What are your thoughts on a government backed jobs program?
At the moment of this writing, the New York Times is publishing author-less, ‘Live Updates’ regarding the Coronavirus pandemic. The top of the page reads, “Amid fears of “the mother of all financial crises,” Washington considers an infrastructure program to create jobs.” The fear is that the economy-halting strategy to combat the Covid-19 outbreak is going to drastically impact the rest of 2020 and quite possibly beyond. As discussed previously, the idea of an economic ‘doom loop,’ is becoming a more powerful factor than initially considered.
Recognizing the global impact of this virus, alongside the potential longevity of the virus impacting the United States economy, everyone is concerned with the possibility of financial ruin and huge increases in unemployment. While these are both issues that deserve attention, is it sound logic to move forward on a huge infrastructure plan (President Trump quoted two trillion), when prior to the virus most of America was experiencing a shortage of employees, team members, or viable candidates? Only a month ago unemployment was at a historical low. Could the funds be applied toward directly combating the current virus, as well as future viruses?
This virus is likely not an anomaly we will never see again. It is not the hundred year storm that every generation speaks about in regards to weather events. This virus may only be the first of many that will continue to impact our world. While perhaps easily suppressed with good research and medicine, it might be a warning sign that we need to better prepare ourselves for the future. Merely a thought experiment: Could the growth of these viruses be a combination of events? Growing resistance of viruses and bacteria to common antibiotics. Growth of new viruses and bacteria as a byproduct of climate change? Viruses are able to grow more powerful due to changing weather conditions (think bugs: warmer weather, bigger bugs)? New viruses altogether that have been held dormant for millions of years within the melting polar ice caps or glaciers? A focus and goal of preparedness moving into the future seems prudent. This may be a good place to invest the money, however this also may not solve the potential economic concern.
Based on the success of the economy previously, given America’s success in innovation, and the expansionary fiscal and monetary policy already in place. Perhaps we should leave employment primarily to the private sector. While not condoning it as a good idea per say, perhaps the best use of an additional stimulus package would be supporting the growth of small business during this period of uncertainty. Take firms with revenues between one million to ten million dollars annually, firms with a track record of proven success, and invest in them with money and expertise. These are firms that are clearly committed to building businesses, firms, and agencies with value. They almost certainly create jobs. For the purpose of this model, let’s ignore cash eating tech start ups. Focus solely on the grass roots, backbone of American business. Manufacturers, service companies; Home Improvement, Landscaping, community businesses (think gyms, coffee shops, activity locations, etc.), and firms that physically create things. Tech should certainly not be ignored, however it has a pool of people already interested in investing, there is no reason to change a working model.
Invest in the people who have put in the time and effort. Give them the tools they need to build their businesses even bigger. Two of the most common reasons for lack of growth are lack of monetary capital and lack of human capital. The SBA clearly has the resources to assist in the monetary capital, this one is easy. Take the two trillion dollars for a jobs program and invest it into these businesses. Incentivize certain sectors with additional bonuses if they can build inline with national interests; such as bringing broadband into rural areas and/or promoting living wages. For human capital, lets incorporate our state universities and theoretical experts with Ph. Ds and years of study. The combination of the academia theoretical and entrepreneurial experiential will create successful results exponentially.
It seems counter-intuitive to the free market system, and the prior economic conditions to force small businesses to compete not only against larger, more resourceful firms, but also the federal government. Applicants were slim prior to the pandemic, and I am confident given the resources, the small business sector can create and grow a wildly successful economy. Small businesses are big business.