The frank Mr. Feldstein
Martin Feldstein has never been known as a person who shied away from speaking his mind. Back when it was considered in poor taste, Mr. Feldstein raised questions about the US social security system. Now, as chairman of the Council of Economic Advisers, Mr. Feldstein is once again proving that frankness can be a refreshing commodity in Washington. His latest noteworthy observation is that it will probably take five or six years to reduce the unemployment rate to the 6 per-cent to 7 percent range.
Lest that judgment seem unreasonable, it should be noted that the productivity figure for nonfarm businesses for the third quarter of this year rose faster than had at first been thought - up 4 percent rather than the 3.6 percent originally estimated by the Labor Department.
The irony in that hike in productivity should not be lost - and fits in, in a way, with what Mr. Feldstein is saying about bringing down the unemployment rate. Fewer workers. Yet higher productivity. In other words, firms are finding that they are able to get along with fewer workers. Which means that in many firms there has been major misuse, or overuse, of workers. Just to take one example, unionized airline pilots have tended to fly far fewer hours per month than nonunion pilots at competing airlines. Such ''feather-bedding'' means lower productivity per man hour and higher costs for the airline.
Which leads back to Mr. Feldstein's contention that it will take several years to bring unemployment down. He reckons that to reduce just that part of the unemployment that is linked to recession will require the creation of some 5 million new jobs during the six years. In addition, another 10 million jobs will have to be created to employ the people coming into the work stream for the first time. ''No series of public employment programs or other government activities can begin to create more than 15 million additional positions during the next half dozen years,'' says Mr. Feldstein.
This is a point that lawmakers might take special note of as they go about considering changes in the US tax code, or large-scale new jobs programs.
Whatever programs are adopted, the objective must be that of encouraging real growth in the giant US economy - rather than adopting programs that work against that real growth and new job creation.