Barack Obama proposes large jobs creation program

2 comments

November 24, 4:47 PM

by John Ryden, Global Warming Examiner

 

 

Obama.com

This is a program that could work. Putting people to work building roads and bridges plus energy projects to generate renewable energy supplies would be a plus for the economy. We need more demand now to create jobs and pull us out of this recession.

I especially like his focus on ‘green energy’. The renewable energy business has been hurt by the downturn in the world’s economies. Solar cell producers have been battered by decreased demand and falling prices. The growth momentum that these companies have built upon for the past several years is coming to a halt. This will mean less solar cells will be produced in the future, which will be detrimental to moving our energy supplies away from fossil fuels.

In the long term, it does matter what sort of ‘investments’ are made. Investments in building tangible property that generates recurring revenue will be good investments. Investments that do not create tangible property will only increase the amount of debt in our economy and will only make continuing economic recovery more difficult.

Investing money in wind, solar, and electricity transportation projects will keep these companies going and hopefully lead to growing industries in the future. This will create jobs, but will also create assets will real economic value. If you build a solar farm or wind farm, you have created a producing asset. It has real value. You could sell shares in the wind farm on the stock market.

He could also create value and jobs without government money. How about fast-tracking the development of new nuclear power plants? Construction and raw material costs are both down now. What a great time to get these types of projects going. Private financing would probably be available for these types of projects. It takes a lot of people in some high paying jobs to build a new nuclear power plant. When you are done you get very low cost electricity for the next 50 years.

If a jobs program becomes something like picking up trash in city parks, you have not created an asset with economic value. Sure, the park may look nicer, but how would you sell that as an asset. The bridge to nowhere in Alaska is another example of a public works project that has little economic value. (How much could you collect in tolls after it is built?) You have only created a debt obligation for the government that will eventually become a problem when it has to be paid off. The energy farm pays back its debt through the value of the energy it produces.

Solving the problem of the auto industry is a great opportunity for President Obama. I think he should take them through a chapter 11 bankruptcy to convert a lot of debt and other IOUs into equity in restructured companies. The government would have an opportunity to put in public cash as new equity and make sure the money is used to develop fuel efficient hybrid cars. The government could always sell off their stock later after the market and the companies have recovered and maybe even make a profit.

The big reason that we have these economic problems is because we have been consuming too much and producing too little. The key to a good jobs program is that it creates productive assets. We can get an early idea of how successful Barack Obama will be as president by the types of programs he supports and how they are implemented. If his jobs program stresses building hard assets it would be a good sign. If a lot of money goes to soft projects like picking up trash, painting schools, etc then we can expect more problems when the bills come due.

   Subscribe   Feed

Include other special offers from Examiner.com
Terms of Use