By Peter Galuszka
The conservative dogma machine continues to whine on in full gear. There’s Texas Gov. Rick Perry talking about it and Mitt Romney, sort of. Our own esteemed James A. Bacon Jr. is on Norm Leahy’s right-wing radio citing it chapter and verse.
What is it? The government should not be in the business of creating jobs.
OK, fine. Then who should be creating new jobs? In case you haven’t noticed, Virginia’s unemployment rate has increased from 6.1 percent to 6.3 percent in August despite the efforts of Lt. Gov Bill “The Jobs Guy” Bolling.
The answer is the private sector should be hiring. But they are not, according to a revealing story in Saturday’s Wall Street Journal. Instead of hiring, companies are collecting ever more cash to horde. It is up from $1 trillion to $2 trillion — the most in a half a century. Horded cash is up $88 billion since March, according to the Federal Reserve.
To be fair, one reason that the companies are stashing cash away is that banks aren’t lending, but the point is so very obvious. If you don’t have a recovery, banks won’t lend. And if banks don’t lend, you don’t get more jobs (at least not in the U.S.).
For those of you old enough to remember, this is a basic lesson from economics professor Paul Samuelson’s classic basic textbook. The phenomenon is called “the paradox of thrift.” It’s when people and businesses save for a downturn but since everyone does it, it makes a downturn a certainty.
Funny how you never hear about this from Bacon and his Baconauts or the GOP presidential wannabees. Our predicament, of course, is entirely Barack Obama’s fault and no, he should not create temporary jobs with another stimulus. Uh- uh. Too Keynesian.
But the Baconauts don’t exactly say how we are going to start getting jobs if the private sector they love and honor SOOO much is stashing away cash and not hiring. They can’t blame budget overspending or their other favorite themes.
This could be why a stimulus to create jobs — that’s right gang, do exactly what the Baconauts say we should not do — might finally break through this gridlock. People working even for government money on infrastructure might start spending, giving the financial sector some confidence. They start lending. Corporate America stops acting like Scrooge and spends and hires. Revenues start flowing. Sure we need to be frugal with long term public spending, but now is not the time to make it our priority.
And by the way. Three cheers for the Warren Buffet tax on the millionaires. If Obama goes and gets approval from Congress, only 0.3 percent of the country’s taxpayers would see a tax hike. In fact, Obama should have done this months ago instead of bowing to conservative pressure and keeping on George W. Bush’s tax cuts for the rich.
As far as the millionaires, they can be sure I am crying for them. As for Obama, let’s hope he stands up to the Boehners, the Cantors and the Tea Party nuts and tells them to kiss his ^$%.