How to create tens of millions of jobs, good jobs? Much hinges on the answer to this question.

Long gone are the golden Reagan-Clinton years that saw almost 40 million new positions created. In the decade since Clinton left office America created a paltry 3 million under George W. Bush, and Barack Obama recently was scored as having the worst job creation for a first period in office of any president since 1890, excepting Hoover.

The Permanent Government seems confused about what to say, much less do, to turn this around. The Insipid Recovery’s threat to turn into a Double Dip is starting to concentrate the mind of the political class wonderfully. D.C., where our tax dollars go to die, finally is beginning to focus on the right question: How to create jobs?

There are two theories. Progressives believe that the answer lies in government job creation (stimulus, bailouts, “shovel-ready” public works). Supply-siders believe that the answer lies exclusively in human action, entrepreneurs and businesspeople, and that the government needs to get its boot off our necks. Watch Fight of the Century for a wonderful rap version of the debate — between Keynes and Hayek — produced by John Papola and Russ Roberts.

President Obama, cheered on by the elites, relied on the power of government to create jobs … and failed. Reagan and Clinton relied on the free market. They were attacked as tools of the plutocrats for doing so yet delivered the goods: massive job growth.

Ralph Benko is a Forbes.com contributor. He serves as senior adviser, economics to the American Principles Project and is editor of The Lehrman Institute's "The Gold Standard Now." He is author of "The Websters' Dictionary: How to Use the Web to Transform the World." To continue reading his column on "The Constitutional Populist Realignment of 2012," click here.