View from Davos 2011: How Would Clinton Create Jobs?

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Christian Hartmann / REUTERS

Bill Clinton says unemployment doesn't have to stay high in the US

Bill Clinton wants to get you a job.

There is a debate about how much government can do to boost employment. If companies are uncertain about the economy, they won’t spend money and hire employees. Worse, if the unemployment problem is structural, then many Americans may stay out of work even when the economy recovers because they don’t have the skills employers are looking for. But the former President, disagrees with that assessment. He BAnd, surprisingly, the answer is does not revolve around more stimulus spending. Here’s Bill Clinton’s jobs plan:

The former President started out by saying we are in a difficult situation. The key lesson from the Great Depression was that you can’t stop stimulus spending too soon. It takes a while and it’s expensive for government to create jobs. And in the 1930s and 1940s the US went into a lot of debt. The difference, though, Clinton says, is back then America was able to finance its own debt. When the US sold bonds to build bridges, those bonds were bought by other Americans, who had the savings and felt they had the duty to buy Uncle Sam’s paper. That’s not what happens when America sells bonds now. Instead they are bought by foreign governments, namely China, to finance trade with the US, and continues to fuel the global imbalances, which could lead to inflation in Asia, and tepid job growth in the US.

So Clinton says stimulus spending is not the option it once was. So what should we do instead? Clinton has a four point plan.

First of all, he said we should emphasize exports more. This is something that Obama has talked about as well. One of the reasons, Clinton says, Germany has done so well is because it has done a much better job of penetrating the China’s market than US companies. It seems clear from what everyone is saying in Davos that the growth over the next few decades will be in emerging markets, so the US has to figure out how to sell into that growth.

Two, we have to restructure unemployment insurance so that it prevents job loss, rather than deal with after it happens. Clinton’s idea is to put a portion of the unemployment insurance premiums that workers pay into a trust that companies can draw on to avoid layoffs. Third, Clinton thinks we need to sign onto global climate trade treaties. He believes that if we were to adopt those changes in the US it would promote clean energy innovation in the US and create more jobs. Lastly, the former President said we need to reform our immigration policies. If we have a structural unemployment problem in the US, meaning that we have a mismatch between skills and jobs, then allowing skilled workers to come in from other countries might get companies to hire. Those people get jobs. They spend money. And that creates other jobs. Some of them may start their own companies, in the US, rather than where they currently live.

Of those, I think restructuring unemployment insurance is probably the most interesting idea and something that could get done pretty quickly. Obama has tried unsuccessfully to pay employers to hire workers through tax cuts. An unemployment trust would probably be a cheaper way to do it. Because keeping a worker that you would normally want except for the economy is a much easier thing to convince a company to do than getting them to add people they don’t think they need. And it is probably pretty politically viable. The idea that we want to pay for work, rather than bankrolling the unemployed is something that I think I could play for both parties.