Fixing the Economy

Our Board of Economists offer President Obama advice on putting America back to work

such as the role of community banks and small businesses in helping to fire up the economy. However, the board universally agreed that the desired outcome must be job creation.

Amid the current downturn, African Americans are particularly vulnerable. Anderson notes that blacks are twice as likely to be out of work as their white counterparts. Although blacks make up 10.9% of Americans who have jobs, they comprise 19.7% of the jobless. Overall, the most significant erosion of U.S. jobs can be found in industries such as construction, finance, insurance, and professional services—sectors that tend not to have a heavy concentration of  black workers. Even so, Anderson cautions, “when you look at how the economy is deteriorating, and the rapid rate at which it’s occurring, I interpret these numbers to mean the worst for black people is on the way.”

Obama’s stimulus plan, as it’s been outlined thus far, could fall short in getting a broad number of Americans back to work. Obama’s American Recovery and Reinvestment Plan seeks to save or create more than 3 million jobs in industries such as “environmental technology.” In addition, the program hopes to put millions back to work rebuilding and reinforcing roads, bridges, and public transit systems. That portion of the proposal was just the sort of endeavor that be’s economists fear would do little to address unemployment among African Americans since that aid would flow to industries in which blacks are underrepresented. To alleviate minority joblessness, Anderson, a former assistant secretary of labor for employment standards during the Clinton administration, proposes that Obama create public service jobs “similar to what we had in the depths of the Great Depression,” he says. “We’re talking about jobs in cities to hire people to be school aides, school crossing guards, working in recreation centers, cleaning parks and rivers, and other work like that—combined with job training.” Anderson added that a sizable portion of Obama’s spending should be channeled through state and local governments. His advice to the new president: “Listen to what big-city mayors are saying about the fiscal crisis they face.”

Jaynes challenges the Obama administration to think broadly about solving unemployment long term. He points out, for instance, that while the U.S. has transitioned away from a manufacturing-centered economy in the last two decades, a large swath of American workers are still suited only for factory work, due to lack of training and education. Jaynes also believes Obama has a unique opportunity to help the U.S. adapt to its changing role in the global economy. Along those lines, Boston thinks Obama should boost the country’s investment in basic scientific and technology research with a more aggressive, new industrial policy.

The economic crisis gives Obama license to intervene in the marketplace more than other presidents in the recent past. What that means, in effect, is that the U.S. is morphing into a so-called mixed economy as it bails out industries and purchases equity positions in large corporations. The resulting economic system is no longer a wholly free-market

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