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G-20 Leaders Still Have Work Cut Out
This week, the leaders of the G-20, representing about four-fifths of the world's economy, gather in Pittsburgh, for their annual talkfest. As they come together, experts are suggesting that the Great Recession is over, that the recovery has begun.
The G-20 leaders would be wise to stow the champagne bottles and take a sober look at the global economy. Despite the success in governmental efforts across the world in saving or creating tens of millions of jobs, unemployment has risen rapidly--the International Labor Organization estimates that a record 241 million workers may be unemployed around the world. In the U.S., the total unemployed and underemployed is about 39 million, or 16.8 percent of the population. Young men in our cities are facing unemployment rates reaching 40 percent to 50 percent.
The stock market is up, and the banks are said to be "healing," but there are no jobs. A jobless recovery is like an eggless omelet--a contradiction in terms. This goes to what we value. The economy isn't healthy if speculators are doing well or if banks can make money with the dough the Federal Reserve lends them at zero percent interest. The economy has recovered when people are back to work, when wages are rising. The economy is healthy when every person willing and able to work can find a job, and when wages are high enough not simply to lift a family out of poverty, but to provide access to the American dream for those who work hard.
We don't need G-20 photo-ops to reassure Wall Street that recovery is on the way. We need them to work together to figure out what must be done to put people back to work--and to get the economy going again.
To address the jobs crisis requires challenging a growing conservative consensus that is simply wrong-headed.
We need another round of a recovery spending, focused on putting people to work. In the U.S., that would require federal money going to states and localities to avoid the devastating layoffs of teachers, police and firefighters that are now spreading across the country. It would also require direct job programs, Green Corps and Urban Corps, to put young people to work retrofitting buildings, planting trees, cleaning parks. It requires making the investments that the Senate cut out of the first recovery plan--and more--in vital infrastructure projects that put people to work and make our country more efficient and competitive.
Washington is fixated on budget deficits, but the most destructive deficit is a shortage of jobs. Unemployment destroys families; it crushes hopes and shuts doors. Without jobs, young men and women don't learn the skills and the discipline they need to succeed. And, in reality, the only way to get the budget balanced is to have an economy that is growing, with people working and paying taxes.
Second, we need to balance global trade. The U.S. can't keep borrowing money to buy the world's goods. That means that China and Germany and the surplus nations must consume more at home, and depend far less on exports to the U.S. And it means the U.S. must make things at home, export more and consume less. The industrialized world must help stimulate development in the poorer countries of the world.
How should the U.S. reduce its borrowing from abroad? We can lower our demand--our trade deficits are down since trade collapsed in the recession. Or preferably, we can increase our exports and reduce our reliance on imports. That requires that we make something here in America that others want to buy. And it requires insuring that we have a level playing field across the world--rather than allowing countries like China to play by a different set of rules.
Both of these big initiatives would best be done with global cooperation. A second round of recovery plans should be adopted across the globe, not just here. Balancing trade should be done cooperatively with the surplus nations, not simply unilaterally through tariffs or taxes.
So keep an eye on Pittsburgh this week. Are there serious discussions about a new plan for jobs? Are the leaders talking about more balanced global trade? Or do they pop the champagne and ignore the jobless, setting the stage for greater trouble ahead? Let's hope they get this right.