There are dire forecasts for the winter in Europe. The forecasts aren’t about the weather, specifically, but more about the ability of Europeans to stay warm and European factories to operate when the temperature drops and energy supply problems reach a crisis point.
An article recently published in Fortune outlines the issues. Many European countries made the decision to rely on Russian natural gas as one of their primary energy sources. When it invaded the Ukraine, Russia provided 40 percent of the natural gas for the 27 countries in the European Union. Some European countries then responded to the invasion by stopping purchases of Russian natural gas, while others were cut off by Vladimir Putin.
Obviously, losing 40 percent of a primary energy source–natural gas is the second most popular energy source in Europe behind oil–puts a dent in your energy policy. And, as the Starks are fond of saying, “winter is coming.” Prices have skyrocketed to historical record levels. The cost of electricity has already tripled in some places, and governments are scrambling to reopen coal-fired and nuclear power plants that were shuttered in moving toward “green” energy. The EU countries also are looking to other, non-Russian sources, but they don’t yet have the infrastructure, such as pipelines and processing terminals, needed to use the alternative suppliers. Building that infrastructure can’t happen overnight.
That means there is an immediate energy crunch, and the experts consulted by Fortune paint a bleak and alarming picture of what might happen when the snow falls. They say that world energy supplies are so precarious right now that any increase in demand could cause even bigger price spikes, mandatory rationing, and mass shutdowns of factories and businesses, “devastating European economies with a wave of unemployment, high prices, and in all likelihood public unrest and divisions between European nations.” That’s petty scary stuff. Some European factories have already stopped or reduced operations, and some countries have already instituted some energy conservation policies to try to preserve supplies in advance of the winter. The rubber won’t really meet the road, however, until the cold weather hits and energy demand increases in response.
So let’s all hope that the European winter is mild, and our friends overseas aren’t left to shiver in the cold and dark. But praying for warm weather isn’t exactly sound energy policy. What has happened in Europe should cause our government, and every government, to take a careful look at their energy policies and focus on making sure that energy supplies are secure. That means reducing dependence on unreliable energy sources–like Russia–and taking steps like building nuclear power plants and pipelines to provide domestic sources of energy that won’t be turned off when winter comes.
The Taco Bell initiative is a response to a very difficult labor market for employers. With the current unemployment rate at historic lows — the product of a strong job market and lots of aging Baby Boomers moving into retirement, among other circumstances — there just aren’t many good candidates out there. So Taco Bell is going to test, in certain markets in the Midwest and Northeast, whether paying a $100,000 salary brings in a better crop of candidates. That represents a significant increase over the current starting salary for Taco Bell store managers, which ranges from $50,000 to $80,000.
It’s an effort to test the theory of “basic income,” and also an attempt to try to streamline Finland’s social welfare system, where benefits vary depending on a person’s status and change whenever the status changes. The concept of basic income posits that paying people just for being alive will make sure that no one falls through the cracks. And the Finnish government also is hoping that the experiment will provide some evidence of just what unemployed people will do if they are given money with no strings attached. Proponents of basic income hope that the money spurs unemployed people to start their own businesses and be more entrepreneurial. The skeptics expect that the lucky 2,000 Finns will spend a lot of time on their couches, watching TV and eating junk food.
I think it’s a really good — and useful — piece of work because it captures the frustration, depression, and rejection that productive people feel when they lose their jobs and cannot get hired somewhere else, despite making every effort to find a new position with a new employer. They want to work and know they could make a contribution, but they simply don’t get the opportunity. You can sense the angst they feel in quotes like this from one woman who has looked high and low for work without success: “Why is it that after five years of looking, nobody wants me?” Is it any wonder that so many become discouraged and simply stop looking — or take an early retirement?
As the Gallup report linked above indicates, there are many potential causes for this phenomenon. Some young adults, for example, may be helping to care for their aging or infirm parents. But deep down, we all know what the real cause is — the job market for young people is terrible, and many college graduates have obtained their diplomas at the price of a huge amount of debt. If you can’t get a job that covers the cost of housing, allows you to service your student loans, and leaves a little money left for living expenses, you don’t really have a choice. Inexorable financial necessity drives the decision. 
We need jobs, to be sure — but we also need to have people working and looking for work, which is why the 347,000 number is the more important one. 
In August, the economy added 169,000 jobs. It’s a mediocre number, following a series of mediocre jobs growth numbers. The unemployment rate dropped, but only because we don’t take into account people who have just stopped looking for work. As the New York Times story linked above reports, the number of people participating in the labor force — i.,e., either working or looking for work — fell to its lowest level since 1978, since the Jimmy Carter administration. And, the job creation estimates for June and July were revised downward.
Unfortunately, the economy only created 114,000 new jobs last month, which is just about that number of new workers who enter the job market every month. Although the reported jobs creation number was small, the unemployment rate dropped sharply — from 8.1 percent to 7.8 percent — because the number of people who said they were employed rose by 873,000.
In addition, Romney also released a summary of his taxes going back to 1990. The summary reported that, during the period from 1990 to 2009, the Romneys paid taxes every year, with an average annual effective federal tax rate of 20.2 percent. Romney has now provided information about 23 years of tax returns, including releasing the tax returns themselves for 2010 and 2011.
The President’s speech reminded me of President Clinton’s speech the night before in that it was heavy on brief references to a host of issues and policy concerns. The President mentioned a number of matters — job training, renewable energy, investment in education, climate change, women’s health, oil and gas exploration, and countless others — and then moved on quickly. The speech included lots of round-number goals (“100,000 math and science teachers” or “a million new manufacturing jobs”) and future dates (“over the next decade”). It was as if the President wanted to touch every conceivable base. It certainly seemed that he did so, but talking, however briefly, about disparate issues makes it more difficult to knit together and present broad, unifying themes.
The President sought to address the charge that he views more government as the solution to every problem. Not all of our problems can be solved by government programs, he said — but our problems can be solved. Thereafter, however, every proposal and solution he offered seemed to involve some form of government program, benefit, or subsidy. He talked about “nation-building here at home” through construction of roads and bridges, which sounded like a pitch for another “stimulus” effort. It’s tough for President Obama to argue that he isn’t for bigger government, because he obviously believes that, as he says,”government has a role.” That belief makes it difficult to convince him that some government programs don’t work and that government spending often is wasteful. Last night, at least, there was no talk of eliminating any specific programs or spending as part of a plan to balance our budget.
The Administration predicted that the stimulus bill would move unemployment rate markedly lower; that didn’t happen. It said we would have “recovery summers” in 2010 and 2011; that didn’t happen either. Its forecasts of budget deficits, the costs of legislation like the Affordable Care Act, the losses likely to be incurred as a result of the GM bailout, and the success of “green energy” investments in companies like Solyndra also have been way off base. (We can argue about why the forecasts haven’t been realized, and how much of the blame should be allocated to the Bush Administration, “obstructionism” by House Republicans, or other factors. My point is simply that the Administration’s projections have consistently fallen far short of the ultimate reality.)
These figures are often revised, and perhaps this announcement will be modified in the future. And 1.5 percent growth is better than flat-lining, or actual economic contraction, but that’s about the extent of the positive things you can say about this news. Such economic growth is measly by any measure. It’s not enough expansion to create real employment opportunities for the new people entering the job market — good luck finding work if you are someone who graduated from college this year — and it basically means that the economy is in a stall. We’ll just have to hope that the stall ends with upward movement, and not a nose dive into new, double-dip recessionary territory.
Webner House 