Finance Column » Your Money This Week » Bye-bye to tequila dreams

Bye-bye to tequila dreams

By Gregg Fields ·
Monday, January 24, 2011
Posted 11 am ET

As a die-hard Jimmy Buffett fan, just the sound of "jobless prosperity'' resonates.

It conjures images of a lazy day in Margaritaville. Somebody grab the salt and the limes.

Unfortunately, there's apparently no such thing as a free liquid lunch. The term "jobless prosperity" is indeed being used a lot lately. It refers not to idle riches, however, but rather to idled workers in a strong economy.

The economy is strong? Who knew? But there's no denying the evidence. Corporate profits are hitting records. Banks on the brink just a few years back are now getting ready to write dividend checks. And the stock market is floating like Muhammad Ali in his prime.

In short, the U.S. economy is firing on six cylinders. The problem is, it has a V-8 engine. Jobs and hiring are still sputtering.

It always takes awhile for jobs to return after a recession, of course. But a number of economists have become concerned that globalization and free trade have permanently altered the labor landscape. Major U.S. corporations no longer necessarily need a strong American consumer to prosper. Their markets, and their operations, are increasingly overseas.

The scope of how much the world has changed was brought home last week, when Chinese President Hu Jintao paid a state visit to Washington. Once upon a time, leaders of developing countries came to Washington hunting handouts. By contrast, Hu Jintao was, metaphorically speaking, checking his portfolio. China holds $900 billion in federal debt. His country's biggest domestic concerns include inflation, owing in part to outsized economic growth.

It wasn't supposed to work this way. Economists sold globalization as a "win-win.'' One can't help but wonder what sports they played growing up.

Like a luxury train that has left the station, globalization provides quite a nice ride for those on board. Unfortunately, there are 15 million unemployed Americans back on the platform.

Perhaps the man whose company is the world's largest maker of freight locomotives can get things back on track. Last Friday, the White House created the President's Council on Jobs and Competitiveness.

It will be headed by Jeffrey Immelt, chairman of General Electric. Ironically, GE also announced last Friday that profits were up 33 percent in the fourth quarter, thanks in no small part to its trade with China.

Looking ahead, Immelt noted that much recent economic theory seems misguided, at least regarding jobs. "The assumption made by many that the United States could transition from a technology-based, export-oriented economic powerhouse to a services-led, consumption-based economy without any serious loss of jobs, prosperity or prestige was fundamentally wrong," he wrote in an opinion piece that ran in the Washington Post.

Say good-bye to Margaritaville.

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