Jobs for Jack, Jill, Jacques

IN the bad old Communist days, Polish wags used to say that a pessimist was just an informed optimist.

To describe the world economy today, reverse that aphorism. An optimist understands how economic pessimists misjudge Asian, European, and North American growth, trade, productivity, and interest rates.

One reason for such misjudgment is the continuing loud static of government budget fights. Even in the United States, where the economy has performed well, and in Japan, where it is emerging from lengthy doldrums, the publics are often confused by government noise.

In the US, turmoil over trimming the rate of entitlement growth so dominates the scene that the federal budget sometimes appears to be the economy.

In Japan, the government's long hesitance to bail out big banks and thus put behind it the burst real estate bubble is now ending. The result is no more fair to taxpayers than was America's end to its savings and loan bank crisis. But the time comes when societies accept lessons learned and move on. Japan's economy has started to grow again, in a more balanced way.

Ah, but what about Europe? Surely that is not a sunny economic story?

True. Unemployment rates are still too high. And governments have not yet succeeded in reining in their welfare-state growth to more nearly match economic and demographic growth. But even those clouds have at least a chrome lining. It seems likely that Germany's Bundesbank will now admit that inflation is under control and lower interest rates are in order, if more German jobs are not to flee abroad. That means a similar stimulus to growth, jobs, and perhaps productivity in France and elsewhere on the continent. Meanwhile, the dollar is likely to strengthen against Euro-currencies, aiding growth in exports (and, again, jobs).

America is seeing its share of very low inflation figures. That should allow the Federal Reserve Bank to lower interest rates further in coming months (extra likely in an election year). The Republican revolutionaries' decision not to risk a default on the national debt also helps to lift some government uncertainty off the private-sector economy.

This is boring stuff - except that it affects almost everyone's living standards. Perhaps the most hopeful effect comes from the fact that stimulating jobs and growth undercuts populist arguments for clamping down on trade to protect jobs. And in recent decades trade has done more than any factor except technical innovation to create higher living standards.

Problems remain. Not the least, how to sustain growth while not fouling our global nest. But in general pessimism seems about as outdated as a used Japanese real estate bubble.

This is boring stuff - except that it affects almost everyone's living standards.

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