Jobs, Jobs, Jobs: The American Jobs Act, Keynesian Economics, Occupy Wall Street and More
Recently, there has been tremendous coverage of the Occupy Wall Street protests. It is obvious that this is not a political movement but merely a way for some disgruntled Americans to express their frustrations. It is unfocused and really has no coherent agenda. Ask 50 demonstrators why they are there and what they hope to achieve and you get 50 different answers.
I was particularly amused by the recent college grad who postulated that he should not have to pay back his school loans because “the banks were bailed out. Where’s my bailout?” Someone should explain to him that the banks were lent money that they paid back with interest, yielding a substantial profit to the taxpayer, notwithstanding all of the other tangential benefits of keeping the banking system afloat. He was already given his bailout by virtue of the loan itself. Not wanting to pay it back is what differentiates this student from the banks.
I certainly don’t mean to make light of the plight of the unemployed today, which is a significant problem for far too many of our citizens. While not many people take O.W.S. itself too seriously, there are, however, two important takeaways from these protests. The first is that it is likely to be an early iteration of things to come as discontent with current economic conditions and the unsustainability of our economic “promises” become all too clear. The second takeaway is derived from interpreting the timing of these demonstrations.
Things were much worse economically in the fall of 2008. Companies that were thought to be AAA credits had either failed or were on the brink. People were running around opening bank accounts at several different banks out of fear that A.T.M. machines might stop spitting cash. Why didn’t O.W.S. rise up then? The reason the demonstrators are here today is due to the unfortunate economic reality that many people believe things aren’t going to get tangibly better for a long time.
The economy appeared to be getting better many months ago but recent economic indicators have been trending downward and job creation has been well below expectations. European defaults are on the way (whether they are called defaults or not), Obamacare hasn’t kicked in yet and Dodd Frank has only started to be understood and felt by those who reside under its heavy thumb. Is it any wonder that we haven’t seen job creation gain much traction and have, in fact, observed acceleration in the number of announcements about pending layoffs in the financial sector?
The unfortunate thing, for both our economy and our commercial real estate market, is that many of our leaders today including the Fed, Congress, the president and his economic advisers have no idea what to do to make things better. The administration’s recent attempt at a third round of stimulus, a.k.a. the American Jobs Act, is another Keynesian mechanism that would have little chance of working. Moreover, it has no chance of even passing. During lunch with an Obama insider last week, it was divulged that the bill was nothing more than a campaign stunt so the president could vilify the “do-nothing” Republicans who did not pass a piece of legislation that would have saved everyone. Unfortunately, for the administration, the bill did not even make it through the Democrat-controlled Senate last week. The media really made little mention about this, likely because few actually thought it had a chance to pass.