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Jobs

What the President Did Not Do in His Jobs Speech

As expected President Obama’s speech before Congress last week laid out a moderate agenda for job creation through Keynesian-style stimulus and targeted tax cuts.

Certainly there is much to be lauded in the speech, so let’s start by addressing what he did do. The opening portion compellingly described an America where the social compact that said “you can succeed if only you work hard” has eroded. He went on to add that America’s deteriorating infrastructure (which receives an overall grade of “D” from the American Civil Society of Engineers), and crumbling schools are hampering our competitiveness. He did talk about investments we need to make and protections we need to keep. He did talk about priorities.

But the president missed an opportunity to elevate the narrative. He failed to decisively, crisply, and compellingly spell out an answer to his own question: “what’s the best way to grow the economy and create jobs?” The president could have used the question to pivot to a principled discussion of the progressive vision of economic prosperity. He could have drawn a stark contrast between his progressive values and the importance of “building up” the

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What the President’s Jobs Speech Should Say Next Thursday Night (Hint: Restore U.S. Competitiveness)

President Obama is slated to unveil his long-awaited jobs plan Thursday, September 8. What are the optimal policies he should advocate to restore both short- and long-term U.S. jobs growth? The answer depends first and foremost on the right diagnosis of the causes of anemic U.S. economic growth and corresponding job losses both over the past decade and in the last few years. Three primary—and fundamentally differing—diagnoses have been advanced. The two prevailing ones are: 1) this is a demand-side Keynesian recession, albeit of severe proportions; or 2) this is a financial crisis-induced recession and as such recovery inherently takes much longer. But the right diagnosis is related to America’s fundamental lack of economic competitiveness and that is where the President needs to focus.

Two years after the official end of the Great Recession, it’s clear that the solutions tried thus far aren’t working: GDP is still below its peak, employment growth is sputtering, consumer confidence is at rock bottom, and even productivity growth is waning. According to the Keynesian view, the persistent high unemployment is the result of a shortfall of demand and therefore it is up to

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We need to better tell the innovation story

The innovation story is getting lost in the jobs story.  Case in point was the critique by George Mason University economist Russell Roberts on a comment by President Obama on technology and jobs (Obama vs. ATMs–Why Technology Doesn’t Destroy Jobs – WSJ.com).  Roberts takes the President to task for suggesting that some technologies replace workers and thereby create short term dislocation.  Roberts discusses at great length the benefits to wealth creation of technology-induced productivity.

I agree with everything he said about the power of productivity (while I disagree with his political potshot at the President).  But, when it came to tying technology to job creation, here is the best Roberts could do:  “Somehow, new jobs get created to replace the old ones.”

If we can’t explain the “somehow”, we will lose the policy debates.

Roberts more detailed explanation given was this: “Fifty years ago, the computer industry was tiny. It was able to expand because we no longer had to have so many workers connecting telephone calls.”  In other words, the computer industry grew because all those unemployed telephone operators (unemployed because of advances in computer technology) could

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