American Elephants

Electing a President Who Is Not a Member of the Political Class May be a Very Good Thing! by The Elephant's Child

It’s hard to know what the Left really believes. Nancy Pelosi has announced that as soon as Democrats return to power, they will end all this “tax cuts for the rich” nonsense, and raise taxes. If they can just convince everybody that the tax cuts only went to the very rich and CEOs of big corporations, then they will return to power and have more money to spend. Republican tax-cuts are what is called “supply-side economics”. When you free people up, and let them keep more of their own money, then they have the money to start their own businesses, invest and grow the economy. When the economy is growing,business expands and grows and hires. Works every time. Here are some facts:

President Trump is the “Jobs President” after 8 years of Obama’s failure. The unemployment rate is at a record low. It  hit 3.8% in May, a record low. The unemployment rate of Latinos is at an all-time low. African-American unemployment is also at an all-time low.

A record number of Americans are working full-time. Almost 130 million Americans now have full-time jobs. This is six million more than the previous record.

The number of jobs available is at a record high. Job openings are ranging from 6.6 to 6.8 million between March and May —meaning there are as many jobs out there as unemployed Americans. In many cases, employers are waiving their usual requirements to training or retraining workers themselves. Congress is in the process of passing legislation supporting community college and technical training. A good time for preparing students for high paying jobs and avoiding the mountains of debt that many millennials face. When employers have a hard time finding qualified workers, salaries go up.

President Trump is keeping his commitment to the forgotten blue collar worker and to the older workers in middle America. As a result the economy grew at a robust 4.1 percent in the second quarter.

I often mention that the government has no money of its own. By that, I mean that every promise of “free stuff,” or “free college,”or “free health care, or “guaranteed jobs”or “subsidized housing” is not paid for by the government, which has no money of it’s own, but by you, the taxpayer, with, added on, the cost of a new bureau and a new bunch of bureaucrats to administer the new benefits. But that is not the end of it. We cannot expect the new bureau and the new bureaucrats to administer all this stuff from the nation’s capitol. Each of the fifty states will need a new bureau and a new bunch of bureaucrats to actually disperse all these wonderful new benefits, who also require salaries and pensions and benefits. Which means that the states will need new bureaus and bureaucrats. Unfortunately that is not the end of it, because all the extra taxes use up a lot of the money that was going to new businesses and new ideas., and slowly, the economy responds by slowing down, which means more people out of work and needing help, so the cycle repeats.

A while back when the Democrats were promising “free stuff” Nancy Pelosi informed Americans that now, with all these free benefits, people would be free to follow their dreams and paint and write and play music in all their new free time.

Employment and Unemployment for July, 2015. by The Elephant's Child

So the job situation for the month of July remains — dismal. There were 215,000 new jobs in July, a little less than the expected 225,000. 93,770,000 working-age people, 16 and older, aren’t working. This takes us back to 1977 levels of employment, and we are a bigger country now. This is a 36-year low. A record 56,209,000 women are not in the work force.

Since 2007, 1.4 million manufacturing jobs have been lost. There are 1.4 million new waiter and bartender jobs that have been created in the same time period.

Possibly a more interesting discussion for the debates? How are you going to fix this one?


Perhaps It’s Time For Some Supply Side Economics by The Elephant's Child
April 1, 2014, 6:37 am
Filed under: Politics | Tags: , ,

From The Seven Fat Years: And How To Do It Again
by Robert L. Bartley

Jean Baptiste Say (1762-1832) lent his name to the bedrock proposition of classical economics: Supply creates its own demand. That is, manufacturers pay workers to make widgets, and workers use their pay to buy widgets. Savers lend their money to investors  who build widget factories, and the factories’ profits go to repay principal and interest.  A higher price will call forth more widgets, and higher wages will call forth more widgetmakers, and higher returns will call forth more investment. Unless the government gets in the way, for example by fixing prices, markets will clear and everyone will live happily ever after.

Whether a free economy functions in this self-regulating fashion has been and remains the great issue of macroeconomics. It was at the heart of the differences between Ricardo and Malthus, and of a general 19th-century debate called “the general glut controversy.” In the 1930s, Say’s law fell before the Keynesian onslaught, the massive unemployment showed the labor market had not cleared. Henceforth, governments were expected to correct “market failures.”

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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