Google Chairman Eric Schmidt appeared on ABC’s “This Week” yesterday, and told Christiane Amanpour what the economy needs. In fact, he presented the ideas as if they were obvious truths — which they just happen to be.
SCHMIDT: The economy is, today, stuck behind the power curve. It needs a lot of encouragement. It needs not just something like the jobs bill but, also, significant government stimulation in terms of buying power and investment otherwise we’re set up for years of extraordinarily low growth in the economy and no real solution to the jobless problem.
AMANPOUR: But you say significant stimulus. Obviously, this is a political environment where the only real conversation is about cutting. Do you see any expectation or possibility of a climate for more stimulus?
SCHMIDT: Well, that’s a political question, but the current strategy is ludicrous. You have a situation where the private sector sees essentially no growth in demand. The classic solution is to have the government step in and, with short-term initiatives, help stimulate that demand. If they do it right, they’ll invest in income- and growth-producing things like highways and bridges and schools, new opportunities for the private sector to go then build businesses.
He went on to say, “Business can create enormous numbers of new jobs in America. All we need to see is more demand. What’s happening right now is businesses are very well-run; they have a lot of cash; they’re waiting for more demand.”
If it sounds as if Google’s Schmidt was presenting Democratic economic ideas as if they’re just common sense moves, reflecting the consensus view among those who know what they’re talking about, that’s because he was doing exactly that.
And incidentally, Schmidt happens to be right. The laws of supply and demand are not subject to Republican filibusters or repeal efforts. Conservatives may not care for this reality, but the private sector has the resources to expand, but doesn’t have the customers.
What Schmidt calls the “classic solution” is straight out of Econ 101 textbooks: during economic downturns, the public sector boosts demand when no one else can, keeping the economy afloat until it recovers.
Republicans have no use for any of this — when there’s not enough demand, the GOP argues, it’s best to take money out of the economy, rather than injecting capital into the system. When the private sector says it needs more demand, Republicans respond by saying the private sector will flourish with even less demand.
I’m glad Schmidt explained otherwise. Maybe some other business leaders would be kind enough to join him in speaking up.
