Wanted: New Ideas to Grow the Want Ads
The decline of the “next big thing” is not something government can foster through monetary policy alone.
The president has proposed a new round of stimulus spending to confront the jobs crisis. The Federal Reserve has said it will increase monetary expansion. Seems like another round of banging our heads against a wall.
Stimulus, if done right, should and could work. Pumping money into the right projects should create jobs. I’m not debating theory. The problem is the practice. For some reason, the last few attempts at stimulus have not created jobs. There is no reason to think that this time will be different.
To see what can be done, let’s look at where the money is. Big, public companies are making money. Earnings of the S&P, on average, have consistently grown for the last 10 quarters, with the last seven showing double-digit growth (year-on-year). Wealth creation and growth are happening.
So what’s stopping it from translating into jobs? First, many companies are doing just fine without hiring, but if you ask big companies what’s holding them back, many would say they need lower taxes, a different regulatory environment and, perhaps, different leadership to inspire confidence.
These are completely logical things for a business to ask for. They aren’t missing mortgage payments; they’re making money, and they see an opening to push for better treatment down the road. They are negotiating from a position of strength.
It seems ungrateful given that the government purportedly kept the wheels on the economy back in ‘08-‘09. One would like to think there’s some sort of amicable reciprocity between “business” and “the government” or “the public.” Unfortunately, the world doesn’t work that way. To quote Greek historian Thucydides, often “the strong do what they can and the weak suffer what they must.”
The government is either not in a position of strength or it’s not using it.
With high unemployment and continued consumer debt, the risk/reward doesn’t make sense for companies to hire on the chance that the economy may or may not pick up steam; and, clearly, with profits being what they are, a segment of consumers are spending. Apple iPads are flying off the shelf. Auto sales are up. Wal-Mart’s earnings are up. Companies are successfully finding ways to create, sell and make money off certain products — without hiring.
The key facts, so far:
• Businesses are making money.
• Government has taken a weak negotiating position.
• A large percent of unemployed people haven’t been able to create their own jobs or wealth.
What can cause the situation to change? We need new and creative ideas.
I have looked at the last three years of economic data and see the story so far, and I can’t see the inflection point where the story arc takes its next step. To date, all the actors are playing the same roles but without any character development.
The Schumpeter school of thought would say we need more change, more pain, more “creative destruction” before something new comes out. Aside from the human condition, which drives us forward, there are also physical, cyber and economic security factors that make progress an imperative; we do not live in a vacuum. And yet change, no matter how necessary, often takes a long time. That may be where we’re heading if the current situation continues.
I have confidence in the creativity of the American people and the ability of our society to muster inspiring, effective leadership when it is most needed. We have a powerful democracy and a strong social fabric that allows creativity to flourish. We have the innovation and solution inside of us. We need to let it free.
I turn to you, reader, to propose any ideas. Post them online at www.redthreadmagazine.com or on Red Thread’s Facebook page or email them to the editor at email@example.com.
What we need now are ideas and dialogue. Incredible solutions can be found when we break out of our silos and start truly sharing ideas. It’s your turn.