What is broken in the American economy that if fixed would create jobs?

I heard a pundit on the news tonight say that one of the things that side-lined health care is that Obama failed to articulate what is broken with the current system, so that if this, that, and the other thing were fixed, it would turn things around.

If you could advise the Obama team about what is broken that needs to be fixed, what would you tell him? (Perhaps, we can make some actual recommendations to his team. So, please share your constructive solutions, and not your sense of futility and cynicism.)

For general economic background, here is an article that puts the present “information economy” in perspective. Here is an article that discusses the problems of how we provide for our “surplus population” through decreasing welfare benefits and increasing incarceration (and how official unemployment statistics understate the case). And here is an article that explains the economic and political ins and outs of wage subsidies, the minimum wage, and the advantages of a full-employment economy.

In the 2008–2009 recession, men have borne 78% of the job losses due to steeper declines in the manufacturing and construction industries, than in the service and hospitality industries. The group that is being hardest hit are men over 50, since employers seem to prefer younger more pliant workers whom they can pay less to older workers, who may be more seasoned and experienced, but also are more likely to use their health plan, and are soon to retire anyway. (Many of these men will not be employed even if the economy does turn around; this why it was proposed to lower the age of Medicare to 55, to pick them up before they run out of benefits.)

It is not just a loss of jobs but a loss of good jobs, declining benefits, retirement plans, and a generation-long slide in living standards. Traditionally, worker productivity gains (which have been remarkable over this same period) would be passed on to workers, but instead employers are using them to pay for their astronomical salaries and lavish bonuses. Unionization has fallen to a mere 12% of American workers (many of whom are in government), so this decline in living standards tends to reflect a decline in bargaining power of workers relative to their employers.

Other things to keep in mind is that there has been little social and economic investment in the inner cities and so these are areas of deep poverty and little opportunity. Our roads, bridges, levies and infrastructure are antiquated and crumbling, and little Katrinas are waiting in the wings. This is also an opportunity to invest in things like parks and the arts, as well as science and technology. Making college more affordable could allow more people to stay in school and relieve some of the pressures on job markets. Somewhat more generous welfare might allow more women with children to stay at home with their children.

No doubt there many other issues and ideas I haven’t thought of that I hope you will.