Thursday, November 6, 2008

It's Back! U.S. Chamber of Commerce Job Multiplier does Rip Van Winkle

In the late 21st Century a common economic development tool existed, the Job Multiplier. It projected the impact of new jobs on a community. Every new $1 of wages washed its way through the local economy, changing hands in boat lifting fashion. However, this measure tired from heavy use and needed to rest under a tree.

A young strapping "Dollar Extender" equation, took over for the exhausted Job Multiplier. The new formula calculated how much farther a $1 went, due to cheap items made in Asia. It assured people the job multiplier no longer applied. That old number was simply inert, asleep and harmless. A new century saw millions of U.S. jobs go to China, India, and Vietnam, to low wage environments. The dollar extender benefit and corresponding corporate profit boost meant all was well in America.

With Chinese apples crowding out our domestic version, an unharvested Red Delicious recently fell. It struck the Rip job multiplier equation square in the head, rousting it from a decade long sound sleep. The Van Winkle formula found job loss a huge concern for his country, as a recession deepened. He went right to work.

Adding machine tape flying, he calculated bankruptcy of a big three automaker would cause a projected 1.5 million job loss. Given the strengthening of the U.S. dollar, the Dollar Extender pumped his fists. His strength enabled people to buy more. An Olympic level competition seemed just around the corner. But the U.S. Chamber of Commerce benched the Dollar Extender.

Mr. Chamber said, "It's not your fight. The U.S. government needs to intervene to save good paying American jobs." Yes, jobs like the ones the Chamber previously watched disappear.

One intervention involves GM buying Chrysler, effectively bailing out Chrysler's private equity owner, Cerberus Capital Management. Cerberus Chairman John Snow is an ex-Treasury Chief. Hank Paulson replaced John two years ago. Is the plan intended to save workers or their high dollar, politically connected investors?

The race is on to influence the waning days of the Bush debacle, to position for the incoming Obama administration. But the Job Multiplier is now employed...