Some advice on filling that economic-adviser job at the White House: Think big, get tough in the global economy, and invest in America's future. Oh, and call Jim Jubak.
I haven't been able to sleep ever since I read that Larry Summers is leaving his post as top economic adviser to President Barack Obama's top economic adviser.
Is the recession really over?
I know the phone's going to ring, though, and I want to be prepared for the Big Question: What would you do to turn around the U.S. economy?
I've quickly worked up this draft of an answer. I don't know how much more time I have before the president calls.Change the way we define the problem No more baby steps. You don't fix a crisis this big by tinkering around the edges. I had this drummed into me in a business school class in 1984. My assignment was to come up with a budget to fix the New York City economy. The professor read my carefully prepared solution and laughed. Well, actually he guffawed. You think you can fix this budget, he asked, by closing firehouses?
Now I'm looking at a $14 trillion U.S. economy with an unemployment rate pushing 10%. Tinkering with the tax code or offering a FICA tax holiday isn't going to fix this crisis.Msn.Video.createWidget('PlayerAd1Container', 'PlayerAd', 300, 213, {"configCsid": "MSNmoney", "configName": "player-money-articles-16x9", "player.vcq": "videoByUuids.aspx?uuids=83b6342d-8d3b-4bfa-a805-a4b40215b41d,5dcd051f-f820-4338-ab4d-58d30c13edee,a7b6cdcc-e4d9-426e-948f-bfd3773bd0d6,269abdea-d778-4bc3-8775-da11f0e9d744,32543ace-6aba-45cc-a48f-587e0b459da9,308b9c2c-b9cf-4608-bef9-33e24304e18e,a19f886a-61c8-4406-b1c0-bcb7f7196056,f08e4325-e6f8-42cc-a58f-5f69fdc3a5dc,7466e49e-53b7-4120-8238-6da763c02bf7,b6eda241-ffb6-47dc-8bed-25b00896c92d,9d70881f-ba5d-40dd-aa84-871c1ed6ca39", "player.fr": "iv2_en-us_money_article_16x9-Investing-JubaksJournal"}, 'PlayerAd1');Msn.Video.createWidget('Gallery4Container', 'Gallery', 304, 150, {"configCsid": "MSNmoney", "configName": "gallery-money-articles", "gallery.linkbackLocation": "bottom_left", "gallery.numColsGrid": "3", "gallery.categoryRequests": "videoByUuids.aspx?uuids=83b6342d-8d3b-4bfa-a805-a4b40215b41d,5dcd051f-f820-4338-ab4d-58d30c13edee,a7b6cdcc-e4d9-426e-948f-bfd3773bd0d6,269abdea-d778-4bc3-8775-da11f0e9d744,32543ace-6aba-45cc-a48f-587e0b459da9,308b9c2c-b9cf-4608-bef9-33e24304e18e,a19f886a-61c8-4406-b1c0-bcb7f7196056,f08e4325-e6f8-42cc-a58f-5f69fdc3a5dc,7466e49e-53b7-4120-8238-6da763c02bf7,b6eda241-ffb6-47dc-8bed-25b00896c92d,9d70881f-ba5d-40dd-aa84-871c1ed6ca39;videoByTag.aspx%3Ftag%3Dmoney_dispatch%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1;videoByTag.aspx%3Ftag%3Dbest%2520of%2520money%26ns%3DMSNmoney_Gallery%26mk%3Dus%26vs%3D1"}, 'Gallery4');Admit that as bad as things are now, they weren't exactly swell before the crisis. Incomes for the average family have been stagnant for the past 30 years -- especially if you take out extra dollars that come from having more moms in the work force and having one or both parents work extra and/or temporary jobs. For some workers -- blue-collar industrial workers and workers without high school degrees -- the Great Recession began not in 2007 but in the 1980s and hasn't ever ended.
Even the great job-creation surge in the Clinton years doesn't look like the best of times when you consider the kinds of work created -- lower-paying, predominantly service-industry jobs -- to replace the higher-paying manufacturing jobs that had been lost.
Let's admit that the ideas now getting recycled in the midterm election campaigns from both parties haven't prevented or reversed that long income stagnation -- and they aren't likely to. It's not because tax cuts, tax increases, education credits, No Child Left Behind, spending cuts, spending increases and the other patent medicines peddled by politicians don't have any effect but because they're too narrowly focused to end a 30-year problem.
As Larry Summers would say -- if we transplanted James Carville's brain into the Harvard economist's body (and that would sure be fun) -- "It's the global economy, stupid." Fixes that ignore the global economy are going to be too small or completely misguided. And those of us who live in the United States will have to give up some of our economic illusions. (Come on, you can do it. It's not nearly as painful as giving up "Mad Men.")
For example, it's time to concede that when it comes to exports, the U.S. has become essentially a commodity economy. We export corn, coal and scrap paper, and we import TVs, cars and solar cells. Export our way out of this mess with an extra paragraph here or there in our trade treaties? Oh, puleez! Play hardball (or insert your own sports cliché here) Let me give you an example ripped from the headlines, as we say here in New York. China has slapped quotas on its exports of rare-earth minerals essential for building hybrid cars, wind turbines, amplifiers for optical cable communications networks and the newest fluorescent lights. If companies want to build these products and are worried about their sources of these raw materials, they can make sure they have plenty to work with quite simply -- by moving production to China.
And we're going to fight back against this sort of globalism by creating a $30 billion loan fund for small businesses or lowering mortgage rates (by having the Federal Reserve run up its balance sheet)?
It's war out there in the global economy, and the battle is to secure the world's scarcest commodity: good jobs. That's way better than real war, let me remind you. But to stand a chance in this war, the U.S. has got to at least match the firepower of the other countries.
In this competitive economic war, we can't afford to have all the battles fought on our turf, and we can't always be on the defensive. European and Chinese makers of high-speed trains are going to fight it out to see who gets billions in U.S. taxpayer money to build a high-speed line in California.
Where's General Electric (GE, news, msgs) in that competition? And if we don't have the team that can play in the big leagues in high-speed trains, how about we go after China's market for freight cars or freight locomotives?
It's not like our stuff can't compete with their stuff. In many cases, cheap financing is the only thing they've got that we don't. (And it's hard to believe that it isn't cheaper to provide low-interest taxpayer financing to U.S. companies than it is to spend taxpayer money saving an industrial shell from bankruptcy.)
If moving from a defensive crouch to offense means using government resources to create competitive industries from scratch, so be it. It's cheaper in the long run than paying for years of unemployment and the social havoc that would cause. It's insane that the U.S. doesn't have a domestic source of rare-earth minerals and that we're willing to give anybody in the world control of something essential to 21st-century technology.
Continued: Think big? No, bigger! More from MSN Money and MoneyShow.com
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Rate this Article Click on one of the stars below to rate this article from 1 (lowest) to 5 (highest). LowThank you for rating.UGR('ratCntrl')High var avgRating=0;avgRating=8.398714; if(avgRating!=0){avgRating=avgRating/2;avgRating=Math.round(avgRating*100)/100;var sDisplayText="Average rating: " + avgRating + " from ";var usersCount=933;sDisplayText = sDisplayText + usersCount;if (usersCount==1)sDisplayText=sDisplayText + " user";else sDisplayText=sDisplayText + " users";avgRatingElem=document.getElementById("averageRating");avgRatingElem.innerText=sDisplayText;} View all top-rated articlesE-mail us your comments on this article Discuss in a message board Stock PicksJubak's PicksCheck out Jim's top stocks for the next 12 months.
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Connect with JimBecome a fan on FacebookSubscribe to his e-mail newsletterDecision CentersStart InvestingMutual FundsFind Hot StocksSimple StrategiesPower ToolsInvesting for IncomeReal Estate InvestingRecent Articles by Jim JubakBe ready for the rally's end 09/23/2010The recipe for another depression 09/20/2010Why there's such a dividend deluge 09/16/2010More...Jim's Most Recent Top Stocks PostsRevving up the recovery's enginesBrazil drives down the realTwo discounts for the price of oneFund data provided by Morningstar, Inc. © 2009. All rights reserved.StockScouter data provided by Gradient Analytics, Inc.Quotes supplied by Interactive Data.MSN Money's editorial goal is to provide a forum for personal finance and investment ideas. Our articles, columns, message board posts and other features should not be construed as investment advice, nor does their appearance imply an endorsement by Microsoft of any specific security or trading strategy. An investor's best course of action must be based on individual circumstances.Msn.Video.createWidget('Gallery8Container', 'Gallery', 500, 230, {"configCsid": "MSNmoney", "configName": "gallery-money-article-site-wide"}, 'Gallery8'); 20CommentsNewestOldestBestWorstControversialdisillusioned1016 minutes agoWhat we need in this country is a new type of corporation. We can call it a Patriot Corporation. Only corporations with a Patriot designation should be able to qualify for direct corporate welfare from the US government. Then we can then wean the multinationals off the government dole. The American tax payer shouldn’t be funding the R&D cost for foreign manufactured goods anyway. Get it GE.
Shares in a Patriot Corporation can only be owned by American citizen of the human verity. Only direct ownership no mutual fund or Wall Street investment banks.
All plants must be here in the USA.
I believe that many American’s are looking for a chance to truly invest in America. They want to get away from the risk of the Wall Street Casino’s and low yields of the Banks. Build it and they will come.
0 0ReportSpamBigrat12 minutes ago"How Obama can fix the US economy" ?
Stepping down immediately would be a GREAT start.. then have all of his socialist liberals step down too, if they can't wait until Nov 2nd that is..
2 2ReportSpamdmdmdmdmd20 minutes agoPlay hardball with other countries to get them to ease their trade restrictions? That's going to bother a lot of multinational corporations.
Give more tax breaks to emergent technologies? The states are strapped for taxes as it is. You're going to need federal monies for this, which is going to be hard to push as long as there are still deficit hawks and a huge anti-tax coalition in Congress.
Invest in new technology directly with federal dollars? That runs right up against the notion that public dollars can never accomplish the kinds of things that private dollars do.
Admit that our problems go back farther than just the last few years and suggest that there are deeper changes within the system that need to be made? Claim that government can't issue an untargeted tax cut, back away from these problems, and wait for the market to fix itself? Godspeed to you, Mr. Jubak, but you've got a mountain of opposition to fight against for that one.
0 0ReportSpammark4330 minutes agoI find it interesting that any comments on this site that are critical of Obama or his policies, get voted as thumbs down!
I find it hysterical that even after Obama has lied, not done anything he promised, continues to drag his feet on DADT and DOMA that all these people still support this man!
They continue to blame Bush for everything. When is this man going to accept any responsibility for anything???
It is easy to blame the last butt in your seat for the smell that is there now, but it is harder to accept the blame.
8 5ReportSpamrotten robert36 minutes agothe way to change the economy is to add a 200% tax on foreign income, then allow a 25% deduction on U.S. investments , with money previously invested in foreign companies for x numbers of years. 1 3ReportSpamjafcee37 minutes agoOddly and perhaps even inevitably, his political experience, a cakewalk, has positioned him to destroy the Democrat Party's hold on power in Congress because in the end it was never about the Party. It was always about his communist ideology, learned at an early age from family, mentors, college professors, and extreme leftist friends and colleagues. 7 7ReportSpamTa8139 minutes agoI am glad that finally someone is writing what I have written so many times.
One more point, we Americans also need to change our attitude of falling for foreign goods instead of american made goods, because economy means you can buy (if you have money = jobs = manufacturing in USA). And American manufacturing companies need to make quality products instead of cheap products which sends the jobs to outside of USA.
4 1ReportSpamz0rr044 minutes agoGod, Almighty ! A proposal for a national industrial strategy. Well if that ain't a decade or two overdue!
But, a nation that thinks credit is what the economy consists of, and a leadership in the pocket of Wall Street finaciers, will probably chose today's Vegas over yesterday's Pittsburg any day.
6 1ReportSpamjafcee49 minutes agoThis man is simply not qualified for the job he is trying to do and should resign before hopefully being impeached.
What do you expect from a Kenyan town idiot!?
12 14ReportSpamBennunya1 hour agoI so much agree and have said so myself for years. If the states such as Ky.,Tn., Al. etc can pay foreign auto manufacturers to build plants there . Why can't we pay domestic auto manufacturers t build plants there. 13 0ReportSpamHANKS1 hour agoWAY TOO FREAKIN' LATE FOR OBAMA TO EVEN SAVE HIMSELF FAR LESS THE ECONOMY.......................ALREADY A TWO YEAR LAME DUCK PRESIDENT AND STILL SLIPPING IN RELEVANCE!
BARRACK WE KNEW YEE FAR TOO WELL, RIP!
THE BEST HOPE THE DEMOCRATS HAVE IS FOR THE REPUBLICANS TO MAINTAIN THE "REPUBLICAN CREDO" OF "CORPORATIONS FIRST LAST AND ALWAYS"............THAT WOULD MEAN THAT IN 2012 OR 2016 WE WILL BE THROWING THEM ALL OUT AGAIN ...........UNTIL THE ELECTORATE IS SERVED FIRST ON ALL LEGISLATION AND PRESIDENTIAL ORDERS IT WILL BE TIME TO TEACH THEM WHO THE HELL THEY WORK FOR,..........AS IN OVERPAID EMPLOYEES!
13 23ReportSpamdisillusioned1011 hour agoJim, you need to think bigger. Jim Jubak for president in 2012. I hear the tea party is looking for a good candidate. The RINO’s in the Republican Party are not cutting mustard. They are not capable of original thought.
If you get the call send me an email I can help, too.
God Bless American!!! Now, lets kick some butttt!
10 8ReportSpamBLUECARS21 hour agoBRING IN THE MILITARY, CIA, HOMELAND SECURITY AND HAVE AN OFFENSIVE AGAINST THE AMERICAN TALIBAN CORPORATIONS. Root out the causes of injustice. Untie Obama's hand and grant him supreme power over all American mis interest and let him do the ' People Will'. Shelve the parts of our Constitution that allows the Republicans to base their Pledge to America on, and replace it with the Will of the People or just replace the whole constitution with the supreme law, The Ten Commandments. Now you have real change you can believe in. 1 23ReportSpamjoey65551 hour agoJim,
First you may consider brushing off the resume. I am sure you will leave your current job due to "personal issues".
So the world's companies want our metallurgical coal? Fine. Have them build steel mills in Pennsylvania and West Virginia and more car plants in Alabama. The world's companies want our corn? Fine. Make their home countries tear down the trade barriers that keep U.S. chickens out of Russia and other nations.
Jim, The plants will be built in the US when the US worker is willing to accept the same pay as a person in china and other countries. That is the blessing of free trade.
The following link may enlighten you.
I suspect the US will scream and kick ourselves into a major depression and bankruptcy before lowering minimum wage to be competitive with the world wide job market.
link is seekingalpha.com/article/188543-u-s-industries-at-risk
7 4ReportSpammark431 hour ago
Obama cannot fix this economy for these reasons
1) This is a man that has never run anything, A business, A town, A state or anything else. He has never had to hire and fire anyone. He has never had to stick to a budget.
2) He is being advised by people who also have never done any of those things. Their knowledge of economics comes from theory only and NO practical experience. They were also taught economics by professors that have never done those things either.
3) Obama's mantra of "Share The Wealth" does not work. You cannot over tax the rich and hope it covers everything. Besides that the rich in this country are the people who employ everyone! Have you ever gotten a job from a poor person????
4) Experts will tell you that many of the things that Roosevelt did at the start of the depression actually made it worse. What really got us out of the depression was "Lend- Lease to England at the start of WW2.
We need to get manufacturing back to America. We need to make 'Made In America" mean something again.
Obama does not have a clue and neither do his Czars!
One last thing is that I find it interesting and telling that No one has heard from Hillary since Obama took office. What is she tied up and gagged in the basement of the White House??
22 31ReportSpamKOCOACH1 hour ago THE BEST WAY OBAMA CAN FIX THIS ECONOMY IS FOR HIM TO STEP DOWN FROM THE OFFICE HE LIED TO GET AND THE IGNORANT PEOPLE OF THIS COUNTRY BOUGHT INTO IT AND LET PEOPLE TAKE OVER THAT KNOW HOW TO HANDLE MONEY MATTERS, THEN THIS COUNTRY HAS A CHANCE TO SURVIVE THIS IDIOT OBAMAS RECKLESS SPENDING OF "WE THE PEOPLES HARD EARNED DOLLARS". IF YOU DON'T KNOW THE LEAST BIT ABOUT POLITICS STAY OUT OF THE VOTING PLACE TO AVOID THIS FROM EVER HAPPENING AGAIN. 18 39ReportSpamcpcath1 hour agoya got my vote, Jim
Now if the dudes in Washington can only find you....
28 4ReportSpamA mere citizen1 hour agoHow can you expect Washington to think long term when no politician can see past their next election? Let's face it, our officials make it into Washington based on effective marketing, not what they do. People don't vote for a candidate they think can't win, that's why you only see this salesman vs that salesman, with no candidate worth their salt to be found. 31 1ReportSpamLost Dollar1 hour agoGood article with good points so do we need an Industrial Revolution here in the US to get up back on track? If so, how much of our infrasture is torn and tattered, do we need to invest heavily in our Roads, Airports, Train Tracks? Airlines have consolidated so much over the years that I do not see any new ones on the horizon (do current Airlines need to have Boeing build new Aircraft); AmTrac was in trouble a few years ago with budget issues (perhaps Pricing Restructure may be the answer and adding additional Passenger Cars), and Freight seems to still be chugging along not to mention Shipping Channels and Port Authorities--Imports vs. Exports/Tariffs? Speed Rail will only be viable where you have high densities of population (Northeast-NY,NJ,MA,Washington D.C., Midwest-Chicago and West-Los Angeles,San Diego, San Francisco).
So, perhaps Jim's right in his assertion that the President doe
Even the great job-creation surge in the Clinton years doesn't look like the best of times when you consider the kinds of work created -- lower-paying, predominantly service-industry jobs -- to replace the higher-paying manufacturing jobs that had been lost.
Let's admit that the ideas now getting recycled in the midterm election campaigns from both parties haven't prevented or reversed that long income stagnation -- and they aren't likely to. It's not because tax cuts, tax increases, education credits, No Child Left Behind, spending cuts, spending increases and the other patent medicines peddled by politicians don't have any effect but because they're too narrowly focused to end a 30-year problem.
As Larry Summers would say -- if we transplanted James Carville's brain into the Harvard economist's body (and that would sure be fun) -- "It's the global economy, stupid." Fixes that ignore the global economy are going to be too small or completely misguided. And those of us who live in the United States will have to give up some of our economic illusions. (Come on, you can do it. It's not nearly as painful as giving up "Mad Men.")
For example, it's time to concede that when it comes to exports, the U.S. has become essentially a commodity economy. We export corn, coal and scrap paper, and we import TVs, cars and solar cells. Export our way out of this mess with an extra paragraph here or there in our trade treaties? Oh, puleez! Play hardball (or insert your own sports cliché here) Let me give you an example ripped from the headlines, as we say here in New York. China has slapped quotas on its exports of rare-earth minerals essential for building hybrid cars, wind turbines, amplifiers for optical cable communications networks and the newest fluorescent lights. If companies want to build these products and are worried about their sources of these raw materials, they can make sure they have plenty to work with quite simply -- by moving production to China.
And we're going to fight back against this sort of globalism by creating a $30 billion loan fund for small businesses or lowering mortgage rates (by having the Federal Reserve run up its balance sheet)?
It's war out there in the global economy, and the battle is to secure the world's scarcest commodity: good jobs. That's way better than real war, let me remind you. But to stand a chance in this war, the U.S. has got to at least match the firepower of the other countries.
In this competitive economic war, we can't afford to have all the battles fought on our turf, and we can't always be on the defensive. European and Chinese makers of high-speed trains are going to fight it out to see who gets billions in U.S. taxpayer money to build a high-speed line in California.
Where's General Electric (GE, news, msgs) in that competition? And if we don't have the team that can play in the big leagues in high-speed trains, how about we go after China's market for freight cars or freight locomotives?
It's not like our stuff can't compete with their stuff. In many cases, cheap financing is the only thing they've got that we don't. (And it's hard to believe that it isn't cheaper to provide low-interest taxpayer financing to U.S. companies than it is to spend taxpayer money saving an industrial shell from bankruptcy.)
If moving from a defensive crouch to offense means using government resources to create competitive industries from scratch, so be it. It's cheaper in the long run than paying for years of unemployment and the social havoc that would cause. It's insane that the U.S. doesn't have a domestic source of rare-earth minerals and that we're willing to give anybody in the world control of something essential to 21st-century technology.
Continued: Think big? No, bigger! More from MSN Money and MoneyShow.com
1 | 2 | next >
Check out Jim's top stocks for the next 12 months.
Read how to invest with Jubak's showcase portfolio.
Follow the long-term portfolio from Jim's book "The Jubak Picks."
See Jim's new portfolio to help navigate the treacherous interest-rate environment.
What we need in this country is a new type of corporation. We can call it a Patriot Corporation. Only corporations with a Patriot designation should be able to qualify for direct corporate welfare from the US government. Then we can then wean the multinationals off the government dole. The American tax payer shouldn’t be funding the R&D cost for foreign manufactured goods anyway. Get it GE.
Shares in a Patriot Corporation can only be owned by American citizen of the human verity. Only direct ownership no mutual fund or Wall Street investment banks.
All plants must be here in the USA.
I believe that many American’s are looking for a chance to truly invest in America. They want to get away from the risk of the Wall Street Casino’s and low yields of the Banks. Build it and they will come.
"How Obama can fix the US economy" ?
Stepping down immediately would be a GREAT start.. then have all of his socialist liberals step down too, if they can't wait until Nov 2nd that is..
Play hardball with other countries to get them to ease their trade restrictions? That's going to bother a lot of multinational corporations.
Give more tax breaks to emergent technologies? The states are strapped for taxes as it is. You're going to need federal monies for this, which is going to be hard to push as long as there are still deficit hawks and a huge anti-tax coalition in Congress.
Invest in new technology directly with federal dollars? That runs right up against the notion that public dollars can never accomplish the kinds of things that private dollars do.
Admit that our problems go back farther than just the last few years and suggest that there are deeper changes within the system that need to be made? Claim that government can't issue an untargeted tax cut, back away from these problems, and wait for the market to fix itself? Godspeed to you, Mr. Jubak, but you've got a mountain of opposition to fight against for that one.
I find it interesting that any comments on this site that are critical of Obama or his policies, get voted as thumbs down!
I find it hysterical that even after Obama has lied, not done anything he promised, continues to drag his feet on DADT and DOMA that all these people still support this man!
They continue to blame Bush for everything. When is this man going to accept any responsibility for anything???
It is easy to blame the last butt in your seat for the smell that is there now, but it is harder to accept the blame.
I am glad that finally someone is writing what I have written so many times.
One more point, we Americans also need to change our attitude of falling for foreign goods instead of american made goods, because economy means you can buy (if you have money = jobs = manufacturing in USA). And American manufacturing companies need to make quality products instead of cheap products which sends the jobs to outside of USA.
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