Valentine: Lack of jobs is only a symptom

Friday, August 26, 2011

Ever heard the expression 'Where there's smoke there's fire?' Our economy is on fire. Not in the good sense but in the destructive sense. We have serious problems in our economy that have yet to be addressed. All the while this administration has been concentrating on the smoke.

In this little analogy jobs are the smoke. They aren't the problem. They're a symptom of the problem. There's something causing the smoke and it's the fire. There's something causing the dire jobs picture and it's a sputtering economy. Yet this administration has done nothing to help alleviate the fire. They just keep waving blankets over the smoke hoping it will dissipate.

In the meantime, the firemen are being kept from the site. The firemen are the entrepreneurs and job-creators who can easily put this fire out if this administration would only free them from overregulation and over-taxing. They won't.

Instead, they pay people not to work and call it a jobs program. They create government jobs and call it a jobs program. They even claim that food stamps are a jobs program.

All the while the fire rages out of control and will eventually destroy everything in its path. Mr. President, let the firefighters do their job. Stop trying to quell the smoke while ignoring the fire.

The Washington Post reported that economists are saying this recovery could be one of the longest and most difficult in history. Two of the economists cited in the article stumbled upon the answer but were apparently too jaded (or too liberal) to see it.

They said one of the primary reasons countries struggle to recover from severe economic downturns is because these downturns typically leave behind large amounts of private and public debt.

They went on to concentrate on consumer debt while totally ignoring the government's debt.

What happens in the aftermath of these crises is governments come in and prop up businesses and banks. This only prolongs the misery and creates huge debt for the government. We've seen this idiocy repeated over and over again, always with the same, predictable outcome.

We spent $1 trillion on a stimulus plan here which only left us a trillion more in debt. FDR's treasury secretary, Henry Morgenthau, confessed in his diary that the New Deal policies of government spending to reduce unemployment had been a failure. "I say after eight years of this Administration we have just as much unemployment as when we started," he wrote, "And an enormous debt to boot."

But these economists not only ignore failed governmental policies in the aftermath of a financial crisis, they ignore the failed governmental policies that led to them.

To a nation, each one that has suffered severe financial turmoil has done so because they artificially keep interest rates low. It sounds good in theory. Keep the interest rates low and people will continue to borrow for houses and cars and whatnot. The problem is, as these economists rightly noted, consumer debt becomes too great. And what happens when too many people get in too much hock? They default and they default in staggering numbers. Had the interest rates not been held so low and credit not been so cheap then the consumers would not have overindulged. Once again, the unintended consequences of government meddling.

So, here we are once again. We're throwing money at the smoke instead of allowing the private sector to put out the fire. And where are interest rates? At historic lows. Starting to see a pattern?

If I were a betting man I'd say it's gonna get worse before it gets better.

Phil Valentine is a radio talk-show host. His Web site is