Illustration by Topos Graphics
Illustration by Topos Graphics

Looking beyond the debt-limit shenanigans preoccupying Washington, the big issue for the U.S. economy is long-term unemployment and what to do about it.

President Barack Obama is always hawking some kind of jobs plan, whether it’s training more engineers, enticing businesses with short-term hiring incentives or creating yet another commission to study the issue.

On the Republican side, House Speaker John Boehner is fond of beginning his press statements with the question, “Where are the jobs?” The implication is that the GOP has a better jobs plan than the president’s $830 billion fiscal stimulus. (There are 1.3 million fewer private-sector workers today than when the American Recovery and Reinvestment Act was passed in February 2009.)

It’s not just politicians who are touting plans to create jobs. The U.S. Chamber of Commerce has a clean-energy jobs plan. Time Magazine’s Fareed Zakaria has the key to job creation. And every left-leaning think tank has a multiple-point jobs plan at the ready, just in case anyone asks.

No wonder McKinsey & Co. is getting into the act. The premiere management consultant asked researchers, policy makers, executives and journalists to identify the single most important step the U.S. should take to create more jobs, and published the responses as a series of short essays.

Every time I hear that question, or listen to a politician talk about a jobs plan, or read an accusation by one party that the other party has none, I wince. Since when is it government’s job to create jobs?

Outplacement Service

No one looks to the government to generate more workers when the unemployment rate is low and job openings are hard to fill. Yet when unemployment rises, the government is supposed to act as an outplacement service.

Simply put, the government’s role is to create an environment for job creation. The private sector does the rest.

The very act of asking what government can do creates the illusion that there is some secret formula for putting the 14 million unemployed Americans back to work. We know the diagnosis; all we need is the right jobs doctor to prescribe the appropriate cure.

McKinsey’s respondents offered solutions that were conventional (reduce the corporate tax rate, eliminate burdensome regulations on business); unconventional (paint black roofs white so that they absorb less heat, thereby reducing energy consumption and utility bills); ill-advised (pay employers to hire, create more inflation); and bordering on the touchy-feely (show more empathy for the unemployed).

I was relieved to see one respondent suggest that the single most important step the government should take to create jobs was “lose the illusion of government job creation.”

Schizophrenic Relationship

There. He said it. Get out of the way, which is what Ayn Rand’s hero, John Galt, tells the desperate bureaucrats in “Atlas Shrugged” as they struggle to find someone with a plan to avert a national economic collapse.

This medicine is very hard for Americans to swallow, but the truth is, we can’t have it both ways. We want an arms-length relationship with the government in good times. In bad times, the cries go out to “do something,” even if it’s pay us to do nothing. We want a free-market economy during expansions, a nanny state in periods of recession. Privatized profits during the boom, socialized losses during the bust.

The idea of some kind of New Deal II to put people back to work is both impractical and implausible. Impractical, because the U.S. government is broke. Even Democrats now seem more interested in deficit reduction than additional stimulus. Implausible, because the president himself was forced to own up to the failures of Stimulus I.

Misplaced Expectations

Following a staged tour of a North Carolina manufacturer of energy-efficient lighting and an on-site meeting with his council on jobs and competitiveness last month, Obama was asked whether he was aware of the red tape that delayed road and bridge projects financed by the recovery act.

“Shovel-ready was not as shovel-ready as we expected,” Obama joked.

But it was no joke. If central planning were the solution, the Soviet Union would still be in business.

Even the idea of looking to government -- to the same folks who can’t put partisan bickering aside to do what’s right for the country -- to solve our unemployment problem is downright laughable. The last place you would go for a timely, efficient solution is the halls of Congress, where lawmakers are still dithering even as the government’s borrowing authority is set to expire on Aug. 2.

Plouffe’s Prism

It’s understandable that the president and Congress want to put people back to work, even if it entails digging holes and filling them in again. Voters tend to hold the party in power accountable for a lousy economy and high unemployment, David Plouffe’s assertions to the contrary notwithstanding.

Plouffe, the president’s top political adviser, said earlier this month that the average American “does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers.”

Right. Tell that to Jimmy Carter and George H.W. Bush.

More important to voters, Plouffe said, is how they feel about their own situation now and in the future.

Has he looked recently at consumer confidence indexes, which are at recession-like levels? If that’s the prism through which voters will view the economy in November 2012, Plouffe had better hope for a few jobs to complement all the jobs plans.

(Caroline Baum, author of “Just What I Said,” is a Bloomberg View columnist. The opinions expressed are her own.)

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To contact the writer of this column: Caroline Baum in New York at cabaum@bloomberg.net.

To contact the editor responsible for this column: Mary Duenwald mduenwald@bloomberg.net.