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  • Real Jobs Plan Must Force Banks to Lend


    Bob Pollin: Obama SOTU speech frames some issues well, but does not deal with mountains of cash held by banks -   January 30, 2012
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    Bio

    Robert Pollin is Professor of Economics and founding Co-Director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. His research centers on macroeconomics, conditions for low-wage workers in the U.S. and globally, the analysis of financial markets, and the economics of building a clean-energy economy in the U.S. Most recently, he co-authored the reports Job Opportunities for the Green Economy (June 2008) and Green Recovery(September 2008), exploring the broader economic benefits of large-scale investments in a clean-energy economy in the U.S. He has worked with the United Nations Development Programme and the United Nations Economic Commission on Africa on policies to promote to promote decent employment expansion and poverty reduction in Latin America and sub-Saharan Africa. He has also worked with the Joint Economic Committee of the U.S. Congress and as a member of the Capital Formation Subcouncil of the U.S. Competiveness Policy Council.

    Transcript

    Real Jobs Plan Must Force Banks to LendPAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I'm Paul Jay in Washington. Last week, after president Obama's State of the Union speech, a lot of critics from the left were saying President Obama's speech appealed more to Republican voters than to his, quote-unquote, "base". There wasn't that much of what they said was a progressive message, that the speech was more about tax cuts and such than it was about anything else. Now joining us to give his take on the speech is Bob Pollin. Bob is the founder and codirector of the PERI institute in Amherst, Massachusetts. Thanks for joining us, Bob.

    ROBERT POLLIN, CODIRECTOR, POLITICAL ECONOMY RESEARCH INSTITUTE: Thank you very much for having me, Paul.

    JAY: So what's your take, Bob? Do you agree with this criticism?

    POLLIN: I actually have a different impression. I think that he said some good things from a progressive standpoint. Whether there's any follow-through is in my view has always been the issue. Let me just cite a few of the good things, number one, that he recognized that we have experienced a jobs crisis before the recession hit that was a long-term crisis, very much tied to loss of manufacturing jobs and the globalization and U.S. workers having to compete in a global labor market and that is absolutely true. It's a very serious problem. Now, again, whether he's serious about doing anything about it is another matter. I think he made some good points with respect to promoting manufacturing in this country, including in the energy sector, so that we could construe that as advancing something like an industrial policy. Now, of course, whether he means it and what the details are—.

    JAY: But his motto was auto industry, General Motors, which, you know, the restructuring our strategy was cut workers wages, cut down the size of the workforce. I don't know if that's much for progress model.

    POLLIN: No. Obviously, like I said, the details matter a lot. In industrial policy, giving credit subsidies, giving support for technical innovation and manufacturing in my view is positive and necessary. Now, obviously, the terms in which this occurred are really what matters. The devil's in the details. Look, I certainly agree that—and model of industrial policies does have to support investments, but it obviously has to support decent wages. It has to support the rights of workers to organize. And that's the framework. And there was some of what Obama said in his speech that I thought was supportive of that. It's very important to recognize that prior to our economic collapse, the U.S. workers have suffered wage declines or stagnation for generations while productivity doubled. So all of the gains in productivity were flowing up to the top, and that's the basis of equality in the country. So to talk about a revival of manufacturing, in my view, means a revival of decent employment in manufacturing. Now, that may not have been what he had in mind, but he didn't say that wasn't what he had in mind.

    JAY: But when he goes to the GM model, then you kind of—like, one of the parts of the GM model was banning strikes.

    POLLIN: Well, obviously, I'm not in favor of banning strikes. Then he—I don't really believe that he—I don't believe—at least I don't think we've gone so far down a neoliberal path that we are any by the in the Democratic Party, or even many Republicans, are going to favor banning strikes. I mean, they did try that in Wisconsin and Minnesota, and actually it seems to have failed. So I don't think that—maybe I'm wrong, maybe I'm naive. I don't think that's seriously on the agenda. The other thing, you know, this support for manufacturing for new energy sector, for investments in energy efficiency, which he emphasized a lot, all of that's good. The part that I found most disturbing in the whole discussion around energy was his emphasis on supporting natural gas, because of these new natural gas discoveries and his apparent enthusiasm and the enthusiasm of other people for hydraulic fracturing as a technology. What we really need to focus on his investing in clean technology and energy efficiency.

    JAY: What do you make of the proposal which I think he says he's going to do by executive order and not wait for Congress? And I didn't quite understand the proposal, which is something to do with using public lands and that the Navy's going to buy a certain amount of clean energy from this new kind of development on public lands. You know what that proposals about?

    POLLIN: I don't know the details of that proposal, but the fact is that, the single biggest consumer of energy in the U.S. economy, maybe in the world, as an entity is the Pentagon. And of course I'm in favor of cutting the Pentagon budget, as we discussed many times. But as long as we are going to have a military budget and arrange for hundreds of billions of dollars, let's move that. Look, that's the way that the internet got incubated, through the Pentagon budget. I would rather see the clean energy agenda get incubated outside the Pentagon, but as long as we have the Pentagon, let's push investments in solar, wind, geothermal technologies within the Pentagon as well as everyplace else.

    JAY: And what did you make of the opening 75 percent or approving 75 percent of the requests for I think it was offshore drilling was it not?

    POLLIN: No, of course. That the support for oil and gas in particular his support for expanding natural gas was terrible for the environment, is not good for jobs. Look, natural gas has this kind of halo around it, as if it's a really strong alternative fossil fuel that's much cleaner than coal and oil. Natural gas is maybe in terms of its greenhouse gas emissions per unit of energy created is maybe 10 percent more clean than petroleum. That's it. So let's kind of get away from this notion that natural gas is somehow a clean alternative to an economy driven by petroleum and coal.

    JAY: Right. The other—he said he was going to—he wants to cut the oil subsidies, subsidies, tax subsidies to oil, which I guess he said before. But he doesn't say anything about biofuels, which you've talked about before and many of the people we've talked about, the subsidization and expansion of corn-based biofuels, one of the biggest factors for creating food bubble prices. But that doesn't seem to be anything about changing that.

    POLLIN: Not only is it implicated in the food bubble, but biofuels based on corn ethanol are not even any cleaner. You know, just like natural gas, they are essentially not much cleaner, if at all, than petroleum. So when we talk about biofuels, we have to be very careful that we are talking about biofuels that come out of nonfood crops and that the refining process has to itself be done with renewable energy. That's the only way that biofuels ends up being cleaner.

    JAY: What would you else you have liked to have seen in this even given the kind of politics of the day? You know, I don't think anyone's expecting president Obama to magically transform into different kind of qualitatively different administration, I thought, given the politics of the day, and he's kind of politically chosen to appeal to Republican voters who might think that the current candidates are little bit off the wall and that, and he's more seems concerned about that than he is about, for example, any kind of direct jobs program. I don't think he mentioned anything to do with real—any direct stimulus spending. It's all about tax cuts.

    POLLIN: No, of course not. Look, I think that the number—I'm not a politician, so I don't know for sure, but my sense is the number one issue on which any candidate is going to win is to be credible on job creation and say, yes, we can drive the unemployment rate down to 4 percent, something like that, build a full-employment economy. That should be the mantra. Now, then the question is: how we do it? Well, you and I have talked about it before. There are ways to do it in part through public spending, but in part through forcing the private sector to use the funds that they are setting. And I don't understand why that should not be a political winner. That should be something where we say, let's give opportunities to small businesses to start getting credit and start investing in job creation accompanying investing in the public sector, for example, strengthening investments in education, strengthening investments in the green economy. That's the way through which we are going to pull the economy unemployment rate down in the range that is decent.

    JAY: But that plan you've proposed and we'll put a the video of our interview about your plan right below this video so you can go see this plan fleshed out a little more, but the plan you've posed means leaning on the banks and big corporations that are sitting on mountains of cash. And he doesn't seem to want to lean on anybody, any of those people.

    POLLIN: Well, they are sitting ducks. I mean, why wouldn't you want to lean on the backs when they are getting money for free? When Ben Bernanke announced that we are going to—the Fed is going to extend its zero interest rate policy for the banks through 2014—. Banks get money for free. They get all the money they want for free. Now, with what are we going to start saying, okay, banks, in exchange for this extraordinary gift we are giving you, and you have to be part of the solution of reviving the economy through job creation, that's the one thing that certainly is missing from what Obama has said.

    JAY: And as you say, it would have been incredibly popular, even the people that are supporting Gingrich—I mean, even Gingrich is adding his sport to a large extent with rhetorical anti big capitalist messages. They are even big supporters, one would think. But I guess the why has to do with a lot of Obama's financing for his election campaigns coming from Wall Street. So—.

    JAY: Well, of course, the mainstream Democrats and the mainstream Republicans obviously all around Wall Street for money, and that's the problem. And the struggle is to push them in the direction of doing things good for job creation and for people. That is the struggle. And the money is sitting there. I mean, it is essentially acknowledging this very central point that we have the financial resources to achieve a recovery, and he is doing step one, which is putting out money cheaply next to nothing to get the economy back in a strong recovery mode. But what they're not doing is forcing the financial institutions to do anything with this opportunity they've been given. To me that is the fundamental problem facing any decent recovery.

    JAY: Thanks for joining us, Bob.

    POLLIN: Thank you very much.

    JAY: And thank you for joining us on The Real News Network.

    End

    DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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