The Economy, Stupid ... or is it Innovation?

We've had a nice discussion of jobs and equity, on earlier threads, but I am going to cut to the chase. It's the economy stupid, to quote Bill Clinton's 1992 election campaign.  Addressing persistent unemployment will be a function of accelerating economic growth.

At The New Republic William Galston explains the size of the "jobs hole":

Despite the modest economic recovery since the recession ended in mid-2009, total employment remains more than 5.5 million below the level of 2007 and about 1.6 million below where it was when President Obama took office. . . To regain full employment (5 percent, which happens to be the same as the level when the recession began) with the pre-recessionary labor force participation rate, we would need 150.7 million jobs—10.1 million more than we have today. That’s a reasonable measure of the hole we’re still in, two and a half years since the official end of the recession.

If growth is indeed the key to reducing persistent unemployment, then I think we can eliminate several of the problem definitions that I presented from ITIF earlier this week:

1. A classic Keynesian contraction (implication: government stimulus)
2. Financial crises are different (implication: wait it out)
3. Regulatory uncertainty (implication: finalize legislation, lighten regulatory burden)
4. Unskilled workforce (implication: train workers, streamline immigration)
5. Not enough innovation (implication: invest in R&D, innovation-friendly policies)
6. Too much innovation (implication: put brakes on productivity growth)
7. Weakened U.S. competitiveness (implication: strengthen manufacturing, invest in skills, R&D)

These five remaining problem definitions are like the blind man and the elephant -- where in this case the elephant is innovation policy.

Should the tag line for the 2012 election be -- It's innovation, stupid?