I get the sense that like most economists Schiller really doesn't know how to answer the question, "How would you fix it?" because his comment is prefaced with"it is really complicated". The first suggestion he makes is to spur hiring by the state and local governments with a thought to hire millions of teacher's aides and get them in the classroom. Interesting idea, but not realistic and not gonna happen. Also, creating more government agencies to waste money is not the trick.
I think it would be almost cleaner and simpler if all businesses were awarded 100% tax credits for all expenses related to new employees for a year or two. First, it would not involve a new or another government agency. Second, it would get businesses focused more on growing and utilizing a "no cost" employee.
Second, I'd keep all the Bush tax cuts in place for at least 2 more years. This would give us a few more years before uncertainty comes back into play.
Finally, I'd halt the Health Care Reform Act measures. Just to make things realistic and doable, I'd keep all items that have come gone live already, but would kill the rest of the bill making the 2014 date a non-event.
If a company would be in a position to hire today, they would have no reason to not hire based on uncertain economic times.
At around 8:33 in the video, Schiller discusses an uncertainty with CEOs and he says that they really can't describe why they aren't ready to move forward with growth plans. Normally I like Schiller, but it seems as though he doesn't want to state the obvious which is the Obama Administration's policies are damaging to business.
We should be worried about Schiller's thoughts on housing prices as he says that there is a real concern that prices could go down for the next 5 years based on the pricing curve that was in place over the last decade. It seems as though he doesn't agree with forecasters in his Case Schiller Market Survey. (15:45 in the video).
Finally, Schiller discusses Japanese style deflation around 17:25. My read on his comments here is that he thinks we are repeating the Japanese outcome (he didn't say it, I'm simply trying to discern what he is not saying). Also, this fits too with his statements about a bond bubble in his closing remarks in 17:40 where he tends to agree that there is not a classic bubble where folks are excited about the potential returns for an investment. He does seem a bit conflicted here because he does back off from that statement at the end.
There are some good tidbits in the interview overall, I like his analysis, but don't like his "solutions". I think they involve more of the same that you get from economics professors and Utopians rather than pragmatic business leaders. Jobs are the key to solving the problem, but government is not the mechanism for the implementation of creation with the exception of the tax legislation to get it going.
Enjoy - If the video has trouble loading simply click on this link to go directly to the hosted site (ROBERT SCHILLER WSJ)
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