Job Growth, Not GDP Growth

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.