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Government should be encouraging jobs over productivity

Here's another debate that, without any announcement or public capitulation, has been settled. Responsible people ought to work.

You may not even remember when this was a controversial notion. I do. I remember the arguments about whether it was better for poor parents to take jobs outside their homes or to be paid for the "work" of taking care of their children. I remember the proposals, based on the assumption that automation and other advances would lead to a vastly reduced need for work, that most of us should forget work and figure out how to make good use of our leisure.

The arguments, while never officially conceded, have been abandoned. Oh, there may be discussions about "workaholics" who steal precious time from their families, or the advisability of both parents working when there is no economic necessity to do so. But these are private questions. The only public questions involve such matters as subsidies for child care or training for those whose skills are inadequate to the work force.

Indeed, the key element of President Clinton's yet-to-be-devised welfare reform program apparently will be a requirement that erstwhile welfare recipients go to work, with government-paid training for those who need it. The main debate is settled.

What isn't settled is how, in a job-tight economy, to produce enough jobs for the people who need to work. Clearly the need alone doesn't produce jobs. That's not very surprising. Nor is the fact that training, whatever can be said about the desirability of subsidized training, doesn't produce jobs.

This is: For perhaps the first time in our history, not even a recovering economy seems to be producing very many jobs.

The reasons, says a man who's been looking at the subject for some years, have to do with government policy, tax codes and international competition. But the key is our refusal to distinguish between policies that promote business growth and policies that create jobs.

Until recently, we haven't had to. But nowadays the news is full of simultaneous reports of increased productivity (and profits) and leaner, "downsized" companies. In fact, improved productivity is just another way of describing the phenomenon of turning out the same product with fewer workers.

Nor, says Charles A. Cerami, president of the World Trade Institute in Washington, is this just another "spasm" of unemployment that traditionally has accompanied recessions. This one is different.

The reason: Productivity, encouraged by such government policies as the investment tax credit, is the wrong goal. We have rewarded employers for installing labor-saving machinery on the grounds _ the hope _ that the resulting increase in productivity would lead to plant expansion and more hiring.

Cerami, writing in the March issue of The Atlantic Monthly, says our mad dash for increased productivity is "like running toward the wrong goal in a football game." The faster we go, the worse our situation.

Cerami has a modest proposal _ three of them, in fact _ for remedying the situation. The first is to scrap the idea of boosting productivity as the starting point and instead enact a Human Employment Tax Credit _ tax credits to employers for hiring people. He stresses that his proposal is not anti-productivity. He'd tell companies: "Buy all the machines you want. But be aware that your corporate tax bill can be scaled down if you are able to take on more permanent employees. The money is yours. You decide."

What would be the result? Who knows? Some employers might opt for efficiency anyway _ after the fashion of the self-service gasoline station. Others might put on a few workers and find a gold mine in sales of motor oil, windshield wiper fluid and auto accessories. In terms of the federal budget, Cerami argues, the credit would pay for itself. The new workers _ many of whom might have remained jobless _ would become consumers and taxpayers.

Cerami would also have the Federal Reserve Board abandon its effort to stimulate economic expansion by lowering interest rates _ "pushing on a string," he calls it. During slow times particularly, "the fact that (business executives) can borrow money cheaply at that moment doesn't make them jump to vote for expansion. When they see signs that customers' orders are piling up, they'll find the money to grow on, whatever the rate."

Those two short-term measures would be accompanied by what Cerami believes is the long-term key to American business growth: Expansion of international markets to include millions of potential new customers.

And all three measures would have a common goal: Not the economy, stupid, but jobs. It's not the same thing.

Washington Post Writers Group