructure projects." (How can anyody still type phrases like that without puking?) A solution would be something that makes it more cost-effective to employ people in America, by allowing wages to fall and productivity to increase. The kind of spending Roubini favors will at best minimize some pain for some dislocated workers in the short term.
Now how much would you spend? But wait! As has been very, very, very heavily documented, Stimulus I (or Stimulus IV if you're using my counting system) has not in fact been minimizing much pain for many, or any, dislocated workers. (My own contribution to this research—a gander at how much job saving and creating the stimulus has done in Hollywood—will be appearing in the LA Weekly one of these days.) Many commenters at the Snooze beat up Roubini for this very point: When you're an internationally fêted economist, the urge to do something—something dammit!—for the Fabulous Little People is no doubt very strong; but let's see what we bought with the first trillion before we spend the second.