It is not unusual for jobs to be the last thing that comes back from a recovery…but this is not your grandparent’s recovery. Is it even a recovery at all?
In the Depression, when money was poured into infrastructure and the war, it created jobs. But how many jobs were created by pouring TARP money into banks, especially when instead of lending it back out to small businesses and consumers, they kept in for themselves to be able to declare billions in profits.
That’s not saying that TARP was a total mistake, money did need to be lent to the financial sector to stabilize the economy before it collapsed like Lou Dobbs’ career. But there were no requirements on what the banks had to do with the money so here we are, with credit still terribly hard to come by, businesses not being able to afford to retain workers, let alone hire new ones… and banks declaring billions in profits.
So we have unemployment increasing while the financial world is enjoying a “recovery”. A corporate version of Robin Hood.
It’s too late now but when the decisions about TARP 2 were in process, there were some voices saying, “Give the money to consumers instead!”. Some folks proposed giving a million to every citizen…obviously, these were not people who had lost their jobs as accountants or if they did, it was well deserved.
However, what could have been done is to have the government, as they do with the SBA, directly loan money to businesses at low rates. The government gets interest, small business gets credit and loans and can afford to keep their employees and even add employees if other businesses getting credit helps their business come back.
The same should have been done on the mortgage front, just as Freddie and Fannie backed loans, the government could have backed mortgage refinancing through them to keep people in homes and reduce crushing mortgage expenses…which would translate into more cash available for spending, on necessities at the least and non-necessities at best. Juicing the economy substantially.
As Congress weighs a new Stimulus bill to boost employment, my suggestion is that they also consider what was neglected by TARP, heavily funding perhaps SBA or some government entity provide low interest loans to a wide array of small businesses. That’s money that returns a profit to taxpayers and will be spent, not horded as the banks have done. And ultimately, makes money available to small businesses which can employ more workers.
If we want jobs and a solid economy in the short and long term, the approach should be holistic and forward looking, putting taxpayer money where taxpayers get a good deal, small businesses are fortified and jobs are sustained and increased.