Here Are The Jobs

"Where are the jobs?"

John Boehner's refrain is the de-facto slogan of Republicans looking to win big this year. Democrats took over Congress in 2007 and the White House in 2009. It's almost 2011. What do they have to show for it? Unemployment remains at 9.6%, and it's stayed above 9.5% for 14 consecutive months. Two and a half million jobs have disappeared since the government "stimulated" the economy.

Republican lawmakers should not forget, however, that the current recession started on their watch. The GOP cannot pin Bush-Greenspan's reckless inflationism on the Democrats, any more than the GOP can absolve itself of the pre-2009 bailouts and record deficit spending. Yet, we've enjoyed two full years of Democrat rule, and matters show no signs of improvement. It's time for the Democrats to take responsibility, and voters will definitely hold them responsible next month.

If Republicans win a majority in the House and a majority or near-majority in the Senate, they must take care not to promise voters too much. Republicans can unshackle the economy and bring down the unemployment rate, but not painlessly.

This recession began because of the easy money policies of the Bush-Greenspan Federal Reserve. Cheap credit served as a potent liquor, impairing the judgment of financial institutions. Inebriated lenders poured all this new money into crazy gambles in the mortgage market, enticed by the Treasury's implicit guarantee of Fannie and Freddie. This distortion of market signals diverted capital into all sorts of construction projects that nobody really wanted, and starved the areas of the economy that actually needed capital.

The Fed's monetary spigot started sputtering in 2008, and the mortgage market cringed in the first rays of reality's cold, harsh light. The gig was up for these malinvestments. Now, truly profitable, worthwhile businesses hunger for capital, so they can hire and produce again.

Wasteful businesses must fail and sell off their assets, allowing worthwhile businesses to buy up capital and labor for productive purposes. America needs more unemployment--at least temporarily. All these "stimulus" jobs, bailouts, and cheap loans simply keep resources from returning to sensible uses. Lawmakers insist, however, upon preventing this painful but necessary adjustment period.

The market will begin to realign, if Republicans take over and end these destructive government interventions. Market adjustments involve pain, unfortunately. The unemployment rate will rise, as government jobs expire and unprofitable businesses close up. Republicans must resist the temptation to respond with knee-jerk interventionism. If they truly do the right thing, unemployment will spike, but eventually begin a steep descent.

Normality can return within a year or two, as every historical indication shows, if government steps back and allows the market to clean up the politicians' mess. Unemployment soared to 11.7% when the (newly-created) Federal Reserve's first bubble economy popped in 1921. The Harding administration stood back and did absolutely nothing, and by 1923, unemployment plummeted back to 2.4%. Reagan and Fed Chairman Paul Volcker had the good sense to plug the monetary spigot and slash taxes, when they inhereted from Carter an economy teetering on the verge of inflationary depression. High interest rates and a bout of unemployment ensued, but quickly reversed for a healthy decade of economic growth.

Republicans can give Americans a job-producing economy back, but they'll need to wrangle the government down for the free market to function again. That means a lot of unproductive employment must initially disappear, but if government stays out of the way, work will soon reappear in productive and sustainable forms. Only then can we truly say, "Here are the jobs."

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Published at RightOSphere.com.