Should You Believe Paul Volcker or the Happy Days Crowd? - Barrons.com

THE BIFURCATED ECONOMY AND JOB CREATION: Should You Believe Paul Volcker or the Happy Days Crowd? - Barrons.com


It is true that the tail can wag the dog and, in the current circumstances (should we be in a debt bubble), the debt balloon is certainly feathering the nest of its minders – i.e. the banks and financial houses (oh yes, hedge funds, etc. too).

And, with governments and much of the benefit receiving public in denial that anything could really be wrong with an ever-expanding credit-card consumption model, it’s no wonder that the banks are feeling again well.

But is all this debt bubble and concentration on the financial sector really creating wealth? Or, in other words more productive capacity that needs workers?

Apparently, the answer continues to look like ‘no’.

(A simple thought would be, if every world-class economic job in the US takes as much capital as it used to (and likely much more), then the Obama administration model of more capital being consumed by government (and given to non-producers) would clearly translate into ‘fewer’ jobs with the same capital requirement.)

(Another stab at the same issue would suggest that if more and more education is required to fill the needs of the Googles of the world for workers (and Friday on Richard Quest a headhunter admitted that new job skills were needed for the jobs now open), then this also takes capital – i.e. savings from consumption.)

So in either of the above scenarios, it would appear that the administration’s policies are anathema to job creation or the move of the economy into the new demands of a global economy in which the US can retain its above-the-mean standard of living.

It would appear as though lots of people are voicing solutions to job creation, but they can’t co-exist with an attempt to return to an old model where a high school education guaranteed a middle class lifestyle and when that didn’t work out, government would raise taxes from industry and thrift and give away a middle class lifestyle by depriving the economy of the very capital and rewards for effort that economic success requires.

Just a thought; but, it sure seems we’re on the wrong track.