American Elephants

The Great Obama Recession continues. Fourth Quarter growth was anemic, expanding at only a 0.7% seasonally adjusted annualized rate in the fourth quarter of 2015.  That’s weak, really weak. From the end of World War II, the economy grew at an average annual rate of 3.5%, through thick and thin.

The Labor Department reported 292,000 new net jobs in December, but the U.S. labor force participation rate has been declining for more than five years. Only 62.6 percent of the labor force is actually employed. In a study published last month University of Chicago economist Casey Mulligan concludes that American safety-net programs changed significantly, in ways that discouraged employment. Unemployment insurance became more generous in several ways. Eligibility rules for food stamps were reduced, waivers from work requirements were granted, and the monthly benefit amount was increased.

In Britain, labor force participation stayed flat throughout the downturn, and it increased for 25 to 54 year olds. In the U.S. labor force participation for ages25 to 54 dropped 3,1 percentage points. The difference was that Britain cut tax rates on income and consumption to encourage low income individuals to work. The American stimulus reduced the incentives to be employed.

Work is important. Only 3% of working-age adults who work full time, year around, are in poverty. Democrats govern most of the major American cities, and they have been increasing their spending significantly. Without the ability to increase their spending much more, they have turned to regulation. By regulating how businesses conduct themselves, who they can hire, what they must provide — they are turning the progressive agenda into a regulatory agenda.

During the 1990s, conservative ideas had a profound and lasting influence on welfare policy, policing, and K–12 public education. Cities that had appeared to be in a death spiral only years before began to see their populations stabilize and even start growing again. Republican mayors such as Steven Goldsmith in Indianapolis, New York City’s Rudolph Giuliani, and Los Angeles’s Richard Riordan gained national renown for their successes. Welfare rolls fell dramatically without the corresponding rise in poverty predicted by liberal doomsayers. Crime rates plummeted. School choice gained broad support throughout low-income minority neighborhoods.

Republican inability to explain what had happened, capitalize on the drop in crime and the popularity of charter schools, led to the reelection of Progressive mayors. The rise in convicted criminals was blamed on racism, not as the cause of the drop in crime. (See Butterfield Fallacy) Progressives aren’t spending in a big way because they don’t have the money. Paying city workers, mostly unionized, and pensions means there’s not enough left for anything else.

Work is Important. To quote Thomas Sowell:

It was Thomas Edison who brought us electricity, not the Sierra Club. It was the Wright brothers who got us off the ground, not the Federal Aviation Administration. It was Henry Ford who ended the isolation of millions of Americans by making the automobile affordable, not Ralph Nader.

Those who have helped the poor the most have not been those who have gone around loudly expressing “compassion” for the poor, but those who found ways to make industry more productive and distribution more efficient, so that the poor of today can afford things that the affluent of yesterday could only dream about.