Tag Archives: jobs

Government Keynesian Waste

Posted on by
Reply

As if there’s any more need to demonstrate the fallacy of Keynesian stimulus pseudo-theory after its failure in the ’30s, some empirical evidence from today’s economic dislocation and failed “recovery” is neatly summarized in the following graph from Business Insider:

Most are already familiar with those projection curves, from the 2009 hype associated with ramming the American Recovery and Reinvestment Act of 2009 (the Stimulus Act) through the Democratic and then-economically timorous Congress.  Government standing aside and letting the economy recover on its own was going to let unemployment peak at around 9% and not move below 7% until Dec 2011 or reach “full” employment until Dec 2013.  On the other hand, the Obama Stimulus would cause an almost immediate peak (in August 2009 after a February enactment) at 8% and lead to recovery below 7% unemployment by fall 2010, a year sooner than under non-interference.

Instead, the Obama Stimulus has actively suppressed employment—and so economic recovery.  Unemployment, at roughly 8.5% at the time of stimulus enactment, continued rising unabated to above 10%, and it has remained above the worse-case no-government projection ever since.  Notice further, that actual unemployment has generally followed the shape of the no-government projection curve: the only effect of Obamanomics in this milieu has been to make government involvement worse than no involvement—it hasn’t altered anything else.

Do we have empirical data for the contrary position, that government noninvolvement is actively beneficial?  You betcha.  The Depression of 1920-1921 ran from the start of 1920 through the middle of 1921, and President Warren G Harding’s administration sat it out, with no significant government intervention attempted.  The graph below is constructed from data taken from Table 9 in a paper by none other than Christina Romer.

There are a couple of takeaways here.  One is the sharp, high peak to unemployment and the rapidity with which both the peak and the recovery occurred.  Another is the rapidity with which our economy actually worked its way through this Depression compared to the projected recovery rates in the first graph above.  The projections for our current failing recovery are, compared to hard data, cynically pessimistic.  This pessimism, though, cannot be laid at Democratic Presidential Candidate Obama’s feet; a broad range of economists assumed that slow pace.

In general, to repeat earlier posts and statements made by others: money spent by government is money not available to the private sector or to individuals to spend on their own goals and needs.  Money spent by the government is money that first must be taken from those private enterprises and citizens in the form of taxes today to pay for that spending or greater taxes tomorrow to pay both for that spending and for the interest on the debt incurred by that spending.  And here we’ve seen empirical evidence that government spending, above a minimal level for funding government itself and national defense, isn’t just useless, it’s actively counterproductive—destructive.

A Quibble that Tells the Truth

Posted on by
Reply

This is from the White House’s very own blog, from the personal keyboard of Alan Krueger, Chairman of the Council of Economic Advisers:

The household survey showed that the unemployment rate ticked up to 8.3% in July (or, more precisely, the rate rose from 8.217% in June to 8.254% in July).  Acting BLS Commissioner John Galvin noted in his statement that the unemployment rate was “essentially unchanged” from June to July.

And so is our economic recovery “essentially unchanged” from 2009 to 2012.

You Can’t Build This, Either

Posted on by
Reply

Paul H Rubin, Professor of Economics at Emory University, had some thoughts on President Obama’s “You didn’t build that” oratory.  After giving Obama the benefit of the doubt and allowing that he really meant, without denigrating the accomplishments of entrepreneurs and other businessmen, that government needed to help private enterprise with infrastructure, Professor Rubin added a few items of interest in the infrastructure milieu.

  • the Obama administration, in its first three years, adopted 106 major regulations that cost over $100 million, compared with 28 such regulations in the Bush the Younger administration, and it has 144 more in the pipeline.

Of more immediate impact, with regard to the infrastructure of roads and bridges, the administration’s attitude toward other necessary components of our transportation infrastructure is clear.  It has

  • refused to allow a private company to build the Keystone XL pipeline
  • reduced permits for offshore drilling
  • slow-walked permits for drilling on Federal land
  • increased EPA regulation of pollutants, well past the point of diminishing returns, yet
  • committed to spend billions on California’s riderless bullet train to nowhere

Concerning another area of necessary infrastructure, access to capital, there’re these:

  • regulations needed to implement Dodd–Frank are not even being written, negatively impacting business’ ability to reasonably predict their fiscal future—so some won’t lend, and others won’t borrow.
  • increased minimum wage discourages hiring entry-level workers, or older workers into low-value jobs
  • Obamacare increases uncertainty regarding future labor health-related costs

And so on.  RTWT.

You Didn’t Build That

Posted on by
Reply

Now President Obama has an ad out in which he tries to walk away from his earlier comments that business owners—especially small business owners—didn’t build their businesses, that they owed government for their success.

Now he’s insisting that what he was talking about was Big Government “investing” in education and training, roads and bridges, research and technology.  And more:

Somebody helped to create this unbelievable American system that we have that allowed you to thrive.

No.  Today’s successful schools are charter and other schools to which parents send their children by choice.  These schools are run by private businesses; they’re not government organs, as today’s public schools are.

Private enterprises built the roads and bridges; Big Government didn’t send in the Seabees or the Army Corps of Engineers to build our transportation network, or to maintain it, except in the direst of localized emergencies, like post-Katrina.  Even then, though, the government’s constructors have been adjuncts to the private construction companies.  It’s true that Big Government funded significant portions of those build-out and maintenance projects, but the Government’s “investment” was heavily inflated: the privately run construction companies were—and are—required to pay “prevailing” union wage rates; the companies are not allowed to bid competitively.

It was Xerox that built the Internet, for instance, not Government, as Obama claims, and Xerox built it so they could share internal data on internal computer networks more easily, not “so that all the companies could make money off the Internet.”

And that “unbelievable American system that we have?”  That’s our free market economy that private individuals, singly and in groups, built up since our inception as a nation.  Big Government had no role in that.  Little Government had the important role of staying out of the way of our private, free enterprise, only enforcing laws against cheating and the like.

As an aside, President Obama had a closing refrain in his “You Didn’t Build That” speech: Americans often work together to do things they can’t do, or do as efficiently, alone.  But who was he talking about in this “working together” of his?  Not Americans working together on their own initiative—forming companies or charitable organizations, for instance—oh, no.  Obama was talking about Big Government as the “together,” a Government that does things for us.  Not at all anything about Americans working together without government…help.

Yet More Thoughts on Immigration

Posted on by
Reply

I want to comment a bit about one leg of our immigration policy, that of what to do about the illegal aliens currently present in the US.

Roberto Suro has a recent piece in The Washington Post that bears on this; although he talks primarily about a second leg of our immigration policy, one that also must be solved: how we let aliens into our country (an immigrant is someone who intends to settle permanently, so I’ll stick to aliens in this post).  All three legs (entry, border security, the existing population of illegal aliens and immigrants), though, must be handled together, or the totality of our immigration policy will continue to be the failure that it is today.

Suro noted,

Along with the many [immigrants] looking to make a permanent home in the United States came those who had no intention to stay, and who would make some money and then go home.   Between 1908 and 1915, about 7 million people arrived while about 2 million departed.  About a quarter of all Italian immigrants, for example, eventually returned to Italy for good.

Today, we are much more rigid about immigrants. We divide newcomers into two categories: legal or illegal, good or bad. We hail them as Americans in the making, or brand them as aliens fit for deportation.

And

To start, we can recognize the new birds of passage, those living and thriving in the gray areas. We might then begin to solve our immigration challenges.

…

If we accept that there are spaces between legal and illegal, then options multiply.

The second part, though, is simply wrong.  There can be no gray area between legal and illegal; that would only perpetuate the limbo in which the illegal aliens currently exist.  Instead, we need to broaden what constitutes legal, and make it easier for these folks to comply.

Who are these folks living this shadow existence?  They are crop pickers, violinists, construction workers, entrepreneurs, engineers, home health-care aides and particle physicists.  These folks are active participants in a global economy driven by the flow of work, money, and ideas; they wish to come and go as opportunity calls them. They manage to have—they often are forced to have—a job in one country and a family in another.  Thus, they are forced to straddle—or avoid—the laws of multiple jurisdiction, with particular emphasis in this context US law on the part of the worker.

Nevertheless, we need them in the US being productive while they’re here, and it’s unnecessary to force them to choose to be here permanently, or to lie about their intent to be here permanently as a precondition for being here legally at all in order to achieve that.

Thus, I propose the following for the current population of illegal aliens.  I’ve proposed a general idea elsewhere, and Congressman Luis Gutierrez (D, IL) and Senator Marco Rubio (R, FL) have ideas that bear on this.

We should issue a “green card lite” for those who come and go at a relatively high rate—migrant workers, for instance, but not exclusively.  Such a card would be good for an extended number of years, allowing the holders to cross the border multiple times as their (seasonal, perhaps) work requires, without having to go through the entry bureaucracy—or risk coyote depravations—each time they want to reenter.  The folks who are here already and want such a card, though, must provide documentation to support their claimed work history.

Additionally, in support of that documentation requirement, I suggest a one year amnesty for employers of (potentially, from their perspective; I assume the good intentions of the vast majority of employers) immigrants, illegal or legal, so those employers can provide their documentation supporting the (illegal) immigrant’s application without fear of government reprisal.

Moreover, a regular green card, for those who aver a longer duration/steadier residency should be far more easily requestable and far more quickly issued, with a similar requirement for work history documentation from those who are already here and want to come out of the shadows.  The employer amnesty should be extended to employers of this group for the same reason.

Note, though, that I’m not proposing amnesty for the illegal aliens themselves.  As many have suggested, these must pay a penalty, variously including a fine and/or a requirement to leave the country and then to reenter legally.  I believe that both penalties should be applied.  The fine, though, must be sized to the illegal alien’s ability to pay, and it must be large enough to sting but not so large as to be an impenetrable barrier.  The requirement to leave the country and return, though, I hold can be satisfied by traveling to the nearest consulate in the US, paying their fine, and applying for their green card from within that consulate.

On the other hand, those who’ve used falsified or stolen documentation (e.g., a false or stolen social security number) to facilitate their getting hired must pay a sterner penalty.  These must leave the US voluntarily for some period of years before applying for a green card (lite), and they must apply as though they have no work history to claim (they’d a first-time immigrant, now).  Failure to leave voluntarily should result in deportation, never to be allowed back in.

Finally, notice that there is nothing in this that presupposes the now legal immigrants wanting to become citizens.  Nor need there be.  As demonstrated by those immigration statistics at the beginning, when folks are in our country openly and freely, our country sells itself.

Let’s not forget, though, the other two legs of our immigration problem.  We also need to look at the difficulties we inflict on those who want to enter our country for legitimate purposes—to settle here, for instance, or to “make some money and then go home.”  And we also need to get serious about securing our borders so that we do a better job of filtering out the ones who come here with nefarious purposes so that only those who want to come here to settle and contribute, perhaps (but not necessarily) to become citizens, or to be here for a time and then go home, can do so.