Doing a lot more with a lot less

The U.S. corporations have recovered remarkably well. Revenues and earnings are growing in a slow-growth economy. As Jack Welch puts it: The American corporations have learned to do a lot more with a lot less.



Large corporations have a lot going for them: extremely competitive labor market and technologies allowing them to cut costs. On top of that, cost of capital has been driven to historical low as the Fed fights the great recession. They're also able to tap into the fast-growing emerging market economies for demands on their goods and services. The Fed is lending a helping hand here too by maintaining the easy money policy which tends to drive down the dollar.

A natural question to ask the government is why can't it do a lot more with a lot less? The Republicans are clearly on the affirmative. But can austerity really help small businesses and help create jobs? You just can't run a government as if it's a corporation.

Can labor or consumers manage to do a lot more with a lot less? Somehow you just can't push that logic very far with tens of millions of unemployed and under-employed.

Obama's job bill may be too little too late, if it gets passed in some form at all. The Fed's latest "operation twist" (a double twists) may be too little as well. A twisted QE may have more sense given the grim outlook. More firepower should be concentrated on the mortgage market. At least the Fed is trying.