American Elephants

The April Jobs Report Was Threatening. by The Elephant's Child

Over the past five years we have been engaged in a test of progressive economic policies. The media happily tell us that we are recovering and offer up the 165,000 payroll jobs that were created in April. This is the Bureau of Labor Statistics (BLS) Establishment Survey, or the U-3 unemployment report which showed the rate declining by 0.1 percent to 7.5 percent. So that sounds good.

The Household Survey numbers looks a little deeper into the economy, and that’s where it gets a little more uncomfortable. Also known as the U-6 rate the unemployment figures increased by 0.1 percent. While total employment rose by 293,000 during April, part-time jobs increased by 441,000, meaning that full-time jobs actually declined by 148,000. The April jobs numbers describe a mass replacement of full-time workers with part-time workers, and a drop in the length of the average workweek. Which means that the BLS report was bad news, not the happy day portrayed by the media. And the results of the roll out of ObamaCare are as expected, as more full-time employees are reduced to part-time hours.

But wait, it gets even worse. During April, the Full Time Equivalent jobs ratio fell for the fifth month in a row, and to statistics-watchers this hints of a new recession.

Progressive economic policies involve Keynesian fiscal stimulus (intentionally increasing government spending to boost domestic “demand”), monetary stimulus (deliberate action to weaken the dollar in order to increase demand for our exports), higher marginal tax rates on “the rich” (they can afford it), and increased regulation to control more of just about everything. They have also expanded alternatives to actually working, including Social Security Disability, Food Stamps, and extended unemployment benefits.

What you get with progressive economic policies is pessimism. America is just in decline, not going to get better, everything is changed, we need to be more like every other country and stop thinking we’re something special. No exceptionalism here.

Supply-side economics has specific steps as well. Tight monetary policy, a strong dollar, incentive cuts in marginal tax rates, and a reassertion of American optimism and creativity with confidence in what government policies will be.

Jared Bernstein, who was Vice President Joe Biden’s economic adviser, wrote in the New York Times about the slowly improving job market (?) that persists in spite of ‘an economic expansion continuing since mid-2009.’

For decades in postwar America, the maintenance of full employment, defined as an unemployment rate below 5 percent, was enshrined in law, beginning with the Employment Act of 1946 and revisited in 1978 in the Humphrey-Hawkins Act. It was a central goal of the Democratic Party, labor unions and advocates of social and racial justice.

And it usually worked. While conservatives and businesses pushed back — tight labor markets meant more worker bargaining power, higher wages and less profitability — between 1949 and 1979 the market was at full employment over two-thirds of the time.

I’m not an economist, but Mr. Bernstein’s nostrums don’t pass my common sense smell test. The problem is those darn ATMs that are replacing bank clerks (?), our large trade deficits have exported too much demand (I thought trade was by definition always in balance. If we sell them too many apples, we get the money), the sequester, which he calls “austerity”and the “economic version of medieval leeching.” (can’t cut back on the increase in the budget from last year?), and the Federal Reserve continues to apply high doses of monetary stimulus (which is why the stock market is doing well). We need more investment in “the areas where clean energy intersects with production.”And we need a new subsidized jobs program. (The WPA returns). The Great Recession continues to imitate the Great Depression.

I have no confidence in progressive economic policies. They didn’t work for FDR, and they have not worked for Obama, nor are they going to. It’s scary to start a new business, and you need, at the most basic, confidence in what the government will do next, and the belief that government is on your side — encouraging start-ups . A country that celebrates achievement and risk-taking is likely to see more economic success than one that does not.

History shows that the money that individuals and businesses invest and spend, if left alone to do so generates far more wealth and new jobs than any government-directed spending. The most successful cities and states dedicate their resources to creating the kind of conditions that attract private investment, rather than pouring public money into centrally planned visions of economic development.
………………………………….Brian C. Anderson: City Journal




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About Mr. Bernstein’s comment, you’re quite correct that it doesn’t pass a common sense test (smell or otherwise). He would have you believe that Democrats passing laws favorable to Democrat constituencies made “full employment” possible, and it was only when those greedy Republicans “pushed back” that unemployment went higher. He reads exactly the wrong lessons into his comment about “tight labor markets” (” more worker bargaining power, higher wages and less profitability”). No business I know of objects to compensating workers for their value (and “value” is the operative word there). The “more worker bargaining power” is a specific reference to unions, and unions have actually done more to lower the value of workers than anything else. I’ll explain:

Sometimes on my way to work I hit the drive-thru for two double-cheeseburgers and a large Coke. It costs $5.33. This has a value to me in that it is relatively cheap and takes care of the hungries. Now suppose they jacked the price for that same order to $20.00 with no changes to the content… not as good a value. Labor unions had a similar effect on some industries, raising the cost of labor with no significant change in the value of that labor (that’s the “lower profitability” he was talkng about… and in his context, it was a feature, not a bug).

In addition, through the late 70’s, there was a word you heard… malaise. America’s best years were behind us, things aren’t going to get better, this is the “New Normal”… any of this sound familiar? Unemployment was through the roof, food and gas prices were up, banks (by necessity, not greed) were charging interest rates that would have embarrassed a mafia loan shark.

(by the way, I find it interesting that Jared Bernstein served as Biden’s economic advisor, seeing as he’s even more of a nitwit when it comes to how business works than his boss).

What helps me remain optimistic for the country is that history does tend to run in cycles, and that after the disaster that was the Carter presidency, we got Reagan, who (without naming or blaming his predecessor ONE TIME after being inaugurated) was able to get things on track and reminded the world… and Americans… of what American Exceptionalism was all about.


Here’s a little quote from Dr. Benjamin Franklin that my Dad used have on the wall of his office (he does sales and marketing consulting).

“Trades would not take place unless it were advantageous to the Parties concerned. O course, it is better to strike as good a Bargain as One’s bargaining position admits.

The worst outcome is when, by over-reaching Greed, no Bargain is struck, & a Trade that could have been advantageous to both Parties does not come off at all”


Comment by Lon Mead

I become ever more convinced that Liberals/Progressives/Leftists simply cruise along the top of issues propelled by feelings and emotions and ideology, sure that any evidence the Republicans/Conservatives/Tea Partiers/Libertarians offer is simply false because it comes from the right-wing; and never bother to read, think about or study what the right-wing offers, or the studies, statistics, scholarship and evidence involved. It’s a determined ideological ignorance.

Oh yes, Jimmy Carter’s malaise. Well, I did have a lot of malaise then. The Progressives always promote pessimism, because they want to save us from the present with their glorious future that they can’t quite manage to describe, or the principles that they can’t come up with.

I am optimistic because I believe in the native common sense of the American people. We spend far too much time being entertained, and too little being informed, so we make dreadful mistakes, but eventually common sense returns.


Comment by The Elephant's Child

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