Forget Second Stimulus; We Need Economic Vision


As the American economy slowly heals, the Obama administration will no doubt claim some credit for its $787 billion stimulus — and perhaps even suggest doubling down for a second stage. Republicans, for their part, will place their emphasis on the “slow” part of the equation and persistent high unemployment, blaming the very same stimulus program.

Whatever the politics, no new stimulus should be considered unless it deals with the fundamental illness undermining the country’s long-term economic prospects. Such a stimulus would address the country’s essential problem: persistent overconsumption amid underproduction.

Neither party wants to address this issue because neither chooses to understand it. From the very beginning, the Obama administration has viewed the stimulus as a political issue, not an economic one. This became clear to me even before the election when I asked Obama’s campaign economic adviser, Austan Goolsbee, about “the goal” of the president-to-be’s program.

All I got for my trouble was vague political rhetoric about improving the economy. Though some parts of the stimulus, such as extending health and unemployment benefits, were clearly justified, the whole program never sought to address the roughly $800 billion annual imbalance between American consumption and production.

Instead, we have witnessed a grab bag of political handouts — Chicago machine politics on a grand scale — designed to placate key Democratic constituencies. Most have gone to what my old teacher Michael Harrington described as “the social-industrial complex” consisting of the education industry, social service providers and the various government bureaucracies.

As a recent New America Foundation report makes clear, precious little has gone to the productive side of the economy that determines the country’s competitiveness and creates many high-paying blue-collar jobs. Infrastructure, a critical component of any productivity-enhancing strategy, has accounted for barely 10 percent of the package.

The results have not been pretty for the productive sectors of the economy. Construction workers now have higher than 19 percent unemployment; jobs in this sector have fallen during the past year in 333 out of 352 metropolitan areas, with more than 200 plunging by double digits. Meanwhile, the hard-pressed manufacturing sector suffers more than 12 percent unemployment.

Why this disinclination to fund the tangible parts of the economy? One reason may be that those working in construction and manufacturing — both blue-collar workers and white-collar professionals — do not wield the same influence in this law review administration as college professors, Service Employees International Union-organized workers or unionized teachers.

One also senses that some militant environmentalists in the administration may be less than enthusiastic about anything associated with the entire carbon-creating part of the economy. Certainly, new factories, natural gas facilities, roads, ports and waterways don’t fit the professed passion of the president’s own science adviser, John Holdren, for the gradual “de-development” of the U.S. and other advanced economies.

Even prospects for the auto industry — the one manufacturing sector that the administration has effectively annexed — are threatened by plans to enact policies that will “coerce” Americans out of their cars. This amounts to trying to “save” an industry by destroying it.

For sectors not under government control — warehousing, fossil fuel energy, home construction and agriculture — the administration’s “green” regulatory regime could boost costs at the worst possible time. As a result, the coming recovery once again may be consumption-led and fail to improve our overall competitiveness. The biggest beneficiaries will most likely be Chinese manufacturers, German and Japanese automakers and, because of a lack of sufficient domestic alternatives, energy producers from Venezuela and the Middle East to Russia.

If they had a collective IQ over 50, the still largely discredited Republicans could run strongly against this economic scenario. Yet, for the most part, they seem incapable of putting the national interest ahead of Wall Street’s profits and corporate excess.

So no matter how much the conservatives complain, Obamanomics most likely will end up with results remarkably like those of Bushonomics: more consumption, less production, expanding public debt, asset inflation on Wall Street and a slowly declining middle-class standard of living. The only real difference will lie in who gets to rob the public — instead of pharmaceutical and oil companies, we get Gorite “renewable” energy traders and well-connected “green” venture capitalists.

Americans need to place a pox on both these flawed models. We need a totally new approach that focuses on key productivity-enhancing investments such as improved transportation infrastructure — new roads, bridges, ports and waterways to meet the demands of an expanded economy for a growing population. We should be looking at modern equivalents of the New Deal electrification program, the GI Bill, the Eisenhower highway and the space program.

Clearly, an infrastructure that is inadequate today will be utterly useless in 2050, when there are projected to be at least 100 million more Americans. Already, our energy-generating capacity in some parts sputters like that of a Third World country. Commodity exports, such as grains, unable to reach foreign markets because of a lack of rail cars and adequate waterways, are left to rot and feed rats.

This is not the way to prepare ourselves for ever greater competition from countries such as China, India and Brazil. Americans must demand a program that, while perhaps financially painful now, will make it possible for our progeny to enjoy a prosperous future rather than a declining one.

This article first appeared at Politico.

Joel Kotkin is executive editor of and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His next book, The Next Hundred Million: America in 2050, will be published by Penguin early next year.

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Cash for Clunkers to be expanded to Office Buildings

Instead of improving the gas mileage of the vehicles driven by 250,000 Americans, how about making all American office buildings 100% more efficient. White collar jobs are the new assembly line.
During his Saturday Radio Address, President Obama called for innovation to help us dig ourselves out of the recession. The proposal below could be on of the most innovate ideas since the advent of "interghangeable part" during the Industral Revolution. If I told you there was a way to instantaneously double the gas mileage of all vehicles in the U.S. you would call me crazy. However, this simple concept would have the same effect on all of the office space in America, by cutting in half its cost in financial and environmental terms.
Stay tuned for an earth-shaking paradigm shift that could save jobs, universal health care, and the environment
The Information Age finally talks to its older brother,the Industrial Revolution.
Interchangeable parts in a virtual world.

The Federal Government (GSA) lived through the end of the Industrial Revolution and at the beginning of the White Collar Era. We have grown up during the Information Age which morphed into the Digital Age that we are in right now. We seemed to have forgotten the basic concept that made the Industrial Revolution one of the most important events in human history. "Interchangeable parts." Sure our software and hardware take advantage of this concept, but what about our brick and mortar, our great investment in land, buildings, and interior space. In order to achieve mass production and manufacture a profitable product, Henry Ford and others made capital investments in factories with assembly lines. The industrial revolution would not have been successful if they only used these expensive investments 8 hours a day for five days a week. They greatly reduced their ongoing overhead by operating three shifts a day and some shifts on weekends. Almost all office space now is used by workers only about 9 hours a day five days a week. Most of the processing and storage of documents needed by our agency's technicians exist in an electronic environment. Within the next five to ten years more than 50% of the work done by federal agencies will be in an electronic environment including work from phone calls and internet sites. Most agencies have nationwide integrated telecommunications networks which have the ability to route calls on demand to a multitude of different offices nationwide. These services are already available outside normal business hours and could be expanded to 24/7.

I suggest that we phase in a program to utilize the under-used space we already paid for by beginning second and third shifts in many of our offices. We no longer have thousands of paper forms, documents, and files to store in each office since they are electronic. The second and third shifts could on answer the 800 number phone calls, work on electronic claims files, disability claims, and applications and post-adjudicative work received from our internet portals. The time is now for this sea change in this white collar paradigm:Because of tight budgets, we can no longer afford the luxury of providing white collar workers with work space that is utilized only a third of the time. We could not afford to have all government owned vehicles to run on idle 24 hours a day even when not in use.With the prospect of ongoing high unemployment, workers will be willing to adjust to shift work. It is better than not working at all. Many medical offices already use this concept as they may be occupied by a different specialist each day of the week.With the prospect of universal health coverage on the horizon, we could almost instantly provide the office space, infrastructure, customer service counters, and computer networks that will be needed to administer such a program. We already have the technology to make a fairly seamless transmission.
Even on a limited basis, the federal government could save the capital expense of more office space by using some of the $418 billion dollars in under-utilized space we have already paid for. The savings could be the billions of dollars.

We would be better utilizing safety, security, furniture, and systems investments and thus, greatly reducing our the federal government's carbon footprint

We could help create jobs for a new industry for retro-fitting billions of square feet of empty buildings to three-shift office space. Why waste our money on thousands of new buildings and destroy even more land when we already have the space.
Globally, we would be setting an example for hundreds of other government and non-government organizations and millions of private businesses. Were they to follow suit the savings could be in the trillions of dollars. By facilitating this simple yet bold paradigm shift we could create jobs, speed up the availability of universal health coverage, and help save the environment

Using shift work for white collar jobs to greatly reduce the fiscal and environmental cost of new office space

I have talked to staff at Senator Pelosi's office and Gov. Schwarzenegger's office.
Innovation can save the earth

Additional thoughts

Today we have about 10% unemployment, but those that are employed are either on a reduced salary or reduced hours or both. I personally know many business owners who are on the verge of bankruptcy as they cannot get any loans from the banks or the Small Business Administration. Even if they are working on that next best mousetrap, or have new technological breakthroughs they cannot get funds.

Private venture capital is difficult to obtain in this cautious economy.

There is however, the recovery programs and grants…
Terms like – “innovation” and “change” have been thrown out freely to the public as political rhetoric, and no doubt those two words are what made America great and can make us strong.

So what of this recovery act and the funding needed to jump start the economy back to life?

Well, looking at the funding and the grants, you had better be a non-profit organization to qualify for many of these dollars. Yep, that’s right, small innovative firms that actually direct the changes of industry far more than non-profits have little chance to get much of these dollars. How “innovative” do non-profits need to be to survive?
Want change? – Open all grants and funding to everybody and watch what happens when competition sets in. Reward the funding to the best supplier – non-profit or corporation.

Well Said Joel

As nearly any design or construction professional will be happy to tell you, the level of disgust at the first six months of the new administration is remarkable. Hundreds of billions pumped into intangible industries while our roads, sewers, power systems, and the rest of the country's infrastructure rots into third-world status. Oops - much of the third world has better stuff due to more recent, state-of-the-art improvements. Sorry for the insult, third world.

A lack of vision at the top led us into a sorry mess. If there continues to be a lack of vision at the top, it is time for the American citizens to take matters into their own hands - we do have a nice internet, after all - and decide for ourselves what we want for our next generation.

Richard Reep
Poolside Studios
Winter Park, FL


thanks richard but here's the rub: where are the republicans? they seem clueless in their own way as well.

a strong pro-growth infrastructure position is attacked by the green left which wants little in the way of actual new construction and the right which doesn't want anything done by, or through, government.

in the end the winners, in either case, are the political class and their sponsors on wall street.