Job creation: courtesy of your government

Carla Axtman

Team Obama's demoralizing economic messaging campaign that appears to be cooked up by a bunch of Stockholm Syndrome victims working in the White House communications shop would be wise to take note of this:

The dozens of jobs being created to build the Shepherds Flat Wind Farm are economic manna for distressed Gilliam and Morrow counties.

“We basically have zero industry,” says Gilliam County Judge Pat Shaw. “This is a big boost to our economy.”

At least 100 jobs in construction and related industries are expected to be created over two years. Jack Ingram, the owner of Arlington-based W.I. Construction, a concrete provider, was awarded a $23 million contract to provide road materials. “It’s an absolute saving grace,” he says. His sales in 2009 decreased 94% from the year before.

W.I. Construction started work on March 3. Ingram expects to provide 25 to 30 jobs and subcontract with three local businesses. His normal staffing level is seven.

Not only is the government directly creating jobs in Gilliam and Morrow County, it's handing out paychecks that will go to local businesses such as grocery stores, gas stations, clothing stores, taverns, etc. It's stimulating the private sector economy.

More government created jobs stimulating the private sector economy:

PCC awarded $4.8 million in federal grant money to help train health care workers

Newport welcomes NOAA

(h/t: Betsy Salter on Facebook)

So as you watch our Governor and our Legislature slash the state budget, shrinking payrolls and sending more workers to the unemployment line, think of all those people who can no longer patronize private businesses in Oregon.

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    It's a square peg in a round hole asGov't stimulus continues to invest in the old Industrial economy--it is only a temporary stop gap. What's needed is far more stimulus for the Knowledge/Service economy which is fundamentally different.

    Much as we once changed from an Agricultural economy to an Industrial--the shift to the Knowledge/Service economy is going to see a major transformation of what we call work. Sadly, neither government or business is helping to prepare for this shift.

    We will need to measure and monetize new and different businesses. If we would do it, we'd end up with the most vibrant economy ever--but the current folks in power rode the crest of success on the last gasp of the Industrial and have no idea how to make the switch.

    More and more of our energy needs to focus on building the new.

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    What specifically does the "Knowledge/Service economy" look like, in terms of businesses and jobs? Based on the type of government created jobs cited in my post, I'm wondering why they wouldn't be included.

    The first is a green energy wind farm being built and maintained in Gilliam and Morrow counties. Second is training for health care workers and third is the National Oceanic and Atmospheric Administration's Marine Operations Center for the Pacific. All of those things would seem to be knowledge-based.

    Which "new and different businesses" would you like to see monetized? Who would be the entity that monetizes them?

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      Yes, all of them could be included in the Knowledge/Service economy. And notice however that with the exception of the potential of the wind farm energy production, the other two do not generate a 'product' and their funding comes from in many cases, the government sector. This is a big issue for the Knowledge/Service economy because many of the fields where growth will occur are not traditional 'market sector/unlimited growth and production' businesses.

      The largest areas of the next economy will fall into education, medicine, finance, entertainment/creative work, local community economy/work in-home--human capacity development. More local food systems and quality of life services.

      The difference here is that we're used to an 'unlimited growth and production = profits" measurement system--attached to a debt system that needs ever more growth to keep the debt payment possible. Many of the new services businesses don't quite fit into this--education isn't a traditional 'growth' business but we will need/want more and more of it. Human capacity development professionals will be key in the next economy and yet we're not accustomed to paying for it at the in-home' level and yet, if we did, we could fuel a new employment sector to replace many who have seen their Industrial sector jobs vaporize forever.

      Medicine for example is a huge business sector for the next economy (everyone I know wants to become a nurse!). But its a Catch-22 because the funds to pay for it is now draining other businesses to the point of no return almost. It's projected to be about 20$ of the GDP yet, if it is killing other businesses in order to fund it, do we want this to be the growing sector it is? Yet, we have to have medical care.

      We need to measure beyond the GDP and include things like Gross Household productivity, Gross Wellness/Health productivity, Gross Natural environment productivity--because once we include these in our measurements, we then are able to monetize them as viable entities within a thriving/consciously designed Knowledge/Service economy.

      As to 'who' would monetize--Well, at the 'local economy/State level', a State bank, working cooperatively with small banks and credit unions could help with farming, small businesses that bring services that benefit the local economy and student loans for college which of course is a huge funding source ultimately for the college/staff etc.

      At the human capacity development professional level--it could be public/private foundations, State bank, and even corporations who pay non-profits to hire this important employment area because they know it is a huge investment in their future too.

      I could go on but hope this helps give more clarity.

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    Last I checked, the Shepherds Flat wind farm is a private project that is being built to supply power to Southern California Edison. I believe it received state of Oregon BETC tax credits, but it isn't an example of the government "directly creating jobs..."

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      Yes, but it is a good example of what will be a major source of funding for the Knowledge/Service economy--public-private partnerships or cooperative support to get things off the ground. This is why a State bank would be useful--it can assist small banks/local banks and Credit Unions to help facilitate these types of new businesses with low interest/longer term credit because while the State bank needs to be paid back--it isn't obsessed with quick turn around/please the stockholders every quarter that traditional banks must deal with.

      I think in the future, we will see many new non-profits doing work that was formerly government areas. It still enables some public funding but adds the private incentives too.

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    I want to address this idea of a new economy replacing an old economy. Although a larger proportion of the state/national G(N/S)P will come from the "Knowledge/Service Industries" I think it folly to try to replace manufacturing/industrial jobs with K/S jobs, as opposed to trying to grow both. It assumes an equal access to education and even equalized individual talent and capacity, which frankly will never be the case. We are stronger as a whole when we maintain a spread of industries (jobs) that need a more diverse set of talents, capacities and abilities, not to mention we will have a happier population when all can find work they enjoy. Moreover I find the entire concept of globalization allowing complete specialization to be quite dangerous. It may seem cool to imagine a world wherein say, China or Indonesia does all the heavy and light manufacturing and we do all the thinkin' work and idea creation functions (Metropolis anyone?). But if we created such a world wouldn't the countries and societies relegated to manufacturing what we think up eventually come to find us a bit redundant? Case in point, "white collar" call center work: pure service based function= easily uprooted, easily outsourced and more cost effective done locally as their middle classes develop. As example, think of the human body. There's not a single cell making organ that creates all the new cells and ships them to where they need to go in the body, each organ creates its own replacement cells. This is because if you ever got punched in the "cell-maker" you'd be done for. There is a lot of economy-of-scale value from designing in specialization functions, but too much centralization is a recipe for disaster.

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      Actually 'local focused' will become a huge driver for the Knowledge/Service economy' future.

      As well, while you're seeing the dichotomy of Industrial/manufacturing being done in one area and Knowledge/Service in another, I would suggest that this too will change in another 10 years. Already India/China are recognizing the downturn consumption (which will continue downward on many levels) leaves them far too vulnerable as well as those doing the work recognizing that they too don't want to work for those low of wages. AND more and more technology will come in to replace even these workers...

      So, I would say that we will be seeing a global shift into Knowledge/Service as well. The fact is that as humans become ever more conscious and educated, redesigning for a quality of life world (including humans, animals, air, land, water, earth) vs. the old quantity of stuff world becomes ever more possible and enjoyable.

      Right now we're in Knowledge/Service 1.0....we're about to make the next step to Knowledge/Service 2.0. I think Oregon could be a leader in this if we can collaborate with politicians, business, education, non-profits and gov't to reshape our State's economy in K/S 2.0 and show others how to do this. One big piece of this will be exploring new measurement critiera of our economy as well as financing structures. All of this is very doable.

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        I love your optimism. In a very real way I think that it is an essential ingredient to finding the creative answers we need to right now. I do worry that Oregon competes with so many other states and nations for these jobs/industries (as we should) because they are clean, high paying and have a generally high economic activity multiplier, but the flip side is that they are also highly mobile, first-cycle downsize targets and traditionally short term to a degree (due to the length of the research and development phases compared to the implementation phases, i.e., manufacturing and support). As economic development goes, I think it may offer some insulation from these forces to also build up our "old industry" capacities at least as robustly. Manufacturing hard assets (machines, buildings, etc.) are somewhat less mobile and require a specialized learning curve to use in many cases that is hard to transfer down to a less educated (read cheaper) workforce. This means their development offers a layer of protection from the speed of economic down-turns, if not the overall effects. The impact of the "Free Trade" and globalization policies championed by Senator Wyden and the whole host of multi-national concerns on Oregon's job numbers is, empirically, undeniable: we have replaced fewer jobs then we have lost, and those with lower paying jobs in the services industries. One of the new measurement criteria I would hope we include will be a stratified understanding of our economic base in terms of how rapidly they wilt in the face of economic hardship. Too much Business to Business activity for instance, when traditionally during a down-turn planners want to concentrate on the revenue generating consumer focused activities.

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    Government subsidized jobs are not job creation, simply wealth transfer. As such they make the country poorer, as capital is diverted from more productive uses to build projects that do not make economic sense on their own without subsidy.

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      Rob, this argument assumes no multiplier on government sponsored activity. As example consider the TVA. How much more private sector activity was possible after the valley was electrified? Or maybe the Internet, who's original development was paid for be government dollars. Can you honestly say that no private sector opportunity was created by these projects, or that they didn't, in a macro-economic sense, pay for themselves? and there in rests the answer: Private industry can create more wealth (capital) in the micro-economic realm, but large scale macro-economic improvements in wealth creating capacity must sometimes be be borne by the collective assets and resources of the economy as a whole (read: government spending). Again, as example, take the federal highway system. Imagine it was a for-toll private enterprise and every business had to pay a per mile fee, instead of the costs spread so much more widely across the whole of the population via federal taxation. How many start-up businesses could absorb that initial input cost? It would, as a purely private endeavor stifle economic activity. So the real litmus test isn't "is the money from private or public sources" but is the activity to by paid for micro-economic, or macro-economic.

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        Good points, Brian.

        If you look at the 'investment in infrastructure' in the Industrial economy--you'll see all sorts of gov't infusion of dollars into roads, electricity, transportation system etc., These funds brought us out of the 1929 Depression (and the other, largest government infusion of $$ that helped us out of the Depression was the GI Bill--this provided many of the consumer dollars for housing and all that goes with it--new couches, cars for the suburbs etc)

        And so, here we are again. The infrastructure for the Knowledge/Service economy is very different from the Industrial/consumer economy--but if we would invest in it (education for the 21st century, medical, environmental restoration to name a few), we would come out of this Great Recession with a new economy and thriving, vibrant one at that.

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          Sorry to disagree Ann, but massive public works projects at the federal level did not bring the country out of the 1929 Depression. the bombing of Pearl Harbor in 1941, 12 years later and the US involvement in WWII is what pulled the country out of the Depression.

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            Yes, because World War II was all private sector and no government subsidized jobs. (shakes head)

            Do you even think before posting?

            BTW, we were already well on the road to recovery when Pearl Habor was attacked. Or perhaps you are under the impression that no ship building under land-lease occurred and no jobs in Portland were created building liberty ships, etc.

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    Carla, I don't think the state government has the same freedom of movement as the Feds, because we have to have a balanced budget. Am I wrong about this for Oregon?

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      Exactly. That the state can't rely on direct deficit-spending counter-cyclical stimulus and is reliant on, and why Federal action to aid states is, so critical in a down-economy.

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      That's correct, Paul. Oregon has a balanced budget requirement.

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    Ok. Now I've got it. The vanishing industrial base and the meager few workers who produce an actual product will have to pay more taxes. (say 300 or 400% of what they pay now), This will fund our schools, nurses, law enforcement, and defense.

    Since $10,000 per student per annum is insufficient to produce the product called "a child educated sufficiently to be able to compete with--say--Bangladeshi students", we'll need to go back to the four or five dozen (really stupid) guys still wearing coveralls and hit 'em for some more tax money.

    Itsa plan.

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    If the answer to our woes is government-created jobs, then let's pay people to dig holes and fill them up again. Of course, that makes no sense.

    Unfortunately much of the government 'stimulus' spending is not much better than this. A vibrant economy does not have to be 'planned' by government. We would be better off to get government out of the way. Let people produce what other people want, be it goods or services. Individuals will choose the best path for the economy to take.

    Yes, there are some things which may make sense for the government to fund. Things which take large amounts of capital with ROIs that extend over a large period of time. The TVA is probably a good example of this. Unfortunately the government has a pretty feeble track record for evaluating which projects are actually valid investments and which are boondoggles.

    I look forward to government leadership that has some business sense and takes a practical approach to infrastructure investments, but I think we still have to wait a while.

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      Nobody is talking about a planned economy, so please desist in your slaying of vast armies made of straw.

      You do realize that getting out of the Great Depression consisted largely on not just "digging holes" but using explosive in the form of bombs to make holes, blow up bridges, Axis Power tanks, etc.

      Here's an idea, let's fill in pot holes for starters, I'm sure we haven't run out of those. We don't even have to kill people either.

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        Perhaps I misread the Knowledge/Service industry comments. Sounded like a call for planning to me.

        Yes I am aware there was a World War, we (and others) bombed a bunch of people, and then we helped build them up again. I guess you could say that was a good investment.

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        mitchell, thanks for adding emphasis to my point. Yes, I think quite clearly prior to posting.

        Lend-Lease did some good for the economy, bu actually very little due to FDR's rationalization boards which dictated everything from salaries to the design and size of chicken coops.

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          Except nobody is even coming close to suggesting, let alone putting in place price control boards, etc.

          And you miss the elephant in the room I was (albeit acerbically) pointing out to you which you missed. World War II was the largest public works project in human history in which the U.S. Government spent over 125% of GDP for nearly a decade, which is what got us out of the Great Depression and led to the full-employment and a white-hot economy. Which is why I asked the rhetorical question I did about wether you were even thinking before posting.

          Because your own statement about World War II, validates exactly the point which utterly destroys the anti-stimulus economic argument you (and the GOPers) trot out.

          Furthermore, the New Deal programs were having an immediate positive economic effect and were making great improvements on the economy until FDR listened to deficit-hawks, cut spending in 1937 and thereby tanked the economy again.

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    Okay, but here's what I think we can agree on--that public and private has been intricately dancing with each other for decades.

    The GI Bill was instituted because after WWI, millions of soldiers came home all at once to no jobs and it created chaos. The GI Bill was quickly put together after WWII to prevent another such catastrophe.

    What emerged from that 'stimulus' was tremendous growth in the private sector across the board. It has led to the last 60 years of expansion in the private sector but it didn't start with the private sector.

    Today a global system is so complex that to simply say we can 'let private systems emerge based on what people want' is not the best use of our brains, our technology etc. That's one of the great by-products of the Industrial economy--we've been adding data/technology capacities and we need to use this.

    The planning/designing of a Knowledge/Service economy 2.0 is using the knowledge accumulated over the last 100 years to plan for the future.

    As I mentioned in a different 1905, as we were coming out of a series of 13 recessions in the 1800s. The Industrial economy was just taking off and gov't/business leaders had 3 options at that time. 1. Let things alone and see what happens. 2. Increase 'insatiable desire' to fuel a consumer economy. 3. Build a whole life economy--that was a balance of needs of social, environmental and business to create a thriving economy.

    In 1905...#1 had already proved useless. #2. looked fabulous and was ready to roll #3 was not yet possible--there was no way leaders of that age could see resources running out, a 7 billion population, environmental stresses etc. So, #2 was chosen. I'm pretty sure if you and I were there then, we'd have done the same.

    In 2005, we find ourselves confronted with the same dilemma. Only now, Option #3 is possible. We have the data, we have the technology, we have the systems that could be designed. Right now, we're trying to jump-start #2 again--it isn't going to work this time. I'm suggesting we work towards #3.

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    Just to clarify and differentiate, I'm all over the good work that Ron and others in the delegation have been doing at Shepherd Flats, Newport and statewide to rasie the profile of cleaner energy and good jobs.

    My comment was directed at this idea that's been kicking around for a decade or so about redesigning the world economy. Might be a good idea, and certainly no less practical than my favorite of terraforming Mars by flying in giant ice balls in from the asteroid belt and crashing them onto the surface of the planet for a couple of hundred years.

    Just sayin'

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