American Elephants


Vanishing Workers: The Labor Force is Shrinking by The Elephant's Child

Only last week the Obama administration was enthusiastically announcing that payroll employment had increased by 200,000 in December and the jobless rate was trending down. This week the number of people applying for weekly unemployment benefits jumped last week to 399,000. 

This followed three weeks of steady declines as retailers added help for the holidays, and typically applications soar in the first two weeks of the year as companies lay off temporary workers. It happens every year, but the labor department has a hard time adjusting for something that invariably happens every year.

But the American work force is smallerNearly one million workers  have vanished under the Obama administration. They have dropped out of the labor force — they aren’t working and they aren’t looking — according to the Bureau of Labor Statistics.  In the past two months, the labor force shrank by 170,000. If you adjust for that drop, the unemployment rate would be close to 11%.

Here’s a little history. Henry Morgenthau Jr. was FDR’s Secretary of the Treasury, and  architect of the New Deal.  He wrote:

We have tried spending money.  We are spending more than we have ever spent before and it does not work…We have never made good on our promises.  I say after eight years of the Administration we have just as much unemployment as when we started…and an enormous debt to boot.

President Obama in an exceptionally transparent move will ask Congress for greater power to shrink the federal government. He wants the kind of reorganizational power that was last held by a president when Reagan was in office.  The power Obama wants would allow him to propose mergers that promise to save money and help consumers. Of course he promised this in his last State of the Union message a year ago.

He wants to combine six major operations: the Commerce Dept.’s business and trade functions; the Small Business Administration, the Office of the U.S. Trade Representative; the Export-Import Bank; the Overseas Private Investment Corp; and the Trade and Development Agency. The goal would be one agency designed to help business thrive.

The administration said that 1.000 to 2,000 jobs wold be cut, but through attrition, as people leave their jobs over time. Uh huh.

From Iain Murray:

Economic growth is not created from the top down.  Government’s main job is providing a constant, consistent playing field — something Washington lawmakers have done much to undermine over the past decade.

Obama’s new chairman of the Council of Economic Advisers, Alan Krueger, announced that taxing the rich can spur economic growth. He said that there is growing income inequality in the United States, that this growing inequality contributes to slowing economic growth, and that raising taxes on the wealthy to offset the growing income inequality would actually stimulate the economy in the near term. (If this seems completely unintelligible, welcome to the club)

What he means is that Obama wants more money to spend on stimulus, and they want to get it from the rich who they plan to blame for everything — or everything they’re not blaming on the Republicans.  Refer back to Henry Morgenthau Jr. above: “We  have tried spending money.  We are spending more than we have ever spent before and it does not work.”

One million workers have vanished from the U.S. labor force. Spending more money isn’t going to change that. In the past nine recoveries, the labor force had climbed an average of 3.5 million by this point.



We Are Less Free and Less Safe by The Elephant's Child

The Heritage Foundation has just released the 18th annual Index of Economic Freedom, released with The Wall Street Journal.

Economic freedom — the ability of individuals to control the fruits of their labor and pursue their dreams — is central to prosperity around the world. Heritage and The Wall Street Journal measure economic freedom by studying its pillars: the rule of law, limited government, regulatory efficiency, and open markets. Things like property rights, freedom from corruption, government spending, free trade, labor policies, and one’s ability to invest in and create businesses all factor in to a country’s economic freedom.

In 2011 economic freedom declined worldwide as many governments attempted to spend their way our of recession, which has never worked.  Rapid expansion of government appears to be responsible . Government spending not only failed to halt the economic crisis, but may well be prolonging the trouble. The U.S. economic freedom score has dropped from 81.2 in 2007 to 76.3 in 2012, on a scale of 1-100.

And we are not only less free, but we are less safe as well. The administration has, for three years, followed what they claim to be a strategy of ‘retrenchment.‘ We have withdrawn from Iraq, set a deadline for Afghanistan, called off further expansion of NATO, signed arms-control treaties and now decimated the Pentagon budget.

What they have presented as a strategic vision is seen by the rest of the world as plain old weakness. Osama bin Laden was not the source of all danger in the world, and eliminating him doesn’t mean that “the tide of war is receding.” Our allies have reason to question the strength of our commitments.

Our financial difficulties are not a function of spending on the military, for the cost of being perceived as weak and indecisive can be astronomical. Americans have long believed that the last war was the last one, and that peace is the natural state of the world. Politicians, eager to have more money to spend, believe in peace dividends — money they are entitled to spend now that war is a thing of the past.

The U.S. is the only country in the world without a substantial nuclear modernization program. After Russia signed the New Strategic Arms Reduction Treaty, which unilaterally reduced U.S. forces, Moscow announced the largest nuclear modernization program since the end of the Cold War. America, meanwhile, continues on a path of unilateral disarmament now under the guise of budget constraints.

Section 1227 of the 2012 defense authorization bill prohibits spending any funds that would be used to give Russian officials access to sensitive missile-defense technology as part of a cooperation agreement without first reporting to Congress identifying the specific secrets, how they’d be used and what steps will be taken to protect data from compromise.  Obama is required to certify that any technology shared will not be passed on to countries such as China, North Korea or Iran, and that Russia will not use transferred secrets to develop countermeasures and that the Russians are reciprocating in sharing.

President Obama issued a signing statement, something he had previously opposed. He said in the statement that:

he would treat these legal restrictions as “non-binding” and that “my administration will also interpret and implement section 1244  (sic) in a manner that does not interfere with the president’s constitutional authority to conduct foreign affairs and avoids the undue disclosure of sensitive diplomatic communications.

He already betrayed Poland and the Czech Republic who were to host ground-based interceptors (Poland) and missile-tracking radar (Czech Republic).  Moscow objected so Obama obediently pulled the plug. Obama claimed we had a better approach that called for using three versions of the Navy’s Standard SM-3 interceptor missile that forms the backbone of its Aegis missile-defense system. The fourth phase is a missile scheduled for 2020, still on the drawing board, that would intercept hostile missiles in the “early intercept” phase.  The Russians want the SM-3 secrets and Obama appears to be willing to share.

In spite of Obama’s wishful thinking and desire for nuclear disarmament, Russia continues to rearm. Russia just announced the deployment of the new RSM-56 Bluava submarine launched ballistic missile.  The administration’s engagement with Russia has been well-represented with Hillary Clinton’s “reset” button.  More to the point were Ronald Reagan’s words:  “Trust, but Verify.”




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