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August 09, 2011

What Government CAN do to Create Jobs

"It's time to go big or be sent home," says Andy Kessler writing in The Wall Street Journal. He continues with six big ideas, none of which involve throwing money at the problem or hiring more government workers. If you have an online subscription to the WSJ, you ought to read Five Ideas to Kick-Start Job Creation: "Entrepreneurs don't want government money. They want the chance to invest their sweat equity" now. The ideas are summarized below along with some comments from me and one additional idea.

Free spectrum: Andy means the radio spectrum, lack of which is hindering even more development of wireless apps and perhaps a whole new generation of innovative services. Look at what WiFi and Bluetooth have made possible not to mention smartphones. He'd free up spectrum by allowing current licensees to sell what they have, instituting a "use it or lose it" rule, allowing multiple users of the same spectrum (aka whitespaces) and/or repurposing spectrum government has reserved for its own use. Remember, tech companies are sitting on piles of capital; they need to see opportunity to use it. Great idea, IMHO; jobs created won't only be in high tech since communication is an enabler.

Disease diagnostics: "Have the Department of Health and Human Services declare that Medicare will pay for any diagnostic test or device that can be proven to save money over five years…" Although I agree that invention and deployment of early diagnosis technology is a huge opportunity, I'm skeptical of running this through the HHS bureaucracy. Perhaps better to streamline the approval process for new technology (get government somewhat out of the way) and reform the dumb implementation of privacy requirements which make it very difficult to use medical information well.

End the mail monopoly: Andy says this will speed alternatives of automatic bill payment and innovation by USPS and FedEx.

Frack this: This is probably the biggest of all Andy's big ideas. Cheap energy can and will create manufacturing jobs in the US even without a supply of ultra-cheap labor. His method: "Declare all hydraulic fracturing legal with the caveat that drillers put up a bond equal to the potential cleanup cost of environmental damage." Andy is rightly concerned that, even though – thanks to hydraulic fracturing – shale gas has grown from 1% to 25% of our natural gas supply in the last decade and natural gas prices have been falling while other energy prices rise, "environmentalists are pushing to close down this booming industry."

Government platform: "All government agencies should be required to publish their own APIs by the end of the year. What will happen next is a sea of programmers will emerge to write iPhone apps and other code to integrate government functions into our everyday lives." Good idea but ain't gonna happen anytime soon. What Andy doesn't know because he hasn't worked inside government is that many of these apps are still running on mainframes from 80s and 90s. Even more are batch COBOL monstrosities with no prospect for supporting realtime apps. First got to get government applications off legacy platforms and into the cloud where they belong.

Rental society: Andy is suggesting creation of a six-month foreclosure amnesty during which you can initiate foreclosure proceedings on your own underwater mortgage and not have the foreclosure affect your credit rating. He is certainly correct that this would result in "exactly the price discovery that the finance sector both dreads and needs to move forward." He predicts an immediate boom in web-based rental and auction sites. Rather than suppress credit records, I'd prefer ending the policies which allow banks to avoid full write downs on underwater but not foreclosed mortgages and the series of bailouts which have allowed banks to avoid banks moving to either rapid reduction in principal amounts or foreclosure.

Bonus idea – Make America shovel ready: (this one from me and not from Andy). Stimulus demonstrated conclusively that nothing in America is shovel-ready. Government can't get out of its own way when it comes to major infrastructure projects. Endless appeals delay not only government but private sector projects indefinitely making financing impossible to line up and greatly increasing cost. The private sector is sitting on hordes of cash. Much of it would flood into construction costs and finance needed infrastructure IFF projects could get final approval (or disapproval) quickly and predictably. My proposal: 1) set a two-year schedule for all government permitting; 2) require anyone appealing a permit which has already been granted to post a bond equal to the anticipated cost of delay, such bond to be forfeit if the appeal fails.

Related posts:

Go White Space, Young Person, Go White Space

Confessions of a Stimulator

Natural Gas Disrupts the Energy Industry

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