Sept. 18, 2011 -- Google chairman Eric Schmidt today said the current economic strategy of cutting spending during a slow economy is "ludicrous," and pushed for greater government stimulus to generate demand.
The political wrangling between Republicans and Democrats have left business leaders with no certainty on economic policy, and said what is needed to encourage companies to hire more workers are "predictable, long-term plans."
"The economy is, today, stuck behind the power curve. It needs a lot of encouragement," Schmidt told "This Week" anchor Christiane Amanpour. "It needs not just something like the jobs bill, but also significant government stimulation in terms of buying power and investment. Otherwise, we're set up for years of extraordinarily low growth in the economy and no real solution to the jobless problem."
When asked if he saw "any possibility of a climate for more stimulus," Schmidt responded, "that's a political question. But the current strategy is ludicrous."
"You have a situation where the private sector sees essentially no growth in demand," Schmidt said. "The classic solution is to have the government step in and, with short-term initiatives, help stimulate that demand. If they do it right, they'll invest in income and growth-producing things, like highways and bridges and schools, new opportunities for the private sector to go then build businesses."
Schmidt, a strong supporter of President Obama, has helped lead the Internet search giant Google for the past decade, stepping down as CEO this spring while remaining executive chairman.
While many companies continue to bleed jobs in the current economic downturn, 2011 has been one of the strongest hiring years for Google, with the company planning to add more than 6,000 new workers by the end of the year, bringing its total employee count to more than 30,000.
While critics of Obama have faulted him for having a poor relationship with the business sector, Schmidt said the real problem is the lack of predictable government policy, with uncertainty holding back businesses from spending current profits on new employees.
"The real problem is not the business community," Schmidt said. "The real problem is the Democrats and the Republicans fight for one point or another in a political sphere, while the rest of us are waiting for the government to do something concrete and predictable.
"What business needs is predictable, long-term plans," he said. "We need to know where is government spending going to be, what are the government programs going to be and off we go."
Schmidt said many businesses have been operating more efficiently, allowing them to grow and profit without hiring more workers since demand for goods and services remains low, a situation made worse by the housing crisis still holding back individual spending.
"You have to solve the housing problem," Schmidt said. "Most people still have either the perception or they either feel or they really are underwater with respect to their mortgages. We need some sort of a fair deal that solves that problem, that spreads the pain around.
"Business can create enormous numbers of new jobs in America. All we need to see is more demand," he said. "And until we solve the problem, people are going to sit idle. And it's a real tragedy."
But Schmidt dismissed the idea that greater efficiency and new technology have created structural changes to the economy that have replaced workers unable to re-train for new higher-skilled jobs.
"That's been true for 100 years. It's been true of the industrial era for the last, literally, century," Schmidt said. "And over and over again, American ingenuity has meant that the people who were displaced were able to find new jobs in these new industries.
"There's every reason to believe that if the political system could come to a consensus around stability, solving these short-term problems and get the investment that I'm describing, that we can take care of the rest," he said.
"Serving Customers or Threatening Competition?"
Schmidt is scheduled to testify Wednesday at a Senate judiciary sub-committee hearing, sparked by growing concerns that Google has grown into a monopoly that has stifled competition in the Internet search business. Both the European Commission and the U.S. Federal Trade Commission have begun inquiries into various Google business practices.
"The government has a proper job to do here. I think it's fine that they're investigating these sorts of questions," Schmidt said, saying he is looking forward to the hearing. "They haven't really complained about anything yet. But they're looking and I think that's appropriate, in a democracy."
The Senate hearing is billed as "The Power of Google: Serving Customers or Threatening Competition?" A major concern raised by Google's critics and its competitors is that the company limits competition by favoring its own affiliated websites through its search engine.
"From a Google perspective ... as long as we've stayed focused on the end-users, we end up doing the right thing and staying on the right side of these laws," Schmidt said. "We don't take the position of judging what our consumers are looking for. ... We're here to serve consumers and do it quickly.
"We have an opportunity to communicate what we're doing. Senators have an opportunity to communicate their concerns, and I think that's very good," he said. "We won't know for a long time ... but I'm pretty comfortable that we're in pretty good shape."