Chrystia Freeland

“Jobs! Jobs! Jobs! What can we do?” was the title of a panel Chrystia moderated at the New York Forum last week with members of President Obama’s Council on Jobs and Competitiveness.  The Council has been tasked with jump-starting the U.S. labor market and recommending changes to the nation’s education and training initiatives, and each of the panelists touched on a different aspect of the Council’s findings.

Laura Tyson, a former chief economic adviser to President Clinton and an economist at the University of California, Berkeley, stressed that infrastructure projects were the low-hanging fruit of job creation.  She argued that $1 billion in infrastructure investment could create between 11,000 and 30,000 jobs.  Many infrastructure projects have been approved and are shovel-ready — the only thing that’s holding them up is the Department of Transportation’s lengthy permitting process, Tyson noted.

Valerie Jarrett, a Senior Advisor to President Obama, added that in order to offset the rise in structural unemployment, investments in education and worker placement must be made sooner rather than later:

The President is convinced that if we’re going to win the future, we have to continue to invest in education; we have to invest in innovation; and we have to re-build and build in order for us to be competitive…  We also want to make sure that the companies who are here have the resources they need to compete globally, and that means having a trained workforce.  That means having a workforce that’s trained for the marketplace of tomorrow, not the marketplace of yesterday, and so focusing on science and technology and engineering and math and partnering with our community colleges and working with the private sector so they actually design the curriculum and offer a job when you complete a program.  So for the people who are currently unemployed, let’s get them into those programs, so when the opportunities arise because demand does increase there is actually a job waiting for you on the other end.

AOL co-founder Steve Case emphasized entrepreneurship in his remarks.  Case brought up a study from the Kauffman Foundation that found that high-growth, entrepreneurial companies created 40 million jobs in the past 25 years — that’s roughly all the net job growth the U.S. saw during that period.  Nevertheless, Case laments, the nation has taken its entrepreneurs for granted and hasn’t recognized that entrepreneurship is the “secret sauce” that flavors the U.S. economy:

Robert Wolf, chairman of UBS Americas, addressed the difficulties that small businesses facein getting loans .  On the credit demand side, uncertainty over the economy’s growth prospects have halted new investments, Wolf argued.  On the supply side, credit is constrained because one thousand banks have vanished in the past few years and because those banks that survived have been hit with higher capital requirements. One possible policy the federal government could adopt to remedy this would be to expand Small Business Administration loan guarantees. Case noted that they have a long history in allowing budding enterprises to grow and cited Under Armor, which would have never become the success it is today without an SBA loan guarantee.

Last week at Davos, Chrystia anchored an hour-long daily talk show that featured many of the World Economic Forum’s most exciting participants.  Last Wednesday’s edition featured a segments on frugal innovation in India with two top Indian businessmen; the state of trust in business and government today with a behavioral economist and two CEOs; an appraisal of President Obama’s State of the Union from two pre-eminent economists; and more.  Here’s the video and the guest list:

* T.K. Kurien, CEO, Wipro IT

* Richard Edelman, President and CEO, Edelman

* Dan Ariely, James B. Duke Professor of Behavioral Economics, Duke University Fuqua School of Business

* L. Kevin Kelly, CEO, Heidrick & Struggles

* David Schlesinger, Editor-in-Chief, Reuters

* Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance, University of Chicago Booth School of Business

* Laura D’Andrea Tyson, S. K. and Angela Chan Chair in Global Management, University of California-Berkeley Haas School of Business

* T.P. Chopra, CEO, Bharat Light and Power

* Dan Gross, Editor, Yahoo! Finance

* Susan Glasser, Editor-in-Chief, Foreign Policy

* Paul Collier, Professor of Economics, Oxford University

Posted by Peter Rudegeair.

As President Barack Obama’s new lieutenants settle into their offices in the White House, talk has turned again to the revolving door between Washington and Wall Street: William Daley, the president’s chief of staff, arrives from JPMorgan Chase, where he earned millions; Gene Sperling, the new top economic adviser, collected $887,727 from Goldman Sachs for advice on a charity project on a recent hiatus from government.

There’s nothing new about this tradition – indeed there was a time not so long ago when it seemed as if actually running Goldman Sachs was a prerequisite for serving as Secretary of the Treasury. But the triple whammy of the financial crisis, the trillion-dollar government bailout and the return of lavish bonuses to many on Wall Street while unemployment in the United States is stuck above 9 percent has cast the intimacy between political and business elites in a new, often more jaundiced light.

To many U.S. business people, and to centrists in both parties, the concern that Mr. Obama’s White House is too close to business sounds absurd. Far from being a dangerous example of an overly intimate relationship between business and politics, Mr. Obama’s recent appointments, particularly of Mr. Daley, are seen as a welcome sign that the White House will work harder to bring business onto its side.

“We have a private, market economy. We don’t believe in the government being the source of economic growth. The whole thing depends on business,” said Laura Tyson, a business school professor at the University of California, Berkeley, and head of the Council of Economic Advisers under president Bill Clinton. “Starting from the view that business is a vested interest is not a healthy place to begin. Here’s the irony – you sit in a boardroom and you talk about making a company profitable, and then in the press there is a criticism that ‘these guys are simply maximizing profits,’ ” said Ms. Tyson, who is on the board of Morgan Stanley. “There’s this ideological inconsistency. We want business to succeed, but we also don’t want business to succeed. The point is that we don’t have an alternative economic system.”

Mark Gallogly, co-founder of the private equity firm Centerbridge, one of the President’s early supporters on Wall Street and a member of his economic recovery advisory board, said the fiercely competitive global economy made it more important than ever for government policy to be focused on making the United States an attractive place to do business.

“The goal is to provide incentives to create jobs here and not someplace else,” Mr. Gallogly said. “There are a lot of other markets where companies can invest.” All of which sounds obvious and unobjectionable, especially in a country where “socialist” is a term of derision, not a mainstream political party. So why are Mr. Daley’s and Mr. Sperling’s Wall Street paychecks a point of contention rather than a source of pride?

Raghuram Rajan, a professor at the Booth School of Business at the University of Chicago and a former chief economist at the International Monetary Fund, said one reason for popular suspicion of the ties between policy makers and financiers was the 2008 bank rescue.

With hindsight, he believes Washington should have demanded a higher price for saving Wall Street: “They should have put far more restrictions on the banks. They should not have let them pay dividends, for example.” Close ties between Washington policy makers and Wall Street banks are relevant to those decisions, Mr. Rajan argued, because of the human instinct to worry most about those we know the best.

“We have had growing inequality for 25 years,” Ms. Tyson said. “It is not just that the top has gone up; everyone else has gone down. And we are going to see even more inequality coming out of the crisis.” Mr. Gallogly, who welcomes what he sees as a more explicitly business-friendly tone from the White House, argues that “this president gets the equation that if business is successful, America will be successful.” The problem for Mr. Obama, and a source of the suspicion of policy makers with business ties, is that for many Americans, that equation has broken down.

“Is the anger simply because the elite has been found to be incompetent?” Mr. Rajan asked. “Part of the job of the elite was to keep everybody happy. By all means accumulate your stuff, but keep me growing at 3 per cent.” That may be the heart of the tension between America’s elites and everyone else. After all, rule by a moneyed, mutually connected establishment is nothing new. But to stay in charge, those insiders need a way to deliver to the whole country, not just the narrow sliver smart and lucky enough to shuffle between the C-suite and the Oval Office.