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Job Growth, Not GDP Growth
Obama's Rose-Colored Glasses: Growth Has Little or Nothing to Do with Jobs or Reducing Poverty
Faced with the bad, but hardly surprising news, that poverty has increased in the US on his watch, to a record level not seen since before President Lyndon Johnson launched the War on Poverty in 1965, President Obama is declaring that the answer to poverty and joblessness is economic growth.
He's wrong, but, as they say on NPR's "Marketplace" program, "But first, the numbers."
According to new figures from the Census Bureau, the poverty rate in America in 2009 jumped to 15%, up from 13.2% of the population in 2008. That would be one in seven of us, or about 45 million people living below the poverty line of $22,000 for a family of four. Now, obviously, things are pretty tough for people who are earning a lot more than that. It's not easy getting by with a family of four on $35,000, especially in some parts of the country, so the real poverty rate is probably a whole lot higher than 15%, but let's not quibble. The point is that we now have the highest rate of poverty that the country has seen since the mid-'60s.
Obama is claiming that growing the economy is the answer for these people. As he put it at a White House news conference, "The most important anti-poverty effort is growing the economy and making sure there are enough jobs out there...If we can grow the economy faster and create more jobs, then everybody is swept up into that virtuous cycle."
The problem with this answer is that economic growth doesn't guarantee jobs, and it also doesn't guarantee that any jobs created, or already there, will pay better wages.
Economic growth is a term that refers to the size of the nation's Gross Domestic Product (GDP), which is the sum total in dollars of all the goods and services that are "produced" in the country. It can rise, as it has for the past year, even as joblessness increases and poverty worsens. This is because companies can increase production while not hiring more workers, by working existing workers harder, for example.
Furthermore, gross domestic product is calculated by adding together total consumer spending, total government spending, total business spending, and the value of net exports. Think about that. The military budget is part of the GDP calculation! So is debt payments by corporations. Neither of these huge outlays has anything to do with creating jobs. Well, okay, the military spending does produce some jobs, but given the outrageous prices the military pays for everything, the number of jobs produced per million dollars of military spending is pretty small (how many worker/days does it take to make a million-dollar toilet seat?).
So the president's claim, that promoting economic growth is going to help the poor, is bogus. Growth helps investors. It helps business owners. But it doesn't necessarily help the poor.
To help the poor you need programs of income support, and you need jobs, but the way you get the poor employed is to hire them--now!--with government money.
Urban schools need painting and cleaning and lots of teachers' aides--all things that unskilled workers could do. Roads need trash pickups. State and national parks need trail maintenance and other things. Neighborhood watch programs to improve safety could be paid positions. School crossing guards are in short supply. Fire departments need more people who could work in support roles. There is an endless supply of jobs that the government could be funding to put the jobless to work immediately. That's how you end poverty.
Not by extending tax breaks to the wealthy, who just hoard it anyhow, or invest it in speculative ventures.
President Obama and the Democratic Congress may not have caused this terrible economic calamity (well, I'd actually say that the Democratic Congress, including former Sen. Obama, did their bit in producing it by suppporting deregulation of the financial industry), but they have done precious little to end it. And at this point, all his election eve proposals are a dollar short and a day late, as far as dealing with the desperate situation that the one in five who are jobless or underemployed are facing.
Either the president is fooling himself, or he is trying to fool the public (and given his years spent at the University of Chicago, where Milton Friedman and and his Chicago Gang of "free market" economists held sway, it's probably a little of both). Growth is not going to solve the poverty crisis or the jobs crisis.
What America needs right now is not economic growth, it's economic development, which is defined as the development of economic wealth of a country for the well-being of its inhabitants. Normally a concept discussed in relation to developing countries, it is now clearly what we need in America after several decades of de-industrialization, union-busting, and exporting of jobs and manufacturing, and a dramatic widening of the gap between the rich and the rest of the population.
It has often been said that India's middle class constitutes a modern developed country the size of Belgium or Austria within a larger Third World country. America's poor constitute a Third World country the size of South Africa within a larger modern developed country.
That is unacceptable, and faced with this human crisis, if all the President and the Democrats in Congress can do is talk about GDP growth, they deserve to be trounced this November.