(Over)regulation

Here’s an example, from The Des Moines Register.  Federal banking and mortgage company employment “guidelines,” issued in May 2011 and February 2012, respectively, require these institutions to not employ

executives and mid-level bank employees guilty of transactional crimes, like identity fraud or mortgage fraud.

Fear of Federal litigation, though, has driven these enterprises to apply the regulations across the board to all employees, even the most junior.  Natasha Buchanan, an attorney with Higbee & Associates in Santa Ana, CA notes that

Banks are afraid of the FDIC and the penalties they could face[.]

The results include this one, involving a customer service rep making the princely sum of $30,000 per year.  Richard Eggers is a 68-year-old Vietnam veteran with a conviction, 50 years ago, of using a cardboard dime to try to fool a washing machine in a Laundromat.  He spent two days in jail way back then, and he’s been an upstanding citizen ever since, including that tour in Vietnam.

Now it’s true enough that the FDIC, for instance, has a waiver process that (fired) employees can follow, but it’s a six month-to-a-year effort that might end in denial. Even with gaining a waiver, though, six months is a long time for a low-wage ex-employee to be without a job, especially when it’s caused by Uncle Sugar.  The FDIC also has an “automatic waiver” that supposedly works “faster,” but it’s limited to people sentenced to less than year in jail and who never actually were locked up.  Those two days disqualify Eggers even from this government largess.

This has got to be stopped.

Who Built That?

A private enterprise built the car—a Ford—that I drive.  Private enterprise drilled the oil well for the oil, private enterprise refined the oil into gasoline, private enterprise shipped the gasoline to my local filling station—itself a private enterprise.

Private individuals, and collections of private individuals—businesses—built all of those.  And it was my own private industry that enabled me to earn the wherewithal to buy my Ford.

I built that.  All of us in that chain can say that.

Now, it’s true enough that infrastructure facilitated all of that.  It’s nice to have decent bridges and paved roads on which to drive my car and on which those fuel shippers could drive their trucks.  It’s good to have a communications system (vis., the Internet, a technology developed by a private enterprise to solve an internal data management problem) through which to talk with others and do some research enabling me to choose the car I’d end up buying.  It’s nice to have a set of laws that enables these private enterprises to compete with each other in a fair way, free of the depredations of brigands.

From where did this infrastructure come, though?  Some have insisted that Government built that.  Private individuals, private enterprise, had nothing to do with any of that.  More, that without that Government-provided infrastructure, private effort would have been impossible, and so by extension, I—and you—didn’t build our companies, either.

But without the desire to have a car, without private enterprise providing that long chain of support for the car, there would be no demand—and so no need—for that infrastructure.  Private enterprise—I, and all the other private entities—created that need.

Private enterprise built the roads and communications networks, and all the other infrastructure items.  Not the Navy’s Seabees, not the Army’s Corps of Engineers, not the USAF’s Civil Engineers—none of these were out there building that.  Those were private construction firms and private communications companies building that.

That legal system?  The courts are manned by individuals, not some nebulous “government” thingie, albeit those individuals are government employees.  Private individuals, choosing to lead for a time public, political lives, deliberate and enact the laws of that legal system.  They’re elected—and fired—by private individuals voting at the polls.

But surely government paid for all that.  No.  Government has no money of its own; it has only the money we private individuals and our private enterprises allocate to government in our tax payments.  It’s our privately originating money, pooled for the purpose, that paid for the construction of that infrastructure.  And that pays the salaries of those government employees and elected politicians.

Government didn’t build anything; it just acted as middle man for a small part of all that private building.

Four More Years of This?

Democratic Presidential Candidate Barack Obama’s Deputy Campaign Manager, Stephanie Cutter, had some…interesting…things to say recently.

Well, I think that worker probably has a good understanding of what’s happened over the past four years in terms of the president coming in and seeing 800,000 jobs lost on the day that the president was being sworn in, and seeing the president moving pretty quickly to stem the losses, to turn the economy around.  And over the past, you know, 27 months we’ve created 4.5 million private-sector jobs. That’s more jobs than in the Bush recovery (or) in the Reagan recovery.

Hmm….

The Investor’s Business Daily editorialist had a few things to say about her claim.

She starts counting private-sector job growth under Obama in February 2010 and, sure enough, in the 29 months since then (not 27 as Cutter says), there have been 4.5 million private-sector jobs created, according to the Bureau of Labor Statistics.

February 2010 was fully eight months into the economic recovery.  So Cutter has simply picked the worst month under Obama as her starting point….  In the aftermath of the 1981-82 recession, private-sector jobs bottomed out in December 1982, the month after that recession ended.  Twenty-nine months later, the private sector under Reagan had created 8 million jobs—nearly twice as many as under Obama.  How about Bush?  …if you use the Cutter method, the private sector created 4.7 million jobs in the 29 months after July 2003, when the job market bottomed.  In other words, Bush beat Obama by his own preferred measuring technique by 200,000 jobs.

What’s more, after 29 months of allegedly stellar job growth under Obama, the jobless rate is still 8.3%.  By this point in the Reagan and Bush jobs recoveries, the unemployment rate was 7.2% and 4.9%, respectively.

It’s important to note, too, that Obama continues to offer not least minim of evidence that these created jobs have resulted from his policies in particular, and not from the normal economic business recovery that follows any recession—only now with the recovery rate suppressed by his policies.

And there’s this tidbit that bears on Cutter’s claim.

In January 2009, the month President Obama entered the Oval Office and shortly before he signed his stimulus spending bill, median household income was $54,983.  By June 2012, it had tumbled to $50,964, adjusted for inflation. … That’s $4,019 in lost real income, a little less than a month’s income every year.

[E]ven if you start the analysis when the recession ended in June 2009, the numbers are dismal.  Three years after the economy hit its trough, median household income is down $2,544, or nearly 5%.

Some jobs he’s “created.”

Now, isn’t Cutter the one who spoke Obama’s lie about his Republican opponent being a felon?  Isn’t she the one who carried Obama’s denial of all knowledge of his SuperPAC’s ad accusing his opponent of killing a woman with his practices at Bain?  Why, yes.  Yes, she is.  Can anyone take seriously anything her mouth talks about?

A larger question: can we afford four more years of an administration so plainly out of contact with the reality of our current economic strait?

 

h/t Richard Fernandez of Belmont Club

Household Income

How are we doing in the post-recession “recovery” under the Progressive policies of the Democratic Presidential Candidate Barack Obama?  One indication comes from Sentier Research and a report produced by their Gordon Green and John Coder, Changes in Household Income During the Economic Recovery: June 2009 to June 2012. (normally, I provide links to the documents from which I quote, but the folks at Sentier charge for their reports; I’ll not defeat their purpose. The report can be found at their site, here.)

The following graph from the report shows the policies’ impact on incomes of various household types in the period since 2009.  It hasn’t been good for anyone.  Green and Coder normalized household incomes, setting per cent changes to 0.0% as of January 2000 (as in the graph) and to a Household Income Index with the income levels of January 2000 being 100.0.

Moreover, they noted that household income has remained poor and relatively static after the recession “ended.”  Having fallen from a start-of-recession HII peak of a shade over 100 to 96 at the “end,” household incomes continued to fall over the following year to roughly 92 and have remained static there for the last two years.  In other words, at the official end of the recession, incomes were roughly 96% of their pre-recession levels, and since 2010 have remained static at a lower 92% of pre-recession.

The authors pointed out a number of factors related to the drop in HII, including this one:

Another important factor contributing to the steep decline of the HII is the sharp increase in the median duration of unemployment not only during the recession but also during the economic recovery, and its tendency to remain at a very high level.  During the recession, from December 2007 to June 2009, the median duration of unemployment increased from 8.4 weeks to 17.4 weeks.  During the economic recovery, the median duration of unemployment increased from 17.4 weeks in June 2009 to 25.5 weeks in June 2010, and then fell to 19.8 weeks in June 2012.

Notice that unemployment duration after the recession “ended” remains above the in-recession rate.

Meanwhile, over 20 House-passed jobs related bills have continued to languish in the Democrat-controlled Senate in the period since 2010, when unemployment remains above in-recession levels and household income remains depressed compared even to its in- and immediately post-recession levels.

A Few More Thoughts on Employment

The Beveridge Curve is a means of depicting the relationship between the unemployment rate and the number of jobs available in an economy.  An example of this curve is given by a Federal Reserve Bank of Cleveland article, which asks “Has the Beveridge Curve Shifted?” and is presented below.

Moves along the curve indicate increasing job openings in a growing economy associated with decreasing unemployed workers, or decreasing openings with increasing unemployment in a shrinking economy.  The curve itself can move, also, as structural mismatches between employers’ needs and employees’ capabilities change.  Such mismatches can be driven by technology that creates a gap between skills needed and skills possessed, or job location vs employee location—or by long-term unemployment, which destroys existing job skills that otherwise would be a good match for existing skill needs.

But in such cases, we’d expect the curve to shift back as such mismatches clear (and shift again, as new mismatches develop).  It’s normal for economies to expand and contract on a shorter time frame, though, than that on which structural shifts occur—it can take months or years to retrain, for instance, whereas an economy can contract in a matter of months (typically, in the US, the current dislocation, or those of the 1970s or 1930s notwithstanding).  In fact, the Fed’s article points out that such movements of the curve itself are normal behaviors for our economy in the post-war period.

That’s a long-winded entry into the purpose of this post.  There are two graphs that indicate the failure of the present administration’s economic policies, especially as those policies impact employment capabilities in our economy; both of these are from  Sober Look.  The first graph is this one:

This shows just the sort of structural shift described above, and the shift didn’t occur until after the recession was over—and recall that the recession ended in Spring 2009, before any economic policies of Democratic Presidential Candidate Barack Obama could have taken effect.  Even his $800 billion Stimulus Act spending had not had time to have any effect at the time of the recession’s official end.

Notice that the pre-recession unemployment vs job openings part of the curve is entirely consistent with what we’d expect in a healthy economy—lots (relatively) of openings and full employment, with fewer openings associated with moderately higher unemployment.  During the recession, the decreasing availability of jobs and increasing unemployment followed that curve all the way out to the peak unemployment near 10%.

After the recession, though, and since—a period in which Obama’s economic policies have been able to have their full effect—we see the curve’s shift: even though jobs are becoming more available, unemployment is remaining high, and the drop-off in unemployment, such as it is, is following a higher level of jobs availability—there is a higher mismatch between jobs and job seekers.

This next graph illustrates a major reason why.

This graph shows the number of Americans who’ve been out of work for 27 weeks (6+ months) or more as a per cent of total unemployed.

Notice that sharp, and so far sustained, rise in this long-term unemployment during Obama’s term.  This long-term unemployment produces one of those mismatches described above—the skills mismatch, this time driven by skills destruction through non-use from that long-term unemployment.  Obama’s policies are actively suppressing re-employment.  Even as the preceding graph implies that there are more jobs available now than at the start of his term, job seekers can only find jobs from an increased amount of availability than was the case before the present policies were in place.  The increase in jobs available just isn’t enough to absorb our high unemployment.