I tweeted earlier that if “focusing on jobs” created jobs, incumbents would never lose elections. And this seems to me to be the problem with a lot of the talk in the air about the Democratic Party trying to pivot to jobs. I’ve heard a lot of good ideas to pivot to a “jobs” message. But while I’m familiar with a lot of empirical evidence suggesting that the unemployment rate has a big impact on politics, I’m not familiar with any evidence suggesting that the volume of jobs-related messaging impacts anything.
So what might create jobs? Brad DeLong surveys some options:
If the Senate won’t let us run bigger deficits, and if the Federal Reserve is not expanding but rather cutting back on its degree of monetary easing, then there are only three paths open to try to increase employment:
1. Shifting government spending from things that create the most in the way of useful goods and services (and that also boost employment) to things that create the most employment (and maybe also create some useful goods and services): i.e., large government employment programs.
2. Shifting private production from things that create the most in the way of useful goods and services (and that also boost employment) to things that create the most employment (and maybe also create some useful goods and services): i.e., large (but incremental and temporary) new employment tax credits.
3. Using the U.S. Treasury as the world’s biggest hedge fund to take huge amounts of private-sector risk onto the government’s books, and thus create an appetite on the part of investors to finance additional risky investment even given their limited and depressed risk tolerance.
It’s unclear to me which of any of these are on the table…
I don’t fully understand what option 3 entails. And it’s important to note that whatever downsides you may think higher short-term deficits or more Fed easing would have, they would be smaller than the downsides entailed by options 1 and 2. By far the best option would be for congress to do something that addresses long-term deficits—something like passing a slightly modified version of the Senate’s health care bill—and then use that additional breathing space to implement bigger short-term deficits and more monetary easing. Any other jobs option looks much worse than that, and it’s not clear we’re even going to get any other jobs option at all.