Right now," "immediate economic emergency," "requires urgent action," "can't wait." Wow! He gave the impression that job creation would be his top priority, that action would be swift and effective, that his solutions would not only stanch the hemorrhaging, but reverse the trend.
Fast forward. On Friday, the Bureau of Labor Statistics released unemployment figures for October 2009. The official rate was 10.2 percent, up more than 50 percent from the time Obama gave that speech. Oops, nevermind.
(By the way, the underemployment rate, which includes part-time workers who want to work full time and those who've given up searching, is a staggering 17.5 percent.)
Job creation has dropped from top priority to one of many, and President Obama has been remanded to pandering for patience and offering excuses. On the one hand, he argues the tortured rationale that there is good news in the awful numbers: Things are still getting worse but at a slower pace. On the other, he incessantly reminds us that he inherited the crisis. The implication: Don't blame me, blame Bush.
But this president can't keep deflecting to the last one. Pain is presently felt. The crisis that took form on Bush's watch is being experienced on Obama's. Fair or not, finger-pointing is not effective policy.
This is now Obama's crisis, and it carries political consequences. During Tuesday's gubernatorial races in New Jersey and Virginia, nearly 9 in 10 voters said that they were worried about the direction of the nation's economy in the next year. And the majority of those who held that view voted for the Republican candidates. This could portend a flashback to 1994.
It isn't President Obama's fault that he inherited this mess, but it is his to fix, and he must make haste.
What exactly is he supposed to do to create all these jobs? Use the book proceeds to buy a Dairy Queen franchise?
The president has very little control over employment in the economy. The stimulus undoubtedly kept the economy from losing even more jobs than he did. But the economy is undergoing a hell of a deep structural adjustment: from debtors to savers, from housing-and-finance led growth to . . . well, if we knew that, the recession would already be over. Those adjustments need to happen, because the previous situation was totally unsustainable. But they definitionally imply higher unemployment and less consumer demand in the short run.
A third stimulus might lower the unemployment rate a little, at least from where it would otherwise be. But it would not put us back at 5% unemployment, and it would have a lot of other costs, including further risking our AAA bond rating. Stimulus is at best an incredibly blunt instrument. And it is made blunter by all of the procedural checks we've accumulated over decades of government growth, not to mention very powerful public sector unions. FDR could tell his government to go out and hire people to paint hallways or build dams. The current president needs Environmental Impact Statements, public review periods, and the okay of ACFSME.
The fact is, most of the time, the best the president can do is avoid making things much worse. And though I have many disagreements with the specifics of Obama's policies, I'd say that largely, he's kept from making stuff worse, and eased the worst of the damage on hurting families. We could be doing more with more generous unemployment benefits or other income assistance, less with atrocious auto bailouts. But the economics of recession is truly a dismal science, and demanding that the president cure the recession is about as effective as expecting him to cure Hep C.
Blow is certainly right that Obama and Democrats will pay a price in 2010 and 2012 if the employment picture doesn't dramatically improve. Life is unfair that way. But op-ed columnists should not pile on with fruitless demands for radically lower unemployment.
agree with you on the creation part. I always get a chuckle out of politicians who talk about a "jobs bill." on the other hand, he could stop the health care bill, which in its present form is going to cream small business.
"What exactly is he supposed to do to create all these jobs? Use the book proceeds to buy a Dairy Queen franchise?"
If Barack Obama would write me a check for $230,000 ($150 billion divided by 650,000 jobs) then I'd gladly open fucking Dairy Queen and start employing people.
The Democrats aren't hiring. They're stealing the money.
As you are already a welfare queen, Dairy Queen would be a step up.
Given you type so much with one arm, ice cream should be a doddle.
A Job's Bill?
Easy: a 3-year Tax income moratorium on small business start-ups.
Throw in a 1-year payroll tax moratorium.
To tell the truth, I'm not enough of an economist to know which numbers would stimulate the most. Should the moratorium be 6 months or 6 years? Is income tax much of a burden on new small business start ups? I don't know.
But the point is, a temporary freedom from taxes is extremely stimulating. It allows you to either earn more money from a given price, or allows you to lower your prices to increase demand from customers without losing money.
It also sends an extremely powerful message from the world's most powerful bully pulpit that you value and support small businesses, and will find ways to help them thrive, rather than using them as a cash cow to tax/regulate into abject servitude...although you would have to follow up by actually doing things to value/support small business.
The point is, that which you tax tends to decrease, that which you lighten tax on tends to increase.
So use tax policy to encourage new small businesses.
It *will* be effective. Think about how many new businesses would have started up with $700 billion of tax reductions?
Then how many people would those businesses have employed...they would have paid a good amount of taxes out their wages, no? And they would have purchased things, paying sales tax. And their purchases would have increase the corporate tax payments from the businesses to whom they gave their custom. And the increased business would have encouraged all these businesses to hire more people, and the cycle of stimulus continues.
...that's how tax cuts can actually increase revenue.
But since it is tax breaks for small businesses rather than large corporations, it is harder to sell it as tax cuts for the wealthy.
Democrats would still oppose it, of course. [sigh]
Who said that the stimulus would produce jobs? None other than the President himself.
If he doesn't want blame, he shouldn't've claimed to be in control.
Precisely - and Megan, in this very article, indicates that the stimulus did create jobs.
Really? Where? Let's not quibble over a thousand here or there, let's talk about meaningful numbers. Where are the hundreds and hundreds of thousands of jobs that this stimulus created?
Because, mathematically, $700B could provide 2 *million* people with checks for $350,000. Or 4 million people with checks for $175,000.
Etc.
Where are those millions of people, with those hundreds of thousands of dollars, fueling this comeback? And where are the thousands and thousands of new small businesses that this money seeded, dotting the land like "green shoots" and fueling a turn-around of employment?
As is pointed out elsewhere, none of this happened. What HAS happened is a Health Care bill that is so onerous that you can go to jail if you don't comply. And the threat of an energy tax that will be equally crushing, to a different sector.
Anyone care to guess what kind of effect THESE have on small business creation?
I'll concede that Obama can't go out and just open Dairy Queens, but let's not be naive here. The man has been handed over a Trillion Dollars, between TARP and Stimulus, and the only results we see are indecision, patronage, secrecy, and fear.
For example: Has he even fully staffed Treasury yet? In the face of H1N1 it took him something like 9 months to even get Sebellius onboarded. His indecisiveness and ineffectiveness is stunning.
I'm still curious to know how we have elected anything other than an empty suit, at a time when we most assuredly need a real leader.
Don't tell me that this doesn't impact the job market.
How does it affect employment that roughly half of all businesses close within 4 years of startup (per SBA) The unquestioning worship of the small business entrepreneur seems misplaced at best. Don't even get me started on stupid business practices, that's a whole career for Scott Adams.
What's really scary is the government makes the private sector look like a model of efficieny.
What was I thinking? Screw the statistics, we need LARGE, CENTRALIZED, GOVERNMENT RUN INDUSTRY to save the economy.
It's worked wonders elsewhere. I don't need to list all of those places - you already know them, and had them in mind when you wrote your inspired comment.
I'm sure Central Planning will work here, too, once we all get enough State Vodka to stop caring.
(and... uh... by the way... the next time you drive through your town take a look at how many Wendy's, and Car Washes, and Plumbers, and Music Stores, and Chinese take-outs, and pizza joints, and electricians, etc. there are. It sure will be fun to Nationalize them all, won't it?)
Please don't let the facts get in the way of your politics. And by the way, it is "new," not "small" that is key.
Take Google -- zero to antitrust target in less than ten years.
http://online.wsj.com/article/SB10001424052748704013004574517303668357682.html
"According to the Census Bureau, nearly all net job creation in the U.S. since 1980 occurred in firms less than five years old. A Kauffman Foundation report released yesterday shows that as recently as 2007, two-thirds of the jobs created were in such firms."
Small businesses and new businesses (which always start small) are the only businesses thata CAN create jobs. The Raison d'être for large business is efficency, which really means doing more while empoying fewer.
The other half doesn't close within 4 years of start-up.
And those that do close still provided 4 years of employment to a number of people.
The unquestioning worship of the small business owner is the basis of the American Dream:
Have an idea, put all your effort into it trying to get rich and have something to pass on to your kids. If you fail, figure out why and try again. Keep trying until you succeed.
I don't see how anyone could oppose this as cynically as you seem to. Maybe I didn't fully grasp your point.
Doesn't much of the staffing issue come back to the Senate having to provide advise and consent on lots of those staffers, including most of the so called czars?
^^^ wiredog:
Um, no. No it doesn't. That's largely the point of the "czars"; they are end-runs around the constitutional limitations on appointing high-level executive-branch officials. (Legal, but still end-runs.) To a limited extent approval is required for top Treasury slots, but there remain glaring absences below that level.
Not only did the stimulus NOT create jobs, IMO it has (along with the auto/bank nationalizations and the health insurance debate)stepped on their creation. The economy has been ON HOLD as everyone waits to see who will receive a benefit, who will get bailed out, and who will foot the bill.
There is high unemployment because there is a lack of aggregate demand. The Govt (Obama) is, on purpose, refusing to fund the private sector's appetitive for net financial assets by running insufficiently large deficits.
Instead, Obama chose to help out his politically connected union supporters and wealth wall street banks. The problem with Obama's stimulus is not that it is too blunt, it is that it is too targeted, and targeted at the wrong things.
An immediate payroll tax holiday, kept in place until inflation picks up, would dramatically reduce this problem.
The President, through fiscal policy, has a huge amount of control over employment. Obama has bad advisors.
Obama has created the fall of aggregate demand.
Does he not oppose import duties on Chinese products (except in industries where it helps his friends in the unions)?
Obama opposes visa restrictions on the importation of cheap labor here in the United States. He's refused to limit the number of visas.
High unemployment is directly Obama's fault.
Aggregate demand for what?
Houses? There are hundreds on auction every week.
Cars? How many cars per US household again?
Food? Hmphh.
And what pray tell are the consumers to use to purchase? More credit? Are you suggesting that the US consumer is not indebted enough?
No it's quite simple. The US economy is suffering from an overhead problem. Cost of government has risen to around 41% of GDP. These vaunted service industries, finance, etc. that drove the last boom are overhead. Needed services, but when they are too expensive, they drive the service users out of business.
Why is that important? The competitors to the US are lower cost. So US manufacturers lose.
More borrowing by government will only raise the cost to the economy in both interest payments and in directly supporting the governmental sectors and overpriced service sectors that need to shrink. They won't shrink because they are fed by printed money.
The solution is to tax enough to pay for the goodies. Stop borrowing. Then politicians will be forced to drop costs, and forced to not support their pet businesses by angry taxpayers.
Derek
I'm sympathetic to these arguments in general, but...
What exactly is he supposed to do to create all these jobs? Use the book proceeds to buy a Dairy Queen franchise?
I would settle for not pushing those two massive tax hikes, the health care deform bill and the Carbon Fairy Appeasement Act.
I'd say that largely, he's kept from making stuff worse
Not for lack of trying. He was hoping to have both those done by now.
Obama's solution to low car sales was to pay people $4,500 to buy a car.
Obama's solution to low home sales is to give people $8,000 to buy a house.
Obama's solution to low appliance sales is to give people $300 to buy a refrigerator.
Obama's solution to low employment however so far has not been to pay businesses $5,000 to hire a person.
Now why would that be? It's because he wants unemployment to stay high so he can pass his health care tax bill.
Obama wants people to be unemployed. All his actions so far confirm it.
Of course, Blow is a man of the left and is certain that More Stimulus and Smashing The Rich will make more Progress, er, I mean, jobs, but really, Megan, how could you be surprised that a president who who has promised a zillion times that he will presonally create (or save) 3 million jobs has generated the impression that presidents create or save jobs?
Sorry. left off the last sentence:
Of course, Blow is a man of the left and is certain that More Stimulus and Smashing The Rich will make more Progress, er, I mean, jobs, but really, Megan, how could you be surprised that a president who who has promised a zillion times that he will presonally create (or save) 3 million jobs has generated the impression that presidents create or save jobs?
Your argument is with Obama for creating these expectations, not with Blow for pointing out that he's failed to deliver.
Your argument is with Obama for creating these expectations, not with Blow for pointing out that he's failed to deliver.
On the contrary. He could be delivering.
Obama could issue an executive order requiring that the Executive "buy American." This alone would boost American jobs.
He hasn't done so. In fact, he's prevented anything like that.
There are a thousand ways he could stimulate economic activity within the borders of the United States merely by the stroke of his Executive Order pen. He is deliberately holding unemployment at high levels because he believes it will create demand for his social policies ("free" health care, etc.).
Impeach. Him. Now.
This alone would boost American jobs.
Except in industries that export, or hope to export.
Is Obama's job to help exporting industries? Or is it to boost jobs for all Americans?
As a matter of fact, why doesn't he just issue an Executive Order declaring that the recession is over? Or that unemployment shall be 5% by the end of December? You're right, the only reason Obama hasn't done either of those things is because it would interfere with his plans to create an army of welfare queens...
So why don't we just ban imports, both goods and people. We could all have a lot more work to do if we made our own clothes, did our own landscaping, grew our own food, etc. Why let people outside of the US do anything for us. It's not like there's any advantage to that and it's not like economic protectionism has ever brought about anything other than prosperity.
Obama could issue an executive order requiring that the Executive "buy American." This alone would boost American jobs.
'Cause trade wars are so much fun! (Smoot? Hawley? Never heard of them.)
"'Cause trade wars are so much fun! (Smoot? Hawley? Never heard of them.)"
You're making my point for me.
Trade wars may not be very fun, but they have a long and storied history. Unemployment is significantly decreased during them, for example.
Look, America isn't the same place that it was when Smoot-Hawley was a bad idea. In the past, we exported much more than we imported and so trade wars didn't necessarily accrue to our benefit.
Today, that is not the case. We import far more than we export by orders of magnitude. Today, a trade war benefits us ... not our trading partners.
How high is unemployment in China?
We need leaders who can look past 90-year-old history and judge the current situation with a clear eye. Clearly we don't have the sort of out-of-the-box thinkers required.
So let me get this straight. A policy widely credited with being a big part of why the Depression ran 10 years instead of 2, by left and right alike, and you think that it's a good model for how to deal with the current situation?
Here's an idea for you - if buying American is supposed to create American jobs, why not Buy Movertyperguy? After all, if neglecting gains from trade in the name of narrow-minded parochialism is such a great policy, why limit it to the national level? Refuse to buy from other people, and you'll save a job for yourself for sure. Right?
So let me get this straight. You think that the same exact policies when we were a net exporter are the ones we should apply when we're a net importer.
Man, for an economics blog, there sure are a lot of stupid economists hanging around.
movertyperguy: Obama could issue an executive order requiring that the Executive "buy American." This alone would boost American jobs.
Nope. Let's assume that The Executive is importing rather than buying American made, and we'll call the products they import "X". Why would the Executive be doing this? The only reason that springs to mind is because X is some combination of cheaper or better quality than the American goods.
If the Executive is now required to buy American-made all the time, then the Executive either needs to spend more on the American-made X, or to put up with inferior goods, or some combination. Therefore the Executive has less money than before to spend on their other goods, or they produce less of whatever they were producing before.
So the American companies who supply product X get an increase in income. But the American companies who supplied product Y (where y is all the products the Executive uses that aren't X) get a fall in income, or alternatively, anyone who uses what the executive produces gets less of it than in the past.
So why would this result in an increase in jobs, as opposed to a shuffling?
So let me get this straight. You think that the same exact policies when we were a net exporter are the ones we should apply when we're a net importer.
Man, for an economics blog, there sure are a lot of stupid economists hanging around.
Here's a hint for you - trade isn't zero-sum. Importers get more goods for their money, exporters get more money for their goods. Everybody wins.
The real negative effects from the debt-derived stimulus won't be fully realized for years. Eventually taxes will have to go way up just to make debt payments on all this borrowed money. Then we'll look back at this current recession as the good old days...
income: 90, tax rate 35%
income: 75, tax rate 25%
Do the math. Which would you prefer? Any reasonable person would choose the first. Now, the question remains, can the stimulus put the economy on a high enough path (compared to no stimulus), to justify the extra cost? We simply do not know. We do know that GDP growth was not only positive, but quite good last quarter. We also know that the job numbers are nearly as bad as they were during the Reagan era. But, one cannot simply just ASSUME that there is no way for the increase in growth to offset (at least some) of the costs. You must always consider the changes the stimulus will have in the tax base before trying to predict the required changes in the tax rate.
You're forgetting just how dynamic and intertwined all the relevant equations are and treating them as if most of them were completely static and independent, as if none affected the other. If only the world were that simple.
Let's do the math (since you think nobody will):
$90,000 x 35% = $31,500 tax payment
$75,000 x 25% = $18,250 tax payment
Obviously, I'm paying $13,250 less in taxes by earning $75,000 a year as opposed to $90,000 a year. Wait ... let me finish.
Now, you think I'm crazy, but I'm the type of person who believes that working hard enough to earn $90,000 a year just so politicians in Washington, D.C. can skim my income for an extra $13,250 isn't worth the extra $2,250 I would get by earning $90,000 at 35%.
By your math, at $90,000 @ 35%:
1) I get an extra 2,250.00 in income, but
2) Barack Obama gets $13,250 to funnel to his union pals.
How is that in any way, shape or form a good deal for me? I'd rather make less in order to fuck them over.
Give me $75,000 @25% every. day. of. the. week. and. twice. on. Sunday.
Progressive income tax. Look it up.
"Progressive income tax. Look it up."
What does this comment mean? I don't follow your point (assuming you're trying to make one.)
To make it easy:
Two people work. One makes $70, the other $90 - but the one who makes $90 does it with a $20,000 bonus on the last day of the tax year.
Assume the government witholds *exactly* the right amount of taxes from each check, calculated weekly.
For the first 51 weeks of the year, the two people pay the exact same tax. Mr. A pays the same tax on his first 70 as Mr. B does. On the last check of the year, Mr. A pays the same tax as he always has. Mr. B pays the same, too, for that last bit of the 70,000 - but on the additional $20,000 (presuming that's where the bracket is) Mr. B pays 35% and not 25%.
Thus he only pays more taxes on the dollars beyond $70,000.
It's a sweet trick until you realize that every other taxing body uses the same technique. If it was just the Feds who kicked things up by around 33% (an increase from 25% to 35% isn't 10% - it's more like a third), you might still think it's worth the extra effort to make the additional $20,000 gross.
But then you notice that your local state does the same thing. And the city does, too. And you pay a luxury tax on many of the things that you worked so hard to afford...
And when you add all of these "teeny, tiny extra tax bites" you realize that you're keeping less than half of what you earned. Not "stole," not "were priveleged to receive," but EARNED.
So you say "screw it" and don't put in the extra hours.
John Galt lives.
The president has very little control over employment in the economy.
Then perhaps he shouldn't have said that he could.
Just as past generations of Americans have done in trying times, we can and we must turn this moment of challenge into one of opportunity. The plan I've proposed has at its core a simple idea: Let's put Americans to work doing the work that America needs to be done.
This plan will save or create over 3 million jobs -- almost all of them in the private sector. Barack Obama, February 5, 2009
If it was just general bitching that the President is responsible for every leaf that falls, it would be one thing. But this dude sold a bill of goods. And considering that for the last 8 years anything that the President said that didn't come to pass was proof that he had lied, then I think it's absolutely consistent to say that unless the current one can provide objective proof that at least some significant portion of these 3 million jobs exist, then he was lying.
I agree that the impact a president has on an economy is overstated. However, Obama said that if the stimulus were passed unemployment wouldn't exceed 9.1% or so:
http://3.bp.blogspot.com/_oKWxWOEilyQ/SvWvxpq1qOI/AAAAAAAABac/yhODJSHmIow/s1600-h/stimulus-vs-unemployment-october-dots.gif
This guy really is retarding the economy. Businesses are uneasy about hiring given current health care efforts that are going to dump a new liability in their laps. Cap and trade looms. Taxes are going up. It's a very unfriendly environment for business, unless they have lobbyists in DC who can get them some candy from the federal pinata.
"This guy really is retarding the economy ..."
Of course he is. What better way to create the environment necessary to pass his legialation. Remember: "Never let a crisis go to waste."
Obama is the only one who benefits from high unemployment. With it, he's yoking a whole new generation.
He's deliberately adopted policies which ensure high unemployment. He purposely hurts America. And we let him continue to be our President. Unreal.
Actually that 9.1% was if we did nothing. Either he was wrong and the stimulus made things worse or he just grossly underestimated the unemployment rate. But all his estimates for health care are dead right.
Thanks Drew. Yeah, he actually promised us 8% unemployment. Well, I guess that's a case of underpromising and overdelivering.
Megan,
I feel your argument didn't actually address the citation you provided.
The citation clearly was stating the Obama was saying that he COULD immediately impact the jobs picture, that this was a quantifiable problem that would follow a graph his administration provided, and that the stimulus would stem the loss of jobs. This is all pretty clear and not even beat around the bush territory.
And when called out on it, deflecting blame to the past president is not a policy. It's an excuse, and not a very good trait of a leader (though frequently practiced nonetheless).
The article made the point well, but I don't think you addressed it directly...you kinda went off in your own direction.
...
As for what a president can do: Should the congress be willing, a president can do two key things for mass immediate stimulus when jobs are being shed by huge amounts each month:
1. Put into effect immediate corporate tax rate cuts that are scheduled to last for at least several years.
2. Extend unemployment benefits for those who have recently lost jobs via lay-offs.
I'd also add that it would probably be reasonable to provide an extension on paying personal income taxes for something like 6-9 months during a person's lay off.
Reducing trade barriers and offering targeted stimulants and incentives can help too....
For instance, imagine how much more effective it would be to put into place a tax incentive to produce cars in the U.S., than trying to bail out carmakers who were going bankrupt even if they didn't have to pay taxes.
Of course it doesn't help that rogue states like California are engaging in chicanery like moving up withholding because of previous accounting tricks to get by the previous budget crisis. Since CA is such a big piece of the American economy you can't discount what Sacramento is doing!
"As for what a president can do: Should the congress be willing"
Here are 8 things, that I thought of in about 3 minutes, that O can work on to improve employment.
How about expanding energy production in the US - yes oil drilling and nuclear energy. Both would improve employment soon and lessen the trade defecit.
How about revoking MFN status for countries that manipulate their currency (china).
How about lessening the regulatory burden on business.
How about reigning in the trial lawyers.
How about doing something about the debt that is drowning business and consumers.
How about regulating the banking industry and wall street.
How about lowering taxes.
How about shrinking government.
1) I can't see Obama doing this, if Bush the oil man didn't succeed at it.
2) How does that matter? And how does getting into a trade war with China help the situation? Also, you'd have to come up with a definition of "manipulates their currency" that doesn't apply to every nation on earth, which isn't easy.
3) Again, Obama wouldn't do this.
4) Won't make a difference in the grand scheme of things.
5) Like what, borrow money federally to pay down individual debts? That doesn't help the situation, nor is it practical.
6) You say that like they're not massively regulated already, and like Obama isn't adding more on top.
7/8) God, I wish. But I'm pretty sure the last president to do that was Truman, and it was less about small government and more about demobilization.
The point to take away from this is that it is trivial to think of hundreds of ways, some large some small, that Barack Obama could have a positive impact on the employment situation if only he had just a little more intelligence.
It appears, however, that he's content with 17-20% underemployment and unemployment. Administration sources I've talked with have said repeatedly that the high unemployment figures have a silver lining in that they help the administration pass their legislation. They see high unemployment numbers falling - but only if Congress goes along with what the Administration proposes on Cap and Trade and on the health care tax bill.
Americans are being held hostage by Democrats. We're fucked as long as they wield power.
MTG, I have trouble believing that you'd be allowed to speak with your local elected dogcatcher, never mind anyone who would qualify as "Administration sources". Anyone high enough up to say that sort of thing and have the sort of knowledge with which to say it honestly(as opposed to just making it up to sound good) is also going to be high enough up to know that one doesn't say things that boneheaded, and certainly not to conspiratorial cranks like you.
JoshinB - have you really thought through your list?
Expanding energy production - Why do you think would spending money on energy production create more employment than just leaving it to individuals to decide how to spend their money? For example, say the US government takes $1000 in taxes from you to spend on nuclear energy. Doesn't this necessarily mean you will have $1000 less to save or invest yourself? Say otherwise you would have kept the $1000 in a bank, where the bank could have lent it out to someone building an extention on to their house, thus employing construction workers. What's the advantage in terms of employment to building a nuclear power plant rather than leaving the money with you?
Revoking MFN status, reigning in trial lawyers, shrinking government, will all likely have the short-term effect of economic dislocation, thus raising short-term unemployment. For example, trial lawyers create a lot of extra work as other people employ lawyers to protect themselves against lawyers, employ lab technicians to carry out defensive medicine tests. People who import supplies who find that higher tariffs mean importing is unprofitable will lose their jobs, people who were working for the government will lose their jobs. All of these may be really good ideas overall, but in the near-term they will increase unemployment, not decrease it.
"Doing something about the debt" is not a policy. You need to be more specific about the something.
Ditto regulating the banking industry and wall street.
Lowering taxes depends on how you do it (lowering taxes on payroll probably will do something to increase employment). But if people get scared about the US government's ability to service its debt, then lowering taxes can result in people investing less in the USA and thus less productivity and jobs.
Tracy,
Increasing energy production here means more jobs here, more tax money here and more profits here. It's crazy that we spend $300 billion importing our energy. Thats $300 billionsexiting our economy every year. Thats more that the stimulous spent this year.
Same thing with MFN and China. We ship approx $280 Billion to China every year. China does manipulate their currency to keep their exports artificially cheap. That's hardly free trade.
I'm not Paul Krugman, but it seems to me that if we produce the stuff that we consume, we will have more jobs here.
Regulations are a heavy tax on production that drive businesses away. The US has been increasing the cost of doing business here, or prohibiting it outright, and enabling China to artifically keep their prices super low.
Guess what, the combination drives business and jobs away.
Limiting lawsuits will hurt the economy???? Are you F***ing Kidding. Lawsuits are a total parasite on the productive part of the economy. You might as well say that you don't want to get rid of your tapeworm, because you might get fat!
Regarding wall street and banking. We need to re-establish the rules that were enacted during the depression. Yeah deregulation was great for the financial sector but it has sucked for the economy overall.
Finally the 800 pound gorilla that no one wants to talk about is the over debt levels of individuals, business and government. I don't see how the economy can begin to recover until the debt is disposed of. The fastest way would be some kind of expedited bankruptcy system.
Increasing energy production here means more jobs here, more tax money here and more profits here.
Justin, just saying something doesn't mean it's true.
It's crazy that we spend $300 billion importing our energy. Thats $300 billionsexiting our economy every year.
And what do the people who receive the $300 billion do? They exchange it for their own local currency. Who do they exchange it with? In aggregate people who want $300 billion of something the US has, either in terms of exported goods or investments.
Same thing with MFN and China. China has to do something with that $280 billion. Either they invest it in the USA, providing money for American jobs or they exchange it for their own local currency, meaning that they need to exchange it with someone who wants American goods or to invest in America. If the Chinese are artificially keeping the cost of their exports low then that means that Americans have more money to spend on other goods and services, increasing employment.
I'm not Paul Krugman, but it seems to me that if we produce the stuff that we consume, we will have more jobs here.
Why should I believe you just because "it seems to" you? If you think I should be convinced by you saying "it seems to me" then you should be convinced by me saying it seems to me the opposite. Or do my arguments get discounted because I actually supply the rationale behind my thoughts?
Limiting lawsuits will hurt the economy???? Are you F***ing Kidding.
You are swearing? At me?! You wrote "Here are 8 things, that I thought of in about 3 minutes, that I can work on to improve employment."
You did not say "to improve the economy". You said to improve employment. I responded to the argument that you made, and you misrepresent what you yourself said and then you have the nerve to swear at me?! I even explicitly said "All of these may be really good ideas overall, but in the near-term they will increase unemployment, not decrease it."
I don't see any point in arguing with someone who thinks "it seems to me" should have some bearing, and who misrepresents his own arguments in order to swear at someone who was honestly trying to engage with him. I'm disgusted, this is a new low of debating on the internet.
The president has very little control over employment in the economy.
Not according to the lefties. Bush is at fault for the economic mess that Obama inherited according to them. In reality there are several million small businesses, and another maybe 20,000 medium to large corporations. How can one man be in charge of all that? But magically if the economy has done badly, it's the Republican President's fault, but when Obama actually says and does things that create a WORSE business climate he's not at fault!
Obama could support legislation taxing imports, thus stimulating American jobs here at home.
Would this raise prices? Probably ... but we'd have jobs. Would China retaliate? Probably, but we import far more than we export. Nobody is suggesting that there is a "negative free solution." The net negatives would be manageable.
These are choices ... they aren't the best choices, but they are choices that could be made to boost temporarily employment. We could very easily relax import duties after the crisis is passed.
The fact of the matter is that unemployment helps Obama and hurts Americans.
So, naturally, he'll do what helps him and fuck everyone else.
God, you're actually going to make me defend Obama as a sound economic manager. That's horrifying.
The reason he isn't doing that is because it would be goddamned stupid, and the single best way going to shoot yourself in the foot as a nation short of just nationalizing everything. Gains from trade are real and powerful, and anyone who throws them away on half-witted accounting tricks like mercantilism deserves everything that they get.
Gains from trade are real and powerful, and anyone who throws them away on half-witted accounting tricks like mercantilism deserves everything that they get.
That's "old economy" thinking, sir. We used to be a net exporter, and if that were still the case, your 90-year-old economic philosophy would of course be sound.
But now we're not a net exporter ... we're a significant importer, by orders of magnitude. Free trade no longer helps us. It helps China.
Obama only cares about unemployment in China.
He could give a fat rats ass whether Americans have jobs; in fact, he believes that there are positives to high unemployment as regards his re-election possibilities. High unemployment, Obama believes, can only help him pass his legislation.
As they say: "Never let a crisis go unused."
You're talking to me about outdated economic philosophies at the same time as you busily espouse a theory whose sole virtue was conservation of bullion with which to hire mercenaries 500 years ago.
Why would we have more jobs?
Why does anyone import? Because, quality-adjusted, the imported good is cheaper than buying the products at home.
So if imports are made more expensive then the people who switch to buying the home-made goods have some combination of less money left over to spend on something else or less quality.
If they have less money to spend on something else then all you've done is shifted a job to a company that makes the import substitutes from somewhere else, eg perhaps the people who switch eat out less often, so a waitress is unemployed.
If they have lower quality, and the imported good is used by a company to make goods, then the company's customers either face higher prices or less quality and therefore have less available money to spend on other things.
Furthermore, by lowering the amount of imports it means foreign countries have less dollars in order to buy American-made goods, reducing employment in American exporting companies. Again increasing frictional unemployment.
In other words, reducing imports would increase unemployment in the short-term and reduce living standards.
We could very easily relax import duties after the crisis is passed.
Actually no, what import duties do is create a group of people who have a political interest in having their jobs protected by imports. It's very hard work to relax import duties.
Also most Americans believe the POTUS has the power over jobs. This is a blessing/curse depending on the timing of a Presidential election. It definitely helped Reagan in 1984 and Clinton in 1996. But at least you could argue that Reagan's policies actively helped to create a more positive business climate. What is Obama doing to create a less hostile environment for American business? Oh yeah he's making it MORE hostile through trying to destroy the health insurance industry, carbon taxes, destroy the coal industry, anything I'm missing?
"What exactly is he supposed to do to create all these jobs?"
Nothing. Just do nothing for a year or two.
It is all the maniacal activity of tax raising, spending, and more tax raising that makes small business people like myself stop investing, stop hiring, and consider firing.
JBP
You're just greedy and selfish! People who have never run a business don't understand what's involved and don't care about your burdens. They don't get that an uncertain regulatory/tax situation is not conducive to hiring, esp in a small business where the margin is very fine.
A corrected version of Megan's post:
The president has very little control over employment in the economy. Except... The stimulus undoubtedly constituted a massive giveaway to Democratic interest groups to keep them employed through November 2010 at everyone else's expense. But the economy is undergoing a hell of a deep structural adjustment: from somewhat free market and small business friendly to a more government directed, anti-competitive and sclerotic economy, in which the static interests of the current big corporations and groups are cemented into place and the incentives to develop new organizations, ideas, and products are taxed at all levels, thus permanently reducing economic growth and incentives to employ and be employed. The recession is mostly over. This is pretty much the new normal.
Why all the concern about the business environment for small businesses? It's not like it matters when small businesses can't get financing to invest in growth and hiring anyway.
I think you set your expectations too high to think a POTUS looking to create and save jobs would divert resources, attention, or support to the businesses that have been creating most of them. That would require thoughtful and coherent policy to back up overblown rhetoric.
Well someone had it, and the Feds got it, so now we have it.
The fact is, most of the time, the best the president can do is avoid making things much worse. And though I have many disagreements with the specifics of Obama's policies, I'd say that largely, he's kept from making stuff worse
What delusional reality are you living in?
1: $787,000,000,000 "stimulus" law that sucked money out of the economy where it could have been spent on something useful, and instead directed it towards political paybacks that clearly haven't had a positive effect on the economy.
2: Health care bill that has created massive uncertainty for employers, making them much less interested in hiring more workers.
3: Massive tax increases in the health care bill, just the thing you don't want during a recession.
4: Constant bashing of private enterprise. Leading to more uncertainty, which inevitably leads to less investment (when the risk goes up, but the rewards, at best, remain the same, that's a problem).
5: The GM and Chrysler bailouts / bankruptcies, and the destruction of the rule of law / following of contract law and bankruptcy law. Leading to negative effects for the non-bankrupt competitors, and a general decrease in the business environment.
President Obama has spent his entire Administration doing nothing other than "making things worse." he has earned every bit of opprobrium aimed his way.
If the 'stimulus' was supposed to buoy private employment, a cut in the employers portion of FICA would have been the best way to go.
It seems that the lion's share of the stimulus is going to keeping state and local govt employees, AFSCME members, from getting fired and/or taking paycuts, the theory being that they would then go to the mall and pull the economy out of it's funk. I guess trickle down economics isn't working.
"If the 'stimulus' was supposed to buoy private employment ..."
The stimulus guaranteed state union hack jobs - and that's it. Almost all of it went to the states, which spent it on teachers unions on jobs that already pay 150% of the median income.
They're faking the jobs "created or saved" statistics. Even the AP said so. Why are we not arresting these people for theft and fraud?
It's union theft of tax dollars. Nothing more, nothing less. The rest of us blue-collar working people are fucked under Barack Obama.
He's giving millions to his Wall Street buddies. Nothing for blue-collar guys. It's his Chicago Way.
Actually, I'm pretty sure the Chicago Way tends to involve either gangsters or commodity traders, not bankers, but maybe that's just me.
"... I'm pretty sure the Chicago Way tends to involve either gangsters or commodity traders ..."
What, is the SEIU not "gangster" enough for you?
Headline:
More Union Violence: State Worker Beat Up At SEIU Meeting
http://biggovernment.com/2009/11/08/state-worker-beat-up-at-seiu-meeting/
I'm reminded of Eliot Ness: "They send one of yours to the hospital, you send one of theirs to the morgue." Sounds like a strategy that might work.
Here's the police report on SEIU thugs beating almost to death a black man at a health care rally, and the story of the Democrat St. Louis District Attorney who has been bought off by the union and won't press charges (featuring Vito Corleone pic):
Police Report On the SEIU Hate Crime:
http://biggovernment.com/2009/11/09/exclusive-police-report-on-gladney-beating-by-seiu-thugs/
Corrupt DA Protecting SEIUM/b>:
http://biggovernment.com/2009/11/10/st-louis-protects-its-own-a-da-turns-a-blind-eye-on-the-gladney-beating/
Are tax cuts the only thing left to do? Low interest rates for the foreseeable future, gov’t spending has been spent (at least politically). Fiscal policy (taxing) should become as fluid the monetary policy.
It's impossible to cut spending. Too many ingrained constituencies and grievances. Spending can only go up, up, up. Higher and higher. This is not an 80s pop song.
This is not an 80s pop song.
No, but it'll ruin your day at least as well.
Eh, George Bush claimed he was creating jobs with his tax cuts, and those claims were equally iffy.
Indeed. However, I still don't understand why the problem is not that our President makes ridiculously silly promises regarding his policies, but rather the fact that people actually criticize him when the promises turn out to be ridiculously silly.
Sure, but Bush is supposed to be awful, not the precedent for The Haloed One.
I'd have about a million times more sympathy for Obama if he'd just come out and said "The president has very little control over employment in the economy." He would have been attacked for it, but it would have the virtue of being true.
As is stands, he's promising to create jobs while taking advocating actions that will destroy them.
"The president has very little control over employment in the economy."
Could Obama come out for limiting immigration as a way of boosting employment? Sure. Has he? Nope.
Could Obama force the Executive branch of government to "buy American." Sure he could. Has he? What effect would this have on American jobs?
Could Obama ask the Congress to slap import duties on Chinese products as a way of boosting employment at home? Sure he could. He has chosen not to.
A President who wants to increase employment in the United States could do lots of things that this President has not done. The reason is that he wants us unemployed and dependent on the Democrat Party for our food.
That keeps us his slaves.
What if he just prohibited trade between the states also. We'd sure as hell have a lot of work to do if we could no longer buy things that could be made more cheaply in other states. If cutting off purchases from other countries could help us, think of what cutting off purchases from other states could do.
Johnson_85
By yor "logic". Saudi Arabia, Iran and China are the same as
connecricut, Vermont and Wyoming.
Right?
MTG: Even in mercantilist fantasy land, killing immigration doesn't boost jobs, it just takes them away from "those people" and reallocates them to "us". Of course, in real economics you tend to notice that you just destroyed your customer base, and there's now jobs for nobody, but I don't expect that you've thought things through that far.
Josh: Well hey, if cutting off trade makes us more prosperous, why does it only work with foreigners? Me, I'm refusing to buy anything that wasn't made by somebody on my street. It'll keep the 50 of us in jobs for life.
I'll spot you that it's hard for the President to directly create jobs. Surely you agree, however, that an adminstration that causes uncertainty in the market, or fear of government intervention, etc. can destroy entrepreneurial spirit?
If you've spent time with true entrepreneurs, and I'm guessing you have, you realize they really are a different breed. Similar to how the sales force at a large company is very different than the folks working in accounting.
Entrepreneurs are "meat eaters," but also cautious in how they gamble their own money. And most of the ones I know fall on the "wary about government" side of the fence.
When they hear that taxes or regulations are falling, and they believe it to be at least semi-permanent, they become more aggressive in building their businesses. Job creation, capital investment, more advertising, etc. When they believe that taxes and/or regulations are going up, they recoil.
Do you disagree?
Megan - "George Bush claimed he was creating jobs with his tax cuts, and those claims were equally iffy."
I'm trying to find a reference to a direct quote from W. stating that he created any jobs.
This is as close as I can find (from the 2006 State of the Union):
"In the last two-and-a-half years, America has created 4.6 million new jobs ... "
Please notice that he said AMERICA has created 4.6 million new jobs.
These sorts of appeals to logic and the record are pointless.
I don't know what GWB claimed - I do know that he used tax cuts to help pull the US out of the bubble burst / recession that he inherited from his predecessor, which was exacerbated by 9/11. And I do know that the unemployment rate went down quite a bit, to the point where the Dems/MSM were required to bitch about wage stagnation.
BHO promised that if we followed his [Pelosi's] plan, we would not exceed 8% unemployment.
Your efforts to defend your BHO endorsement from last year are getting rather stale.
Holdfast - "Your efforts to defend your BHO endorsement from last year are getting rather stale."
I assume that you are referring to Ms McArdle.
I neither endorsed nor voted for President Obama.
And I agree that the policies of GWB "help[ed] pull the US out of the bubble burst / recession"
McArdle - it's time to fess up to your lies and smear against Dubya.
Hmm. I have predicted that the left will discredit the unemployment statistics from the Bush era. They couldn't have been that low. It is impossible to have rates lower than the current number.
I've seen a few comments to that effect already. And here is another one.
Derek
"George Bush claimed he was creating jobs with his tax cuts, and those claims were equally iffy."
Megan, Megan, Megan. Not equally. Dubya, left money in the private sector. The Democrats have printed money and doled it out to pet projects and outright pork. The damage done with tax cuts (if one believes there are any) was only in increasing the deficit (if it did). The harm done by the 2009 method is varied, multi-leveled and cumulative.
If Obama doesn't want to be blamed for high unemployment, he should stop claiming that his policies have the ability to dramatically reduce unemployment. Deal?
Or do something about high unemployemnt.
The government of the United States imports cheap labor from overseas with work visas. He hasn't stopped this. They're importing just as much cheap labor at 10.2% unemployment as they were importing at 4% unemployment.
Wake. The. Fuck. Up. People.
There are thousands of policies that could be implemented by a smart President tomorrow if that president really wanted employment in the United States to improve - even temporary policies.
It does not benefit Barack Obama for people to be working. He wants us yoked. He wants us enslaved to our poverty.
Wow, it's like Alex Jones meets the 1600s.
Alsadius, are you really going to argue over and over again that the President can't do his job?
Do you really think that the President of the United States has no control whatsoever on the state of the economy. And is that the re-election message that the Democrats are going to try to foist on the American Public in 2010?
Because if it is, I'm encouraged. Happy Days are Here Again.
You guys are going to be fired by your bosses en masse.
The President does have some control over the economy, though a lot less than you think. He can certainly bugger it up easily enough if he really wants to, but making it work well isn't really a role that any politician is well-suited to. Sorry to disappoint man, but there's no panacea here.
perhaps we should just stop using the expression "the government creates jobs." it's a fairly inaccurate and ridiculous idea. governments can certainly create conditions that are more or less conducive to job growth, but unless the government actually hires someone, or maybe hires a company to fulfill a contract, it makes no sense to speak of the government creating jobs.
Well said.
The role of the government should be to develop and sustain an economic system where private business can flourish and create jobs.
Hence, W's tax cuts helped create jobs.
President Obama's Cap and Trade - Health Care - Roll back of W's tax cuts (next year) will make the unemployment problem worse.
"... perhaps we should just stop using the expression "the government creates jobs."
Can governments destroy jobs? Can it have policies that are employment-hostile?
The United States government imports cheap labor from overseas with visa's? Doesn't this reduce the number of Americans with jobs? How could it not?
The United States reduced or eliminated import duties on Chinese products that receive subsidies from their communist government. What effect did this have on jobs in the United States? It destroys them here and moves them there.
The government doesn't "create" jobs. But the government damn well can destroy them here with an anti-business environment. And Barack Obama is doing his level best to ensure the destruction of as many American jobs as he can.
The United States government imports cheap labour from overseas. So some products are cheaper than otherwise. So the people who brought those products have more money leftover to spend on something else. The Americans can get jobs supplying those products. Furthermore, the cheap labourers have more income than they would have had in their home countries, and will spend some of this on non-tradable goods, thus increasing employment for Americans.
The idea that more labour causes unemployment is about as empirically disproved as it can be. The population of the USA was 5.3 million in 1800. In 2000 it was 281.4 million. If more people meant more unemployment then we should have been unemployment rates of 98% in 2000 in the USA, assuming that there was full employment in 1800.
As for import duties, again the same logic. Americans who import get the imported goods cheaper so they have more money to spend on something else. The Chinese get American dollars. They can either spend or invest them in the USA, creating jobs in the USA, or they can trade them with someone who does want US dollars, again to spend or invest them.
Tracy,
Most people aren't trustafarians like you.
We need to produce and consume.
Yeah cheap immigrant labor and even cheaper imports keep prices low.
They also keep a lot of people out of work.
JustinHB: Nope, cheap labour has no affect on the unemployment rate.
(If you don't believe me when I make this bold statement, why should you expect me to believe you when you make your bold statement?)
I assume by your reply here that a trustafarian is someone who tries to base their views on reality and provides supporting arguments and empirical evidence for them. I hope you are wrong in your assertion that most people aren't trustafarians, but I suspect that on this point you are right.
Deficits don't matter. Until the other guy is running the show.
Or the new guy could TRIPLE the size of the deficits and then people way, "Oh. Yeah. Now you've convinced me. Deficits matter."
What exactly is he supposed to do to create all these jobs? Use the book proceeds to buy a Dairy Queen franchise?"
Well, Krugman wants him to bring back the WPA and CCC.
(As our leading trade economist of the 1990s continues to seek to transform himself into a leading macro economist of the 1940s.)
But I'll concede this point:
Obama's people claim their $787 billion stimulus will create 6.8 million "job years" of employment.
The average wage in the US is $42,000, says the BLS. So if they'd just hired 6.8 million people at $42k each to pick up trash or dig holes and re-fill them or whatever, it would have cost them only $286 billion and they'd a had $501 billion left over for other good things.
Alternatively, they could have hired 18.7 million people at $42k each to build a new Great Pyramid, and unemployment would be 1% now.
Or they could just steal the $787 billion and we'd probably wouldn't string the guy up.
So, they decided to just take the $787 billion and fuck the jobs.
Let them eat cake.
Obama should suggest an aggressive payroll tax cut. There are lots of reasons to like this idea, including the fact that it's easy to implement, it's targeted directly at job creation, and you don't have to call it "stimulus" -- you can call it a tax cut. Which means the Republicans would find it hard to oppose. I did a little back of the envelope math the other day -- I think if they were to cut payroll taxes (not the employee match) by 70% in the first half of 2010, 55% in the second half of 2010, 40% in the first half of 2011, and so on -- until it ends (with a 10% cut) in the first half of 2012 -- it would work out to something like a $300 billion cut. Most of front-loaded for 2010 and early 2011.
Realizing that 70% of GDP is related to consumer spending,
A case could be made for reducing both the employer and employee side of the tax.
Lowering the employee side would result in more cash in people's pocket to spend and hopefully spin up the economy.
"Realizing that 70% of GDP is related to consumer spending a case could be made for reducing both the employer and employee side of the tax."
You should realize that 70% of GDP is related to Chinese imports.
Almost nothing is manufactured in the United States because we allow China to subsidize their workforce and import with no tax into our huge market.
Barack Obama supports China jobs.
He does not support US jobs.
He's working for them. Not us.
Movertyperguy, you keep implying that the Chinese subsidises are bad for American jobs. So what exactly do you think that the Chinese do with the money they get from their exports?
Angst: Well, there are obviously a lot off different ways to structure a tax cut.
But here's the thing: if one's goal is to cut the unemployment rate one has to concern oneself with business decision making at the margin.
What I mean is this: the US economy -- as huge as it is -- is always creating lots of new jobs. Even at the height of the Great Depression (call it the summer of 1932) this was the case. The problem is it's always destroying jobs, too, and sometimes the latter number is bigger -- even a lot bigger -- than the former. And so there's net job loss.
Anyway, as you may be aware, this net job shrinkage was running something like 700,000 per month when Obama took the oath of office. And it's now down to, what, around 200,000? That's about a 70% decline in the pace at which this economy is shedding jobs (I'm quoting from memory so my numbers may be a bit off). Ergo, a modest increase in the rate of job creation, or a modest decrease in the rate of layoffs, will shift us from net job loss to net job gain. And that in turn eventually means the unemployment rate begins to decline.
So, long story shot, making it marginally cheaper to employ people will increase hiring and retention at the margin, and help speed up the eventual commencement of declines in the unemployment rate.
Please don't misunderstand me.
I agree that lowering the payroll tax for employers will help. I agree.
I'm only saying that lowering the employee side might help as well.
Regarding the rate of job loss -
Jasper - "net job shrinkage was running something like 700,000 per month when Obama took the oath of office. And it's now down to, what, around 200,000? That's about a 70% decline ... "
The key point is it that is still going down. If you would like a graphical representation:
http://keithhennessey.com/wp-content/uploads/2009/10/payroll-employment-jan09-sep09.png
If I was on the Titanic, I would not have been cheered if the Captain had announced - "Good news passengers! We are still sinking, just not as fast."
The problem is that the recurring theme so far in this presidency is making bold, unrealistic claims and then offloading to a toxic Congress. If the POTUS does not want to take the heat, he should keep his mouth shut and/or lead concrete steps with realistic expectations.
I don't think he will have any problem accepting praise for any aspect of recovery, whether it was of his doing or not. So the criticism now is appropriate.
If I was on the Titanic, I would not have been cheered if the Captain had announced - "Good news passengers! We are still sinking, just not as fast.
Angst: but we're not on a ship in the Atlantic. We're talking about an economy. And as always, net job growth is preceded by a decrease in net job destruction. In other words, what we're going through now. I suspect that in fact the president's advisers are cheered, because they know that declines in the unemployment rate will follow soon, and because the election last week wasn't the midterm.
I really hope you are right.
But please check out this unemployment graph-
http://keithhennessey.com/wp-content/uploads/2009/10/payroll-employment-jan09-sep09.png
It does not look encouraging in the near term.
(And I agree that last week's election results are not relevant to unemployment.)
But please check out this unemployment graph...It does not look encouraging in the near term.
The graph doesn't tell us anything either way about "the near term." It's simply a graph demonstrating the reduction in the number of jobs nationally over the past year. My point is, the pace at which this reduction is occurring has slowed markedly, and that, in simple mathematical terms, this is the prelude to a resumption in the growth in the number of jobs.
(And I agree that last week's election results are not relevant to unemployment.
I'm not saying that at all. I think it's rather obvious that the crappy economy has voters in a foul mood, and that they're more likely to take out this foul mood on the party associated with incumbency, the Democrats. I just think that what transpired last week isn't necessarily going to occur in November of 2010, because I think there's a strong chance we'll be experiencing fairly robust job growth by then.
Jasper - "in simple mathematical terms"
I really don't want to get down into the mathematical details (but I do have a PhD in Engineering (Mathematical Modeling - Non-linear Systems.)
While you may speak of the first derivative (the rate of change of unemployment) or of the second derivative (the rate of change of unemployment is getting better.)
The REAL issue is the integral - JUST HOW MANY AMERICANS HAVE LOST THEIR JOBS AND HOW LONG WILL IT TAKE FOR THEM TO BE RE-EMPLOYED.
But then again - that is just simple mathematics.
Angst
you obviously can read the good news in the graph.
UE will bottom out at only 18% in 3 years.
"Obama should suggest an aggressive payroll tax cut. There are lots of reasons to like this idea ..."
How does that help Obama's reelection? It doesn't.
He needs us to be poor and dependent on him for a check each month ... so employment would actually reduce our desire maybe to vote for him.
So, it won't happen.
It doesn't help Obama for people to be employed. So unemployment will keep rising since he's determined not to do a fucking. thing. about. it.
Fun reading the comments. Megan, I don't think they agree with you.:) Lots of people would prefer King Log.
I'm glad someone else is smiling at the comments. I'm pretty sure that if MM had written a modest note of support for BO's non-tinkering with the law of gravity, at least 50 people would have written comments demonstrating how she was completely in the pocket of big-gravity.
Megan says "What exactly is he supposed to do to create all these jobs? Use the book proceeds to buy a Dairy Queen franchise?
The president has very little control over employment in the economy. The stimulus undoubtedly kept the economy from losing even more jobs than he did."
This is pretty shallow:
* Very little of the stimulus money has been spent. That which has been spent has been spent very inefficiently. Since when is command and control the best way to stimulate?
* Immediate tax reductions (payroll tax holiday, anyone?) would have cost no more on the budget, but reached the real economy much sooner - which was the whole point of the stimulas, n'est-ce pas?
* Businesses need certainty to invest for the future. Nothing kills business investment like uncertainty. But Obama has sowed business uncertainty left, right and center: daemonizing businesses and businessmen and women; threatening tax increases, not just for health care but in other areas; new proposed regulations with potentially huge compliance costs for small businesses and partnerships. Cap and trade? Health care bill taxes? All up in the air. This list goes on, and on, and on. No one knows what this administration is going to get done, nor the effects on their business.
Presidents do not "make jobs", but a president sure can destroy them with business-unfriendly ideology and policies. This president is a loose canon.
I am absolutely amazed you "never noticed" this hostile business environment - or never connected it as once cause for the length and depth of this recession.
Of course the congress bears much of the blame, but the veto power could have kept them in check. Fat chance.
Very well written, Don.
It should be noted not only that most of the stimulus hasn't been spent, but of the funds which have been spent, almost all of it went to close state budget shortfalls and directly into the teachers' unions.
It's business as usual for the Democrats and Barack Obama. They're taking care of their union friends and ensuring government paychecks keep on rolling in.
The rest of us are fucked.
Kennyboy-
The difference between a business and a government program is this:
Failure kills the business. Failure does not necessarily kill a government program. In the case of a business failure, good money does not chase after bad. A governemnt program, on the other hand, has its own momentum and a never ending spigot of cash.
That's why I reflexively support business over government.
Kennyboy
You're worng.
Failure kills business
Failure ensures more money and growth for ALL government programs.
Sorry Kennyboy
Meant NOT WRONG
Three duds in a row. Bit of a bugger, isn't it?
@ Jasper @Angst:
but we're not on a ship in the Atlantic;
We're talking about an economy.
Yes we are, and some of us think the economy
can sink, i.e. change fundamentally and
permanently for the worse, a la Argentina;
Start your vacation on the Titanic, survive
the sinking, and spend the rest of your life
working as a crewman on a tramp steamer.
At least one of us (me) can see a small but
real (single digit) probability that the US
economy could go into cardiac arrest, and die,
or suffer permanent damage to the body politic,
due to prolonged interruption in the delivery
of food, fuel, power, water, public services.
Call it the Stationary Shark Scenario.
Anybody care to place a lower bound on economic
decline, and related decline in quality of life,
and give a reason why, other than:
"I refuse to look in that direction, because
there is nothing there I want to see." ?
Well, yes, and there are lots of people wearing tinfoil hats as well.
I mean, I agree eight years of GOP governance has left the economy and the financial system in pretty dire straights, but let's not get all crazy.
After all, we've experienced periods of higher unemployment than this before (Reagan recession), and we've also dealt with significantly higher levels of public debt (late 40s and much of 1950s) before.
Our problems aren't trivial, but they're also not unmanageable, either. We're essentially looking at either A) pretty sharp cuts in services in another ten years or so or B) tax increases equal to something like 5% of GDP. I think we both know "A" is pretty unlikely given the aging of the population, and the private sector's inability to deal satisfactorily with health care.
I understand conservative discomfort with current trends, because they unequivocally point to the public sector settling in at a larger share of GDP, with the higher taxes to boot. But don't expect the rest of us to hyperventilate because of the possibility that in 2023 the political economy of the United States looks a bit more like Canada or Western Europe. Holland? France? Ontario? Sure. Argentina? I seriously doubt it.
Jasper - "higher unemployment than this before (Reagan recession)"
Come on Jasper, Please don't try to fool the readers who do not remember the early 1980's
Previously, President Carter had turned on the US MINT printing press and created an unprecedented volume M1 money supply dollars resulting in stagflation (a stagnant economy with high inflation.) It was very painful to live through.
President Regan was voted in to (among other things) correct the fiscal problem which along with Fed Chairman Volcker's help he accomplished in 2 years.
Was it painless - NO
Was it necessary - YES
Was the problem caused by the Carter administration that did not have the skills necessary to run the country effectively - ABSOLUTELY.
Before you call me a right wing-nut crazy guy - let me admit that I voted for Carter. Objectively, I just have to say that on reflection, he did not have the talent for the job.
Previously, President Carter had turned on the US MINT printing press and created an unprecedented volume M1 money supply dollars resulting in stagflation
No he didn't. US presidents don't control the money supply. The fed and banking system do. The inflation we suffered in the 1970s had its roots in the sixties, and intensified because of the oil shocks. Carter was actually dealt a miserable hand, and had little to do with the economic problems of his term. Indeed, it was Jimmy Carter who appointed the man who eventually did tame inflation, Paul Volcker.
Anyway, my point wasn't to debate what brought about the severe recession of Ronald Regan's first term. My point was that we dealt with double digit unemployment in the recent past without experiencing the type of turbulence (currency collapse, hyperinflation, military coups) one associates with Latin America.
Jasper says..
"After all, we've experienced periods of higher unemployment than this before (Reagan recession)"
Jasper I was an adult and remember both periods, do You?
This depression is much worse that the early 80s.
As a recent graduate in 1982 I had no problem getting a job, even if they sucked.
Now none of my kids can find any job outside of my business. Their friends are college educated baristas and waiteresses.
In 1983-4 there a number of factories that were opening here.
Now everyday I see more business closing.
Then foreclosures were a worry.
Now they are a grim reality.
California now has the worst unemployment its ever had, even more than the 30s depression.
You remind me of an old PJ O'Rourke line. Something to the effect of "We've had much worse deficits than this, such as during the Great Depression or World War Two. However, we're not in a depression or a world war right now, though both options are being seriously considered".
"At least one of us (me) can see a small but
real (single digit) probability that the US
economy could go into cardiac arrest ... "
Please add me to to the list of very concerned individuals.
And, I refuse to NOT look or prepare for the possible downside.
It has been too long since Megan last posted a Black Swan blog.
What Obama could be to help the employment situation is absolutely nothing. The threatened taxes and regulation from Cap & Trade, Health Reform, and other legislation stops prudent businesspeople from hiring.
If, post-TARP, Obama had done absolutely nothing, the employment situation would be brighter today.
The real problem is that Obama didn't design a proper stimulus. He wanted to be bipartisan and sing kumba yah with Republicans, so he listened to Republicans and conservative Democrats who told them that a proper stimulus should not be too big, should be front-loaded with tax cuts, and should not have too much state aid. Result? The tax cuts had NO effect( aS predicted by Krugman), state unemployment went up as cash strapped states cut back on employment, and conservatives now claim that stimulus programs don't work ( although they worked in China, whose economy came roaring back after they applied a big stimulus).
See Krugman here:
So Christy Romer’s math looked similar to mine: even given what we knew last December, the straight economics said that we should have a stimulus much bigger than the Obama administration’s initial proposal. And given what happened to that proposal in the Senate — we actually ended up with only about $600 billion of actual stimulus — what we eventually got was half of what seemed appropriate in December. And the actual news on the economy since then has been worse than was expected back then, so that the stimulus now looks way short of what we need.
http://krugman.blogs.nytimes.com/2009/10/05/the-story-of-the-stimulus/
Krugman, btw, has been so dead right on the stimulus that conservatives can't stand it. I want to say, "Eat your heart out, B****tches!" but frankly, I wish that Krugman and the liberals were wrong.
So if really big stimulus packages work, why has Japan's economy been in the toilet for the last decade and a half?
The problem with your narrative is the stimulus was not small, was not based on tax cut, and was not front-loaded.
So of course it didn't work.
The only thing is, dishonest hacks like Krugman aside, some people looked at what was proposed, and predicted it wouldn't work beforehand. These people are called, "Conservatives."
Since we (conservatives) were right and you (liberals) were wrong, I expect an apology and adjustment to your political views immediately.
Megan:
I'm almost at a loss for words. I went through the whole Movable Type registration thingy just so I could write this to tell you: Please Shape Up.
What you said about the POTUS not having much impact on employment is what I have said for decades. But, you know what? --- the man said HE had a program to deal with it. "Follow me," he said, "I'll show you." OK, Barack, let's see your stuff.
Then he said, basically, "We're gonna spend upwards of a borrowed trillion on this, via public sector projects (basically)." And I'm saying: Huh? Let's see. That's slow, indirect (i.e., not fast-tracked through to the people who will spend the money on products and services --- tomorrow), probably contributory toward an even more bloated public sector -- and the impact will be hard to measure." So, it violates 4 basic tenets of effectiveness in terms of stimulating the economy. In baseball, that would be like throwing a hanging curve over the plate, then having your outfielder drop the resulting line drive at the wall, then throwing toward the wrong base, then having that throw go into the crowd.
Now at this point, I have become disenchanted by the guy I kinda liked because he promised a post-partisan new approach to governance. What happened instead? The leader has wandered off in some strange direction, one that looks like eventual financial meltdown to this old hand, and the troops are whispering, "how much longer should we follow before we bolt".
A retired business owner, I now realize I was wrong to think a POTUS was powerless to affect employment statistics. If I were still running my business that I built from one up to 22 employees, I would do what the current owners are doing: AVOIDING any staff additions, because as sure as the sun will rise tomorrow this administration and all future ones as far out as the mind can imagine will be taxing more and more and taxing the taxes to pay interest on the money we are borrowing from outside our borders to pay interest costs. My granddaughter operates that way, but she is only 23 and will have to learn the lesson for herself. She's starting to see the light, but the light has not reached Washington DC yet; those folks are still stumbling in the dark looking for the circuit breaker box. Truth is they are tripping over the furniture and messing the place up pretty badly in the process.
The ONLY business my former company can afford to take, based on the projections as well as gut feel business sense, is from current customers for current products that have higher than normal margins and low delivery and installation costs. Barack Obama and his inner circle of advisors, I fear, have no appreciation for what it takes to GROW a business --- starting with an outlook where you can HOPE to eventually recover the investment costs for expansion and diversification, without seeing the rules and costs and taxes CHANGE on you via legislation, fiat, and taxation philosophy. (There's your "hope and change").
Where we are headed is into toxic territory for business, and the otherwise entrepreneurial souls, and on a path with land mines installed. It doesn't help that our state legislature is almost militantly anti-business, and our local pols are also passing rules about paid time off, etc. It's like swimming against the current, with high waves coming at you. All you can really do is put on the flotation device, get rid of whatever is excess, and try to ride it out. "Create jobs????" Unbelievable audacity to even UTTER those words. It would make for a good Monty Python episode ("Federal Office of Job Creation, Specializing in Green Jobs" issuing meaningless vouchers good for one job if you can find it) if it weren't so blooming depressing (literally).
We are in the early stages (sorry to say) of (re)learning a very old lesson. I guess our children will have to live through it as I will not live long enough to see the exit strategy take effect --- if there is one. Business people are resourceful if they can get air and room to operate, but there comes a point where suffocation takes its toll and the walls keep moving in.
At this point, I would logically move to an outline of what COULD have been done, the things this Congress would never have the wisdom to do because it would diminish the role of government. I have a long list but I will spare you.
I just watched the pre-game show on Monday Night Football, where one of the features is "C'mon Man" showing the worst screw ups that professional athletes and coaches should know better than to do. What I would say to Obama, Pelosi, Reid, and the rest of that gang regarding their version of "stimulus" is simply, "C'mon Man". And to you, Megan, based on this one column of yours it would be "C'mon Ma'am".
"None are so blind as those who refuse to see".
What's a marvel here is how the commenters here are the exact lineal descendants of Herbert Hoover. Their comments echo exactly Herbert Hoover's prescriptions for dealing with the Great Depression.
Raising trade barriers? Check.
Balancing the budget? Check.
Cutting the deficit? Check.
Tax cuts? Check.
Doing nothing? Check.
How did that work for Herbert Hoover?
Wow, do conservatives EVER learn from history.
There's a bunch of people here who are completely against raising trade barriers, myself included. Yeah, there's a few who support it(ill-educated blue-collar resentment will do that), but it's hardly a position this comment thread is taking as a whole.
Regarding Hoover on deficits, it's not as simple as you suggest. Remember that most of the automatic stabilizers we have now didn't exist in 1929, and taxes were generally less strongly progressive, so the deficit wouldn't be expected to spike nearly as fast as it would today.
1928: 939 million surplus (pre-Hoover)
1929: 734 million surplus (basically pre-Depression)
1930: 738 million deficit (early Depression)
1931: 462 million deficit
1932: 2735 million deficit
((Source)
For comparison, FDR's 1933-1939 budgets ran deficits between a mere 89 million in 1938 and 4304 million in 1936, and WW2 at its peak was a 54.5 billion deficit. In other words, Hoover started fairly slow, but by 1932 he was running a deficit bigger than three of FDR's Depression-era deficits. Similarly, "doing nothing" might be what Hoover is remembered for, but it isn't especially true. Hoover did lots of stuff, he just wasn't as aggressive about it as FDR was.
I know that you're giving a good summary of the folk history of the Depression, but it isn't really a good picture of what actually happened.
There's a bunch of people here who are completely against raising trade barriers, myself included.
That's becuase you support Obama's high unemployment.
The United States is not the same place that it was in 1939, sir. Our economy is structurally different now than it was then. That's why 1939 economic policies aren't working this time around.
If you haven't noticed, there's 17.5% unemployment/underemployment in the country. Obama's policies have so far produced misery and failure. You know, the definition of insanity is doing the same thing over and over again but expecting a different result.
Everything Obama has done to date has produced a 17.5% unemployment/underemployment and growing. He's a failure sir, because he can't think past history.
We need a smarter president.
Ah, right. Since Obama is evil and wants everyone to be unemployed, that means that everyone who disagrees with you is also evil and wants everyone to be unemployed. I forgot how insane troll logic worked.
Also, stop citing underemployment numbers naked. Give us a historical baseline on them, or stop using them. It'd be like me telling someone who never took math to turn their car a radian and a half to the left in 12 Roman miles - it's a meaningful statement containing accurate information, but there's no way that they can parse it.
The fact is, most of the time, the best the president can do is avoid making things much worse. And though I have many disagreements with the specifics of Obama's policies, I'd say that largely, he's kept from making stuff worse
McArdle, what the hell are you smoking? The President and his Democrat criminal co-conspirators in Congress pulled $800 billion of potential private capital out of the economy in February 2009, and...did what, exactly, with it? So far as I can tell, shoveled it to prop up incredibly sclerotic state bureaucracies -- Hello California! -- so they wouldn't have to seriously confront their profligacy and maybe, you know, fire a couple of diversity officers or assistant associate directors of public agencies in charge of highway lane striping standards, and sent some more odd bazillions off to favorite Democratic constituencies (public unions, teachers) who all work in counter-cyclical industries almost unaffected by the recession.
They might as well have dropped out of black helicopters on all the banks in the nation, and at gunpoint robbed $800 billion from the savings accounts of its customers. And you think this is "refraining from making things worse?" Geez. You'd think an economist would recognize that government cannot spend money unless it first acquires it, and the act of acquisition itself is fraught with considerable (and almost entirely negative) influence on the economy.
stonetools, you ought to learn a little history, so that you realize Herbert Hoover was not a conservative. He was of a very similar interventionist, government-action, sympathy for the little guy mindset as his successor, Franklin Roosevelt.
Indeed, Hoover had a very active response to the Depression, just like Roosevelt's. And, just like Roosevelt's, his response made things worse.
If you want true conservatives with a "hands-off" response to recessions, you want to look at Harding and Coolidge, guided by Andrew Mellon, who did just that in response to the post-World-War I recession, which started off far worse than either the 1929 crash or the present recession.
Of course, that would be tricky for your argument, because that recession was over very quickly. Just like Reagan's 1982 recession, come to think of it. Or George Bush's 2001 dip. In fact, like any recession to which conservatives respond.
It takes a liberal statist to turn an ordinary business downturn into a decades-long period of depression, stagflation, or some Japan-like "lost decade."
And then, of course, try Jedi mind tricks to convince people it was actually the other way around. FDR "inherited" Hoover's mess! Carter inherited Nixon's! Obama inherited Bush's! Uh huh. Riiight. Good thing there's one born every minute, and your lot have charge of their education.
And then, of course, try Jedi mind tricks to convince people it was actually the other way around. FDR "inherited" Hoover's mess! Carter inherited Nixon's! Obama inherited Bush's! Uh huh. Riiight.
The economy shrunk by something like 40% between the summer of 1929 and the time Roosevelt took office, with unemployment shooting up to 23%. Are you seriously claiming FDR didn't inherit a "mess" from Hoover? I won't bother getting into the Bush-Obama handoff, as that's dealing with current events, and folks are understandably want to be nonobjective. But Hoover-FDR? Seriously? Seriously? How can you stand being so stupid?
Heh, it's an article of libertarian faith that "gumint" intervention CAUSED the Great Depression, and made it worse, and that the economy recovered without the government stimulus provided by spending during WW2. Now they believe this as fervently as creationists believe in a 6000 year old earth, and based on about as much evidence, but there it is.
For such believers, gumint stimulus cannotNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOTNOT create jobs, because... well, Hayek, or Friedman or Reagan said so.
Such people also believed that Reagan didn't run any deficits as he spent his way out of the 1982 recession and didn't raise taxes in 1983, either.
There also wasn't a recession in 1974 during a Republican administration because recessions don't happen under Republicans.
It goes without saying that the economy also didn't grow rapidly from 1950 to 1980, when tax rates were much more progressive.
Say none of these things for these are all heresy , according to conservatives, and cannot be true!
WW2 did end the Depression, yes, though I'd argue that the effect had far more to do with the psychology of "Well thank got that sixteen years is over, let's get back to work!" than it had to do with the deficits. The deficits and paper prosperity of a total-war economy did get people's minds going in the right direction, but the effect had as much to do with the fact that it created a clean break with the past.
Yeah, Reagan ran deficits. Bush did too, though 2001 was a 128 billion dollar surplus, so I'm not sure how you defend that particular bump. As for 1950-1980, I'd question your choice of years - growth during the 70s stunk. The 60s were good, after Kennedy(of all people) made taxes significantly less progressive by cutting the top bracket from 90% to 70%. The 50s were good, but that was mostly a rebound from the Depression and the war, giving people the first chance to build peaceful, prosperous lives in a generation, as well as an integration of 20 years worth of technological growth into the civilian economy.
I don't claim that the evidence of history agrees with my viewpoints entirely. Economic data is complicated and messy, and anyone can find evidence for any theory and problems with any other. But it's not as bad for my viewpoint as you're claiming.
Also, I don't know about other libertarians, but I for one do know how to spell "government" correctly, for what it's worth.
No, he's arguing that FDR and Hoover offered substantially the same sort of policy response, with the difference that Hoover had the misfortune of going first.
That is, the "inherit a mess" stuff is just a bunch of political nonsense obscuring the reality that the two different politicians were really not much different except for historical accident and timing.
Apologies, for screwing up the HTML on that post.
Did Megan post like this when Bush was in office, and the DemSM would run every story about how despite low unemployment, actually U-6 and uhhhh, the quality of jobs sucked, and uhhh, rich people got more tax cuts, etc.?
NOPE.
So, now the left is all puzzled, how come the right is saying quasi-silly nonsense like blaming Obama for unemployment? Well:
1. Obama did have stimulus, did promise jobs, does own GM, does own AIG, does plan to increase taxes on businesses, etc.
2. If you want people to be fair to you, maybe you should have been fair to them in the previous 8 years....Nah?
OK, the next exciting fair-play turnabout on the Dems is: Obama did not connect the dots, and our soldiers died at Ft. Hood.
Oh, and maybe Megan did. In which case, good for her. Now, let's hear more about green shoots.
After reading these blog posts, I've seen the light: Obama is truly the Messiah. He's dying, of a billion one dollar paper cuts, for all our economic sins. He truly is responsible for the state of our economy. It only takes one man to bring our entire economy crashing down, and to keep it there. Only he can save us...If only....If only....
I don't think it's "piling on" to use the President's words against him. Nobody forced him to invent a graph projecting unemployment "with stimulus package" against "without stimulus package." He owns it and now he has to stand and watch as the numbers fail to fall anywhere close to the predictions. Arguably the financial collapse catapulted him into the White House. What the economy giveth, the economy can taketh away.
This is one of my primary complaints about the President's staff, poor execution. We don't get the short-term benefits of the stimulus because the money is still sitting unspent, but are feeling the long-term harm because everyone knows the piper will need to be paid eventually (multiplied by the knowledge that much of the spending is going to be wasted in pork-barrel schemes).
Sorry to mix metaphors.
When Obama justified spending a trillion dollars of our tax money with the claim it was going to save and create jobs he lost the right to claim nothing could be done to prevent unemployment.
This principle applies to his supporters as well.
With notable exceptions you guys should talk about sports, or cars or something. It's like listening to a debate about who would win in a fight between Batman and Captain America. The willfull misrepresentation of history, both recent and distant and the nonsensical partisan interpretations (Obama WANTS to DESTROY AMERICA, BWHA HA HA HA haaa...) views are simply sad.
What exactly is he supposed to do to create all these jobs?
It is more about what he is supposed to not do. His aggressive agenda has made it more difficult for businesses to plan. They aren't going to want to hire more people with so many massive uncertainties hanging over them - health care, almost certain tax increases, new regulations, cap and trade, a stepped up war in Afghanistan, etc...
I see no evidence that Obama prioritizes. He seems to want it all - as soon as possible.
I'm late to the party, but...
"though I have many disagreements with the specifics of Obama's policies, I'd say that largely, he's kept from making stuff worse..."
I think this statement is only true if you consider the time frame for which Obama can make things worse. In the near term you're probably right.
In the mid/long term Obama and his policies are definitely going to make things much much worse. The same is true for many of his predecessors.
Most (all?) of our previous Presidents, when faced with the choice of:
Some necessary pain now, in order to have better times later.
or
Drag things out as long as possible in order to completely screw up the system and potentially crash the US economy.
Have always chosen the later option. I have no reason to conclude any future US President will -ever- chose the first option, as they will always try to push "judgment day" make through some kind of scheme which means makes the real and absolute crash of the US economy a certainty. The only question is when. Maybe it won't come in my lifetime, so perhaps I won't have to worry.
(the Soviet Union lasted a couple generations before going belly-up, China is still running, massively unstable economies take time before they collapse)
samX: I think it's unfair to blame Presidents for postponing the right decisions. It's the fault of all of us - we all postpone the inevitable in our own lives and this simply happens in government as well. Human beings are fundamentally flawed!
then human beings are fundamentally blameworthy
Expanding government increases unemployment. Thus Obama is completely responsible for this unemployment. Hard money market economies never experience this level of consistent unemployment. It is entirely a creature of interventionist, often Keynesian states.
It is historical fact that government intervention caused the Great Depression. If Hoover had simply done nothing, the economy would have recovered in a couple of years and we'd not ever have FDR and his accursed New Deal. Fuck Hoover and I hope he's roasting in hell forever!!!