President Obama was in the Triangle yesterday touting a new strategy for job growth. The multipronged plan comes from the advice of the President’s Council on Jobs and Competitiveness, a 26-member group populated largely by CEO’s of major corporations. The plan includes easier permitting and work visas, however the main thrust is on education and training. Unfortunately education is not the problem holding back America from expected productivity levels. The problem is seeded in a stagnant monetary system.

According to the Small Business Administration, small businesses employ over half of the private sector employees, produce 13X more patents per employee than large firms, and hire 40% of tech workers. Small businesses have generated 64% of new jobs over the past 15 years. Given that the GDP has been below its 30 year average for each of the last 4 years (an unprecedented dubious run in the modern era), it seems the key to job creation in this country is getting small businesses going. That cannot happen while banks are still sitting on cash.

While the Small Business Jobs Act has released some money into the private sector, it is largely an operation of the SBA and not by private sector lenders. Small businesses are still having an extremely difficult time securing funding for expansion and innovation, and business startups are extremely rare. Beyond small businesses, loans for new cars and for houses are still extremely difficult to secure even for those with excellent credit. The SBA can only back but so many cupcake shops. Private sector lending has to be in place.

“Investing in education” is, indeed, important for the long term outlook of America. However we have a short term problem that badly needs the correct solution. Releasing hundreds of thousands of “certified” factory trainees in this job market will only lead to huge increases of laborers seeking higher wages from jobs that aren’t there.

The president’s implication is that America has a talent shortage. In fact, there is a glut of unemployed talent. Where we need help is getting the banks to move their cash. Perhaps an increase of the Prime Rate would help. When banks can only get 4.5% on housing loans, they probably don’t have the incentive that they would have if they could get 7.5% or 8% on that money. Additionally the government needs to acknowledge these two rules of labor: 1) people create jobs and 2) they want to create jobs. The dirty truth to this, though, is that only certain people are the ones that create jobs. America’s economic woes will best vanish when those people have an easier time creating jobs. Burdening these people is only a recipe for a second dip. Trickle Down Economics is real, and what we are currently experiencing is Trickle Down Misery. As long as those who create jobs are miserable and lack confidence, those who don’t create jobs will suffer.

These are real issues. My stock broker has been fervent over the last 10 years about staying the course with the Long Term portfolio. When the Dow 30 closed at 6,547, a 54% drop over a 16-month period, in February of 2009, I continued to get letters about “staying the course”. Since that point the Dow 30 has returned to the 12,000 level, and much money has been made by savvy investors. Last week, however, I got a phone call requesting a meeting. It seems that there is an extremely strong feeling that the market is about to lose significant value again, and he advised pulling some money out of the market. “A 10% drop wouldn’t be surprising at all”. So why all the fuss on a long term portfolio if it’s much less that what we’ve just been through? (After all, I have to pay taxes on the profits from those shares). The scary factor here is that a quick recovery is not foreseen. When StayTheCoursers are scared, it’s time for us to be.

The problem, as it pertains to Raleigh, is that we just aren’t seeing a fertile new business market. The Downturn has changed us to a Derntown. While the economic malaise has eased pressure on the Teardown and Sprawl controversies, it also has severely hampered the downtown renaissance. Banks are simply not lending for creative projects, new restaurants, and construction of new housing options like we need them to. There is little interesting to cover with this blog when that is the case. It isn’t just this site, too. Only rarely do other local blogs present information that is even remotely interesting these days. The blogs need an economic revival, the local businesses need it, and the people need it.

Local governments can only improve the situation somewhat. We need cash we need it now. With a Jobs Commission that consists of only one person from the banking sector, is it any wonder that Washington doesn’t get it? As long as the president presses buttons that don’t solve our acute short and medium term problems, we should continue expect private enterprise to be short on Hope.