Tag Archives: political economy

The Administration’s Monthly Jobs Report Interpretations

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Don’t let the fact that the following are from a political campaign presser bother you.  The data are straight from the horse’s mouth—the White House’s own The White House Blog.  Thus, these are President Obama’s words, albeit posted by his Council of Economic Advisers Chairman, Alan Krueger.  It’s a long, repetitive list; feel free to skip to the bottom of my post when you get bored.

June 2012: “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/07/06/employment-situation-june)

May 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/06/01/employment-situation-may)

April 2012: “Therefore, it is important not to read too much into any one monthly report and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/05/04/employment-situation-april)

March 2012: “Therefore, it is important not to read too much into any one monthly report, and it is helpful to consider each report in the context of other data that are becoming available.” (LINK: http://www.whitehouse.gov/blog/2012/04/06/employment-situation-march)

February 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.” (LINK: http://www.whitehouse.gov/blog/2012/03/09/employment-situation-february)

January 2012: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.” (LINK: http://www.whitehouse.gov/blog/2012/02/03/employment-situation-january)

December 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2012/01/06/employment-situation-december)

November 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/12/02/employment-situation-november)

October 2011: “The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. There is no better example than August’s jobs figure, which was initially reported at zero and in the latest revision increased to 104,000. This illustrates why the Administration always stresses it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/11/04/employment-situation-october)

September 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/10/07/employment-situation-september)

August 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/09/02/employment-situation-august)

July 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/08/05/employment-situation-july)

June 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/07/08/employment-situation-june)

May 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/06/03/employment-situation-may)

April 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/05/06/employment-situation-april)

March 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/04/01/employment-situation-march)

February 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/03/04/employment-situation-february)

January 2011: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/02/04/employment-situation-january)

December 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2011/01/07/employment-situation-december)

November 2010: “Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2010/12/03/employment-situation-november)

October 2010: “Given the volatility in monthly employment and unemployment data, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2010/11/05/employment-situation-october)

September 2010: “Given the volatility in the monthly employment and unemployment data, it is important not to read too much into any one monthly report.” (LINK: http://www.whitehouse.gov/blog/2010/10/08/employment-situation-september)

July 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.  It is essential that we continue our efforts to move in the right direction and replace job losses with robust job gains.” (LINK: http://www.whitehouse.gov/blog/2010/08/06/employment-situation-july)

August 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/09/03/employment-situation-august)

June 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/07/02/employment-situation-june)

May 2010: “As always, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/06/04/employment-situation-may)

April 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/05/07/employment-situation-april)

March 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/04/02/employment-situation-march)

January 2010: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2010/02/05/employment-situation-january)

November 2009: “Therefore, it is important not to read too much into any one monthly report, positive or negative.” (LINK: http://www.whitehouse.gov/blog/2009/12/04/employment-situation-november)

Hmm….  Apparently all Obama has to say about his dismal unemployment record for all of these three and-a-half years is either, “Therefore, it is important not to read too much into any one monthly report,” or “Given the volatility in monthly employment and unemployment data, it is important not to read too much into any one monthly report.”  Oh, and the “Administration always stresses” this importance.

The problem, though, is that not only are Obama’s words about those dismal reports repetitive, the reports themselves are repetitive—with bad news for unemployed Americans.  So—should we also “not read too much into” all those unemployed Americans?

 

h/t Power Line

Employment Numbers

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Here are some employment and other economic numbers, as we see the continued level of success of President Obama’s policies, more than three years into his term.  Meanwhile all those jobs-related bills the House has passed since the start of 2011 continue to languish in the Do-Nothing Senate.

  • [T]he economy added an average of 226,000 jobs a month in the first quarter
  • [[T]he economy added an average of] 75,000 in the second quarter
  • The unemployment rate remained 8.2%
  • [T]he manufacturing sector contracted in June for the first time since July, 2009.
  • [F]actory hiring average[d] 10,000 a month in the second quarter
  • [[F]actory hiring average[d]] 41,000 a month in the first.

 

A Misunderstanding about (Government) Stimulus

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Dr Alan Blinder, in a recent op-ed in The Wall Street Journal, notes that

A debate now rages in Europe over whether fiscal austerity—that is, higher taxes and less spending—helps or hinders growth.  That’s progress of sorts.

He’s right as far as he goes, but then he goes on.

[A] similar debate rages here in the US—with the lone exception that our pro-austerity crowd abhors tax increases.

Here are the beginnings of Binder’s misunderstanding.  I don’t know of a pro-austerity crowd anywhere in the US, at least among Republicans and Tea Partiers.  These folks are plainly pro-growth, and that clearly demands less government spending—and lower taxes.  Contrary to Progressives’ beliefs, it isn’t the government’s money, and the government doesn’t need as much of it as it tries to claim from us in taxes.

…help state and local governments maintain their spending, which has now dropped 6.4% since its 2008 peak[.]

It doesn’t get any clearer than this.  Nor the Feds, nor the states, nor local governments need to “maintain their spending.”  All levels of government need to reduce spending and quit competing with the private sector for goods and services, quit buying for the private sector the goods and services it can—and should—buy for itself.  It’s through private sector economic activity that comes growth, and jobs, which fuel growth.  All government spending can do is substitute for private sector spending—at the expense of taking money out of the private sector to pay for that spending, either in taxes today or taxes tomorrow.

Many Democrats also want to build and repair more roads, bridges, tunnels and the like….  Most Republicans reject that idea, too….

This is just a cynical distortion of the Republicans’ position, and it’s disappointing to see in someone who’s supposed to be a reasonably objective academic.  The need to work on our physical infrastructure is  bipartisanly recognized.  What the Progressives’ programs do, though, and what the Republicans object to, is simply transfer funds to Progressive-favored state and local governments and to union allies.  Honest funding support, that will help—help, mind you, not cover entirely—with actual work, and which funding is itself covered by spending cuts elsewhere, will find Republican support.  Look, for instance, to the 20+ jobs bills the Republican House has passed and that are languishing in the Senate because Blinder’s Democrats won’t even permit them to be debated, much less come to a vote.

He does have some specific ideas:

  •  Budget policy. For openers, as I advocated in these pages last month, we need a two-pronged fiscal package.  In the near term, we need modest stimulus, focused tightly on creating jobs.  But that stimulus should be paired with a vastly larger dose of long-run deficit reduction—perhaps 10 to 20 times as large as the stimulus—over the 10-year budget window.

Economically, this can be done; it’s not even that hard. But if Republicans continue to reject even deals comprised of $10 of spending cuts for each $1 of tax increases, it’s hard to see how we get there politically.

I debunked this here.

  •  Private investment. Republicans are right that business investment is the key to growth. Fortunately, business investment has done very nicely, thank you, despite the sluggish economy—growing 8.4% over the past year and at an annual rate of 10.8% over the past two years.  (The corresponding growth rates for GDP were about 2%.)  So while there’s always room for improvement, business investment is not part of the problem.  The best thing policy can do for private investment is to get the overall economy growing faster.

Indeed.  And the best policy for achieving that is reduced government spending competition with the private sector, lower taxes, and reduced regulatory burden—which has exploded under the present administration.  The EPA’s rules are especially onerous, irrelevant to the economy, and job-destroying.  HHS’ regulations also attack private sector job growth, as well as such minor things as constitutionally protected religious freedom.

  •  Public investment. Unlike private investment, inadequate public investment is part of the problem.  America’s infrastructure needs are so huge, and so painfully obvious, that it’s mind-boggling we’re not investing more.  The U.S. government can now borrow for five years at about 0.75% and for 10 years at about 1.7%.  Both rates are far below expected inflation, making real interest rates sharply negative.  Yet legions of skilled construction workers remain unemployed while we drive our cars over pothole-laden roads and creaky bridges.  Does this make sense?

Public “investment” is, indeed, part of the problem.  “There’s a sale on! Let’s go buy!  Think how much we can save at these prices!”  Think how much more we can save, if we don’t buy at all.  The existence of a sale, whether it’s in a lower price for a good or a lower price for borrowing, is no excuse at all for spending—or borrowing.  Spending and borrowing must have a legitimate purpose, not merely be “cheap.”  All those nickels borrowed today add up to lots of dollars owed—and so taxed for—tomorrow.

Moreover, this administration poured nearly $1 trillion into stimulus—including no small part of infrastructure maintenance buildout and maintenance—in 2009, and it’s been pouring out more since, in the form of loan guarantees, among other routes, for “green” energy infrastructure, among other things.  What have we gotten for all that “investment?” Transfers to unions, transfers to states for their own payoffs, bankrupt “green” energy companies, but no actual infrastructure maintenance buildout or maintenance.  Does this make sense?

  •  Education. Everyone knows that the returns to education, while large, are long delayed.  That means we have no time to waste.  We should be doing a much better job of building a better educated, more productive work force for the future.  A Council on Foreign Relations task force co-chaired by former Secretary of State Condoleezza Rice and former New York City Schools Chancellor Joel Klein recently argued that better K-12 education is critical to American leadership in the world and therefore to our national security.

Indeed, again.  Government needs to stop driving up the cost of education by subsidizing it.  We as a society need to stop stigmatizing those who lack a college degree.  College is not for everyone.  Nor do those in the trades need a college degree; they need a decent VoTech source of education and training—the sort of thing we used to get in our high schools all those years ago, and that could be improved upon by our community colleges—many of which do fill this bill.

Why in the world are we still arguing about this?

Because the Democrats and their Do-Nothing Senate, and the President, are in the way.  If it’s Republican, it’s to be ignored.  It’s all Bush’s fault.  It’s racist.  Pick a Progressive excuse.

Which candidate does that remind you of?

In terms of not understanding the distinction between economic growth and government growth?  That’s pretty clear.

Europe’s Labor Problems

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Aside from the debt and profligate spending problem, Europe’s labor laws are large contributors.  The Wall Street Journal recently described Italian labor law.  And Italy is not atypical for Europe.

  • Business pays 2/3 of each employee’s social security costs (I won’t go into how cheap we Americans are compared to the Europeans when it comes to social security).
  • Businesses with more than 10 employees (quoting the WSJ)

must submit an annual self-assessment to the national authorities outlining every possible health and safety hazard to which your employees might be subject.  These include stress that is work-related or caused by age, gender and racial differences.  You must also note all precautionary and individual measures to prevent risks, procedures to carry them out, the names of employees in charge of safety, as well as the physician whose presence is required for the assessment.

  • Businesses with more than 15 employees encounter very onerous limits on the ability to fire an employee, for any reason.
  • Businesses with more than 15 employees also must explicitly hire disabled—qualified or not—and must have at least 14 disabled employees when they go above 50 employees.  The businesses must maintain that 7% ratio at all larger sizes.
  • Businesses with more than 100 employees must submit to the government a biennial report on the gender dynamics within the company.  This report must include a tabulation of the men and women employed in each production unit, their functions and level within the company, details of compensation and benefits, and dates and reasons for recruitments, promotions and transfers, as well as the estimated revenue impact.

The WSJ cites the OECD as noting that

All of these protections and assurances, along with the bureaucracies that oversee them, subtract 47.6% from the average Italian wage….  Two-thirds of that bite comes before payroll, meaning many Italian workers are unaware of their gross cost to employers.

I mean, really.  YGTBSM.

Collapse of the Euro?

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Much is being made of the impending collapse of the euro, and of the disaster this would represent for Europe.  Indeed, a graph published by Spiegel Online can look frightening:

The risk to Germany in particular?  Much is made about the money Germany and Germans have in some of the PIIGS, as the graph below indicates.

But against the German 2011 GDP of €2.57 trillion, this totals to less than 4%.  That will sting, but not much.

As I’ve written before, a breakup would be near-term disruptive.  But what happens after those two years of the first graph above?  There needn’t be a disorderly collapse.  Even this short term disruption (pop quiz: what are the current inflation and unemployment rates in the PIIGS?), the stronger economies will recover, and do so faster without the albatross of the profligate spend-and-borrowers dragging on their wallets.  Furthermore, it’s not too late to realign into a small collection of smaller common currency regions, each with free trade agreements with the others.  Within each smaller currency region, there would be a far larger opportunity for social, political, purpose-of-money homogeneity, and so a far greater chance of success.

The single alternative of every nation for itself with its old currency back is simply the other half of a false dichotomy presented by Spiegel Online—and by Europe’s politicians, who have a personal interest in the continuation of the current, failing, structure.