In time, we may see congressional approval of the $1.5 billion rescue of the Chrysler Corp. as a symbolic bridge between decades. Ford, in the 1980s, frustrating levels of joblessness may provide rhetorical justification for a host of dubious schemes -- Chrysler in the forefront -- that pretend to create jobs but have the pardoxical result of impairing the economy's employment potential.
We forget too easily that the past decade was one of astonishing employment growth. The number of the jobs expanded by nearly a fourth, from 78 million to 97 million. But, ironically, the policies that produced this superlative result will not serve well for the 1980s.
In effect, we had a last inflationary binge. Persistent budget deficits and relatively easy money promoted inflationary private spending, as consumers anticipated higher prices. At the same time, price controls on oil and natural gas artificially expanded consumer purchasing power and promoted energy waste.
So we inherited a legacy of tight energy supplies, tight money and tight budgets. Without threatening economic collapse, these conditions imply lackluster expansion and fewer new jobs.
That of course, matters. One great achievements of the 1970s was the absorption of much of the "baby boom" generation into the work force. In the past 10 years, the working population (18-64) rose sharply, from 56 to 61 percent of the total. Yet the economy accommodated both this influx and a simultaneous massive increase in working women.
Things may not be so easy in the 1980s. Although the biggest part of the baby boom has now passed, normal population growth demands large numbers of new jobs. Even, if, as some demographers believe, a new baby boom retards the growth of working women, maintaining a 6 percent unemployment rate -- nothing spectacular -- will almost certainly require 15 million to 20 million new jobs.
Given the likely economic climate, the odds of achieving this growth are even, at best. Jobs may be at a premium and, in this context, the Chrysler rescue may be become a harbinger. To see its passage as a triumph of Big Business is to misread completely what happened. Rather, congressional approval demonstrated the power of a loose and ill-defined political and intellecutal coaltion among labor leaders, local officials and community organizers.
They want increased government intervention to preserve jobs against a variety of threats: imports, general industrial decay and economic slump. The basic argument is that weak regions and localities need protection. The proposed remedies include import restrictions, government grants or loan guarantees and "community-owned" or worker-managed firms, usually assisted by government.
When private firms seek government help -- as steel firms have done against imports or as Chrysler did -- they join the coalition. But their participation is secondary and spotty. Business is as often the target of the proposals; one common suggestion, for example, would restrict the ability of firms to close uneconomic plants.
People increasingly crave stability as they grow older, and, with the average age of Americans rising, the popularity of these schemes may gain. Already, governors and local officials in the Northeast and Midwest argue that industrial shutdowns threaten their regions. In the Chrysler case, the Treasury Department contended that the public costs of the firm's bankruptcy -- increased unemployment benefits, food stamps and lost tax revenues -- would far exceed the $1.5 billion federal loan guarantee.
Though superficially appealing, most of these arguments either involve sloppy reasoning or do not work as advertiesd. Comparing the "public costs" of plant shutdowns with the investment needed to keep them open is bad logic for at least two reasons: first, many of the public costs quickly disappear as workers find new jobs: second, the comparison ignores the alternative (and probably higher) benefits of investing the funds elsewhere.
Or consider the perverse effect of the Chrysler rescue. Without the prospect of huge federal help, the United Auto Workers would probably have agreed to a sharply reduced wage package as the alternative to bankruptcy. Such concessions would have tended to keep cars prices down and production and employment up. But instead, company and union appealed to Washington. Consequently, wages will still rise substantially; the company will take on more debt, car prices will rise and fewer will be sold. The bill is pro-inflation and anti-jobs.
In the same way, many job protection schemes simply provide public subsidies for inefficiency and privilege. Inevitably, this means higher costs, more inflation and (usually) less output. Anti-inflationary policies must be more stringent and, therefore, the prosect of generalized job expansion is more limited. In the name of protecting jobs in one locality or industry, these plans may have the opposite, but invisible, effect else where.
Between 1967 and 1978, for example manufacturing employment rose only 0.9 million, to 20.3 millon. One Washington-based "public interest" group cites this lack-luster growth as evidence of weakness and the need for federal protective measures. Left unmentioned is that, on this slim increase in jobs, industrial output rose more than one-third in those 11 years. Until recently, increases in manufacturing productivity have been relatively good. That sector's large expansion of output has permitted the significant irse in services and service jobs -- including government jobs -- of the past 20 years.
But continued vitality requires the closing of old plants and replacement of declining industries with new ones. To say that this never involves human hardship is to talk nonsense, but no more than to imply that all economic change creates permanent suffering. The best way to east the job creation problem of the 1980s is to keep the pressure of firms, unions and workers to maintain their own competitiveness. Transferring more economic decision making to Washington, in the name of strengthening local economies, will not solve problems, but only shift them.