Mohamed El-Erian is the CEO of PIMCO, the huge California based money management firm. He recently wrote a column for Project Syndicate entitled Sleepwalking through America’s Unemployment Crisis. Worth reading.
The country now has an unemployment problem that is large in magnitude and increasingly structural in nature. … This is much more than a problem for the here and now. High and intractable unemployment has serious negative long-term consequences that threaten to become exponentially worse. … At its root, America’s jobs crisis is the result of many years of under-investment in human resources and the social sectors. The education system has lagged the progress made in other countries. Job retraining initiatives have been woefully inadequate. Labor mobility has been declining. And insufficient attention has been devoted to maintaining an adequate social safety net. … The US government has little time to waste if it is to avoid an even more protracted and entrenched unemployment problem. It must move now to address the problem’s sources through multi-year programs that range from educational restructuring and worker retraining to productivity enhancement and housing-sector reform. And it must do so while better protecting the long-term unemployed, many of whom bear little responsibility for their current, once unthinkable, and unfortunately long-lasting predicament.
El-Erian establishes growing the American economy, dealing with our long term budget deficit and narrowing the “already-large gap between the country’s haves and have-nots” as national priorities. (It is noteworthy – and refreshing – that as a business leader he includes narrowing the growing income divide as a national priority.) He then details that investing in human capital development and maintaining an adequate safety net are essential components in dealing with each. In essence he is making the case that allowing our human capital development (education and training) system to decline and weakening the safety net for decades is a major cause of the country’s current problems and that we will not fix them unless both become policy priorities
El-Erian is asserting that the country must make the American worker the focus of policy. As he writes: The issue is the scope and composition of unemployment in America – a problem that is yet to be sufficiently recognized for its increasingly detrimental impact on the country’s social fabric, its economic potential, and its already-fragile fiscal position and debt dynamics. One can only hope that political, and maybe most importantly, business leadership in Michigan and nationally move to this understanding of what really matters.