Thursday, July 30, 2015

US needs more gov't spending, says Google boss

The private sector won't save the US economy anytime soon; the government "needs to do something now."

US needs more gov't spending, says Google boss

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“Where is the demand going to come today if it’s not from some form of government action?” asks Google Inc. chairman Eric Schmidt in this Bloomberg story. “The government has big levers that it can apply. But it needs to do it in the short term.”

“The federal government can spend as much money as it wants because we borrow in our own currency,” said Schmidt, who now heads Google's board as CEO Larry Page leads day-to-day operations.

Don't expect China, India, Brazil and other growing countries to save the world economy; they're not going to buy a lot more of our stuff, Schmidt warned: “We already have one of the cheapest currencies we ever had and yet we still cannot export ourselves out of this recession." Yields on 10-year US government notes are below 2%, half the five-year average.

“All of the economists that I know agree that in a situation where there is a strong possibility of a very long- term recession, or at least a structural growth recession, which many people think we’re in, you need to do something now,” Schmidt said.

Without government spending, the private sector won't likely create a lot more new jobs "for a very long time." In recent months modest US private-sector job growth has been nearly cancelled by layoffs, including teachers and other local and state government workers.

“Economic growth comes from the private sector with government assistance,” including grants to states. "The states are restricted to actually having balanced budgets and with revenues going up and down, it’s extraordinary hardship at the state level and that contributes to the economic decline,” Schmidt said. “A simple thing to do would be block grants to the states to help them through this.”

Obama is pushing a $447 billion package of payroll tax breaks, road projects and other attempts to boost spending and hiring.

Schmidt, a computer-science PhD who helped develpo the Java programming language while at Sun Microsystems, echoed calls by Dow Chemical boss Andrew Liveris and other backers of a national industrial policy when he told Bloomberg we need "national agreement on what it means to be competitive. It galls me that other countries are growing so much more quickly than we are because they are investing in the productive parts of their society and they’ve chosen to or don’t have some of the systems that we have that are not very productive... We have to have that conversation.”

-- The US, specifically the anti-monopoly cops at the Justice Department, are deep in Google's business, writes Blue Bell native Evan Britton, boss of California-based ResourceWebs, in this Business Insider article. US block of planned Google-Yahoo merger made possible Microsoft's Bing, which with other Microsoft efforts now controls as much as one-third of the online ad market otherwise dominated by Google, Britton writes. But Google heavily dominates Web publishing - and will continue to do so - unless Obama's (or his successor's) Justice Department intervenes, Britton concludes.

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About this blog

PhillyDeals posts drafts, transcripts and updates of Joseph N. DiStefano's columns and stories about Philly-area business, which he's been writing since 1989.

DiStefano studied economics, history and a little engineering at Penn and taught writing at St. Joseph's. He has written thousands of columns and articles for the Inquirer, Bloomberg and other media, wrote the book Comcasted, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com, distefano251@gmail.com, 215.854.5194 or 302.652.2004.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

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