American Elephants

Why is Bad Economic News Always “Unexpected?” by The Elephant's Child

I write frequently about unintended consequences.  Michael Barone wrote recently about the frequency with which ‘the word “unexpectedly” or variants thereof  keep cropping up in mainstream media stories about the economy.’The pro-Obama Media is always shocked by bad economic news.  Glen Reynolds (Instapundit) has been noting similar items ever since October 2009.

And so it was today. Unemployment climbed unexpectedly to 9.1 percent. The Obama economy unexpectedly added only 54,000 jobs — the fewest in eight months.  Half of those were at McDonalds. Unexpectedly.

There is little appetite on Capitol Hill for additional stimulus spending.  And the Federal Reserve plans to wrap up its most recent effort to pump money into the economy at the end of this month.

White House economist Austan Goolsbee said the burden is now on the private sector to create jobs, as the days of a government-led recovery are nearing an end.

And the government-led recovery is where? This may actually be good news. If the government gets its nose out of the economy, things might start looking up.

Obama has a way of giving with one hand, and taking away with the other. Take the discouraging climb in the unemployment rate. Obama wants to create more jobs, he speaks about it constantly, and yet he layers more costs, regulations, mandates and taxes on employers so that they are ever more reluctant to hire.

Obama shills for “green jobs” insulating homes and offering subsidies to homeowners to have their homes insulated, yet there are already many firms experienced in the business of insulating homes who don’t need a lot of new workers in a down market. “Green jobs” building wind turbines are created in China.  “Green jobs” building vast solar arrays, are prevented from happening because of a possibly endangered tortoise, and lengthy litigation.

Thousands of jobs have been lost in the Gulf region, not just on idled oil rigs, but in all the supporting industries, and in the local economies. Offshore rigs have left for other countries where they are not idled by misguided regulations. At the same time, Obama supports the Brazilian oil industry and offers to buy their oil.

It is Obama’s strictures on the oil industry that have raised the price of gas at the pump. Higher gas prices weigh heavily on industry, and not only cause inflation, but cost jobs as their expense for transportation and energy go up.

ObamaCare’s main Medicare cost-reduction strategy has already proved ineffective. Accountable Care Organizations aren’t effective and don’t save money. New regulations and mandates impose greater costs on doctors and hospitals, which means that health care costs more, not less. When reimbursement to doctors and hospitals is cut, fewer doctors will see Medicare patients.  If they can’t find a doctor, patients go the emergency room. Doctors who object to meddling government quit and do something else, like run for Congress. (There were 47 doctors running for office in the last election).

There are always consequences. If you raise taxes on luxuries, people stop buying luxuries and the people who create those luxuries lose their jobs, and whole industries go under. When you raise taxes or regulations on businesses, those firms take what actions they can to survive. They may lay off employees, or raise their prices, or take more of their business to somewhere where it is not so highly regulated or taxed.  But Liberals are always surprised when there are bad economic effects.

American’s savings rate is too low, they say. So liberals want to eliminate the “tax expenditures” the money the government forgoes by allowing tax preferences for retirement accounts, employer paid insurance, mortgage payments.  If they just cancel those, won’t the government collect lots more money?

Obama gives with one hand, and takes away with the other, creating, um, “unexpected consequences.” And they never understand. Capital will go where it is wanted, and stay where it is well treated.

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