Why The Stimulus Did Not Reduce Unemployment

The answer is easy, employment is not where the unemployed live or they don't have the job skills. You cannot hire a car parking valet for high voltage line work.

Today I read a editorial from a The New Times that compared Germany to the US in economic recovery. This comparison was made from staring out the window of his Manhattan office with a severe case of backyard-itis. First of Germany is a small country-state with a stable political environment. The US is a very large country with 50 states and a very confrontational political environment. I will make another comparison to Germany, and the state of North Dakota. In GDP the are not comparable but in many places they are alike . Let me enumerate.

1. North Dakota (ND) has lower unemployment than Germany.

2. ND is a state with many natural resources of which value is added and like Germany have many exports of value added work.

3. Germany has many socialistic tendencies, like health care. North Dakota has its own tendencies, with a state owned bank. Also it is a promoter of cooperatives where a one owner share has the same voting power of a neighbor with a thousand shares.

4. Germany has a highly developed infrastructure and by ND comparison does not. But ND infrastructure is very functional and is constantly being improved. A place where ND and Germany is familiar in broadband internet. ND like Germany is wired!

5. The area Germany and North Dakota is most alike in a functioning political system. Like the rest of the US they have a Republican and Democrats, but in ND they function as a team. The three major news papers are more about progress of ND rather than divisiveness. For example this Saturday the Minot ND paper has a headline about "Building Partnerships". The New York Times head line is "Tea Party Claims Dr. King’s Mantle", a very divisive headline. In Germany they debate policy, not personalities.

6. Germany and ND are most alike in the educational system focuses on skills development. To many colleges in the US do not provide graduates with work skills that add value. I even know of a college in Virginia that says it goal for graduates is to go into government.

The reasons for unemployment are many; lack of skiles , location and the biggest of all, lack of demand.

How are Jobs Created?

Why are jobs created? That may be the better question.

We compensate (pay) people for a service we want or a person is hired to make something which adds value to a some material that we grow or purchase. If no one wants or needs services, jobs will be eliminated. If people don't need or don't have money for more "stuff" workers are not needed.

But jobs are needed! We need to innovate! We need to invest!

Innovation comes first. I can think of several examples. Creative marketing is one of the quickest ways to create jobs. Books are written on this subject but the master is Steve Jobs, CEO of Apple. Just go on the Apple web sight and view a free marketing lesson. Its also a good lesson on web design. Another marketing genius, take a look at John Deere. More about John Deere latter.

Some politicians would have us believe small business is the economic engine that creates new jobs. This not true because startups employment is offset by failures. The successful one's grow into large companies and continue to research for business opportunities. A business to be successful must embrace change. These are the businesses who create jobs.

John Deere has not taken a straight line toward success. They have recovered from several misjudgments according to published literature. Two worthy of mention is the reluctance of senior management to go beyond the two cylinder tractor and and the slow adaption of the rotary combine. How did they recover? By a hiring strategy of the best people from the land grant colleges of the midwest. And from these minds came the philosophy of building agriculture production equipment for producers rather than farm machinery.

This is how jobs are created, by making investments in the best, well educated people.

I believe we are losing sight of the many investments needed in our education systems and need to refocus.

Job, jobs, jobs.

After listening to Sunday morning talking heads, I heard little deviation from the script. Key words were small business, regulation and tax cuts. Nobody seemed to have any specific facts or examples. Just shallow spin.

I cannot resist commenting on the Barbie and Ken clones travel network to network who travel talk show to talk show with the same recording. Someone rewinds them and send them on with a new blouse or new tie.

My own experience says we have a new economic model, or to say it different, we are in a reset economy and the "noise" of old economic models aren't valid.

Since the 1980, we have two economic models emerge. They are the service jobs and Dot.com jobs. Neither of which added value to something tangible.

In April of this year Joan and I were attending a sales convention at Rochester Minnesota. When we arrived at our Hotel we were greeted by a two valets, one to park our car, the other to take our bags. Another valet was needed because the first did not know how to drive my 2010 Prius. We now have three non productive workers employed doing nothing of value.

Now reset the economy! Reduce the amount of valet types needed at this hotel. Where do these people find jobs? Their skill sets are obviously limited.

Recently on the online Wall Street Journal there was two front page articles, one about the increasing joblessness, the other about the inability to find skilled workers to hire. The Wall Street Journal could have reconciled these two stories into useful information but they too lack skill sets to do any meaningful analysis.

When there is a reset economy, there is worker displacement. This is very common in a dot.com industry where boom and bust is spaced by months not decades. Upon bust (bankruptcy) workers are displaced. If the only job they can find is one hundred miles away from their present residence they could have a problem. This would be compounded by having a home that loses its value. In this case we have a displaced worker must not only move their family for a new job, they may have to abandon a home. In this case the displaced worker has marketable skills but moving is a major endeavor. What is the solution?

Economic theory says labor is mobile. In fact government policy of promoting home ownership and its tax structure has promoted immobility. Eventually labor will move toward jobs by the young new workers.

But these young workers must have skill sets that are needed. The problem with the job market suffering on lack of skills and immobility will not be solved immediately. There are three solutions; attrition, education and retraining, and mobility. I don't believe these job issues have been fully addressed. We need good short term solutions. And we must realize that many low skill service jobs are gone forever.

Political Party? Culture or intelect?

Are political party affiliations determined culture or intelect. While my first reaction may be culture or intelect, is in fact both. Let me explore the paths that affect our political choices.

As we grow up in a family we take on the culture of our parents. This culture is based on the matching of two cultures and if the marriage is successful, a third culture emerges.

As a individual starts to separate themselves from the family, the intellectual pursuits again changes their political views.

For example as a student who would study the economic theories of Adam Smith on accumulated wealth, could alter ones political views.

One of the most interesting political changes is the South from a Democrat stronghold to a Republican stronghold while keeping most of the same philosophy.

Perhaps the more interesting question is why did these changes take place?

Governor of Minnesota

I am going to support Margaret Anderson Kelliher for Governor. To back up my decision I will make my first donation to her campaign of $100.

Why did I select her now over the other two fine DFL candidates? Issues and management! The issues are education and renewable energy. Her management is the appointment of John Gunyou as her choice as lieutenant governor. John Gunyou cannot be easily labeled politicly and has demonstrated he is a fiscal conservative.

One of the best demonstrations of good management is surrounding yourself with good people to compliment your skills. Margaret Anderson Kelliher clearly demonstrates this with her legislative record and the appointment of John.