Congress appears doomed to fail on Jobs Creation Legislation
by Linda Beale
Congress appears doomed to fail on Jobs Creation Legislation
The House passed a puny measure worth about $154 billion over a decade. The Senate, strangled by the GOP party of no, appears set to pass a bill that does almost nothing and costs only about $15 billion over a decade. See Deal on Jobs Shows Limits of Push for Bipartisanship, NY Times, Feb. 12, 2010 and the NY Times editorial, Ho NOt to Write a Jobs Bill, NY Times Feb. 12, 2010 at A 26.
What is Reid proposing?
1) waiver of the ER 6.2% Social Security tax for workers hired who haven’t had a job for 60 days, plus a $1000 tax credit for any new employee retained for 52 weeks.
this is really puny stuff. First, it’s a tax break for an employer who won’t be likely to hire a new employee for the break–too little at stake, and new employees aren’t hired until there is work for them to do. The employer is more likely to pocket this money for himself or his shareholders–a nice little extra profit. Second, the employer will just get the reduced taxes for new employees that it would have hired anyway–it isn’t at all likely to create new jobs that wouldn’t have been created without this “ice cream topping”. So this is another piece of the current corporatist agenda–giveaway to business, without any real results for ordinary Americans.
2) extend the expensing of capital investments yet again.
This is not just puny, but also “been there, done that” and no magnificant new job creation was forthcoming. Businesses only need to make capital investments if they expect more business that their current equipment can’t handle. If they don’t have consumer demand, they don’t need the new investments. This expensing provision was already part of the Bush “job creation” business-friendly tax cut packages. Look at the record there–really puny job creation and nothing to show that tax cuts and deregulation do anything to create sustained job creation. Further, since it’s already been done, it has been around for long enough that businesses that were at the point of needing new equipment just to keep going may have already used it to accelerate somewhat that equipment purchase. But they aren’t gonna buy equipment they don’t need. That’s like thinking that a set of 64 wine glasses is so cheap that it’s a bargain, but then realizing that you still have 32 in a box that you haven’t used for the past three years so even a bargain is a waste of money.
3) reauthorize spending on road and transit programs
Well, this is at least related to working on public infrastructure projects, which is the only thing that really has any prospect of creating (or preventing the loss of) jobs. It should be focused on innovative “green” solutions–inner city rail, etc. And those projects will create real jobs. But this is way too little money –get rid of programs 1 and 2 and put all that money here, plus about $150 billion more over the next year, and we might have something worthwhile.
4) provide a federal subsidy to states for a portion of the interest on bonds used to finance public works projects
A good idea, but too puny. States are truly strapped for cash, and as the editorial points out, states employ about a fourth of the work force (almost as many as the health sector) and have been cutting jobs right and left to balance budgets. Those jobs matter and have a huge impact on morale and on other things–nothing like a bureaucratic entanglement from lack of personnel to delay that public infrastructure project. So this puny little amount of money will help, but it isn’t nearly enough.
What should Congress be doing instead? It should be thinking of public infrastructure and human capital projects that provide3 support to important public institutions that will last long beyond the current Recession. Congress should be funding public transit and renewable energy projects that would directly put to work hundreds of thousands of ordinary Americans. Another important public infrastructure project that would make a real difference in unemployment? How about providing 1-2 billion apiece to the ten largest inner cities to be used for urban renewal–destruction of ruined buildings, building of public transit and energy projects–with the requiremment that at least 75% of the employees be from the city itself. Detroit’s mayor has said that tehre aare 10,000 buildings that need to be pulled down in the city. That would be great work for unskilled laborers and make a marvelous dent in uhemployment. And it should be providing another stimulus packagge for the states to support education from K-16 and beyond–the best investment we can make in keeping our US universities and schools great, keeping educators employed, and offering ordinary Americans the chance to better themselves through educational advancement.
Just imagine. What if Congress would have the courage to discuss these issues publicly? Quit thinking about their corporatist patrons? Start thinking about ordinary Americans? And actually fund public infrastructure and human capital support over the next two years.
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crosposted with ataxingmatter
I look at Linda’s proposals and see a continuation of the current stimulus proposals with espected similar results, jobs creation delayed for 2-3 years and longer. In that multi-year intrerim we continue to extend unemployment beneifts and other entitlements to allow for those unemployed familes to eke out a subsistence. Continued borrowing and Fed spending and little to show for it.
How much longer before left leaning economists understand the current policies are failing? Voters understand this. Why not Libs/progressives/Dems?
What might be scary is that Linda actually believes this: “The Senate, strangled by the GOP party of no, appears set to pass a bill that does almost nothing and costs only about $15 billion over a decade.”
Her referenced article indicates otherwise. The decision to reduce the already bipartisan bill was a Dem political move by Harry Reid. The article says: “Senator Harry Reid, the Nevada Democrat and majority leader, said he would take four core job-creating initiatives from the bipartisan proposal — including tax breaks for businesses that hire unemployed workers and increased public works spending — and seek to move those rapidly through the Senate.” What isn’t stated in the article is that when Harry made his anouncement he froze out any amendments by using a rare Senatorial parliamentary approach to fill the tree of amendments with just his own.
So Linda, when referencing republican actions as the party of “no”, please include the totality of political moves by the Lib/progressive/Dem leadership. Blatant political moves just get similar reactions.
5% unemployment in 2011!
Do whatever it takes.
There are no left leaning economists involved in current, or for that matter the previous several decades, government decision making regarding any aspect of our economy. Who is left leaning: Larry Summers, Bernard Bernanke, Timophy Geithner? There are some Dr. Feelgoods spouting nice souonding words about the need for jobs without ever noting that no one among the working classes has any money left to spend in any serious way that might lead to a lift in our economic activities. Nice words, even when uttered in an intelligent fashion, have little effect on the reality on the ground. When working people get a fair share of the product of what economic activity still exists, they’ll start spending money and generating the need for more jobs. If the bulk of income generated by an economy’s product is captured by a minute percentage of the earners in that economy too much of that income is squirreled away into unproductive hiding places. Pay workers a better salary and spread the work around so that more workers can share in the available work. Then maybe the economy will begin to grow again. More workers warning more income equals more spending leading to more economic activity producing yet more jobs. There is potentially an up side to an economic cycle oonce the greater bulk of the income is spread around a bit more evenly.
Obama’s first stimulus bill was a dud with unemployment rising and hovering around the 10 percent level. This really should not be a surpise to anyone. FDR tried economic stimulus in the United States during the depression and still had 15 percent unemployment going into the 8th year of his program. The Japanese wasted the 1990s with a series of Keynesian infrastructure projects that failed to lift the economy out of its funk.
I don’t think these programs work. I also don’t see the point of putting a hard hat on a nurse, accountant, teacher, analyst, physical therapist, or other non blue coller professional and handing them a jack hammer thinking this will solve the unemployment problem. A better approach is to keep taxes and regulation low to encourage both producers and consumers to work it out on their own. This is what I believe is the conservative alternative. My camp does not promise the economy will never go into recession, however, when it does our emphasis on low external burdens maximizes the economy’s potential to adjust and change in ways that create new economic growth and jobs.
For a symbolic gesture the administration ought to allow unlimited drilling for oil in Alaska and open up new offshore drilling sites where the oil companies want to drill but can’t because of current regulation. I don’t value seeking energy independence this way since I think without a new fuel this whole concept is a pipedream. However, opening up new drilling sites will sybolically show that America is about business, is number one at exploiting opportunities, and on top of that it will create jobs here in the United States. And the really great thing is that it will be self funding and rather increase our current insane deficit and moreover it would generate both royalties and income tax revenue.
Min,
Do whatever it takes
Including drilling for oil in Alaska & offshore the continental US. You did say “whatever it takes” afterall.
Jack,
Krugman and Stiglitz are the leading left leaning economists.
CoRev,
What’s wrong with “No”?
The US allows over a million legal immigrants a year into this country who displace American workers, and another million or so illegal immigrants who displace Amirican workers as well. If anyone cared about working class they would not flood the market with hungry workers. Any talk about unemployment that does not discuss this issue is intellectual masterbation.
CoRev,
On this point we’re not far apart. The problem this time wasn’t GOP recalcitranc, it was Harry Reid’s cowardice. There was bi-partisan agreement on a weak and crappy jobs bill, but because Harry Reid was worried that the GOP would disown the bill in November he decided that an even weaker and crappier bill was the answer. I think this proves that neither party has a monopoly on stupidity and political cowardice.
CoRev,
On this point we’re not far apart. The problem this time wasn’t GOP recalcitrance, it was Harry Reid’s cowardice. There was bi-partisan agreement on a weak and crappy jobs bill, but because Harry Reid was worried that the GOP would disown the bill in November he decided that an even weaker and crappier bill was the answer. I think this proves that neither party has a monopoly on stupidity and political cowardice.
CoRev,
The Obama Administration is not pursuing a left leaning policy. Not even close. The original ARRA bill was too small to do anything more than just stop the bleeding. The CEA’s own internal analysis showed that the bill needed to be almost twice as large (~$1.3T) than what was eventually enacted. The problem isn’t that the ARRA stimulus package didn’t do what it was supposed to do, it’s that what it was supposed to do wasn’t nearly big enough. The ARRA’s effect on GDP growth rate has been right on target with what was predicted; the problem is that what the CEA was predicting was a long, slow jobs recovery. That’s Larry Summers’ influence.
I agree with you that at the end of the day we are likely to have continued borrowing with little to show for it. That’s exactly why some of us on the left were urging a MUCH bigger upfront stimulus bill. If we had gone ahead and bit the bullet on the $1.3T stimulus package that was really needed, then the final borrowing costs would have been a lot less. As it is, these continuing rounds of weak and ineffective small ball programs are going to drag out this recovery for years. The final cost will far exceed the $1.3T that it would have cost to do the job right. It’s like the guy who keeps trying to nickel and dime his way around having to pay for some major car repairs. It’s almost always a losing strategy. Sometimes you’ve just got to suck it up and do what it takes to get the job done.
But just because the Obama Administration has mismanaged the recovery does not mean that the GOP solution would have been any better. As hard as it may be to believe, Eric Cantor, John Boehner and Mike “dumb as a bag of hammers” Pence were even more clueless than the Democrats.
Cantab,
FDR tried economic stimulus in the United States during the depression and still had 15 percent unemployment going into the 8th year of his program.
You really need to rely on better sources than some Atlantic Monthly writer with a lit degree. This shibboleth has been thoroughly discredited by real economists. Quit listenting to lit majors and actors who play at being economists on Fox News. Try scrolling through all of the NBER papers that shoot down this crackpot theory.
The Japanese wasted the 1990s with a series of Keynesian infrastructure projects that failed to lift the economy out of its funk.
The Japanese only spent half of the 1990s pursuing a series of Keynesian infrastructure projects. The other half of the time they reversed course and pursued the timid Treasury View. The economy always turned down after they switch course and pursued the Treasury View.
I also don’t see the point of putting a hard hat on a nurse, accountant, teacher, analyst, physical therapist, or other non blue coller professional and handing them a jack hammer thinking this will solve the unemployment problem.
First, that isn’t what’s being proposed. The idea is to give money to states so that teachers, public health officers, and road crews can stay busy doing what they are trained to do. And then have the govt buy services and commodities from companies so that people can stay employed. You seem confused about what your side is actually proposing. The conservative view is that resources need to be reallocated as a sine quo non for recovery. In other words, the conservative view is that nurses and accountants and teachers need to find new careers handling jackhammers. Go read the academic literature of conservative economists. They are saying that the way an economy gets out of recession is through wage and employment realignments…in other words, people shifting careers…nurses learning how to run jackhammers. So it seems you’re completely contradicting your own arguments. Second, when the problem is weak aggregate demand and a nominal Fed rate at zero percent, the only policy option available is fiscal stimulus. When you’re in that kind of situation the economy will tend to settle into a local and suboptimal equilibrium. That means the economy is not self-correcting. It can’t get out of its funk precisely because the recession is an equilibrium position. That’s the key insight that made Keynes’ analysis so groundbreaking. Remember, an equilibrium doesn’t mean optimal, it means a convergence point. The govt has to provide a fiscal shock in order to jolt the economy out of this low output equilibrium. And you used to know this stuff too.
Slugs,
The best jobs bill is one that looks for situations accross the economy where private businesses wants to do a project but are being held back by current regulation or petty local interests. This does not mean that all projects that are halted ought to be given the go ahead, but there certainly must be hundreds of billions of dollars worth of projects that are reasonble and could be started. An obvious place to start is with Energy in Alaska, and offshore. For instance, there is a project to build a wind farm off nantucket Island in Massachusetts that’s awaiting for approval. There have been many environmental objections raised but the real objection is that the windmills will impede the view of the few. So this should get the go ahead. Keep on doing this accross the economy and there is your stimulous bill.
I think that leftward economists like Krugman and Stiglitz just want to get us much social spending through the door as possible using the recession as an excuse. They serve the nation’s interest poorly.
President Obama
“If the price of certainty is essentially for us to adopt the exact same proposals that were in place leading up to the biggest economic crisis since the Great Depression . . . the result is going to be the same. I don’t know why we would expect a different outcome pursuing the exact same policy that got us in this fix in the first place.”
To me this shows the president does not really understand the economy (perhaps Summers and Romer are letting him make a fool of himself as a practical joke). Actually, contrary to what the president thinks you do go back to the way things were, maybe with minor tweek or two, but you do you back. The president is arguing against the strawman that free market liberal economic policy always guarantees positive economic outcome. This is nonsense. What free market economics gets you are higher highs and higher averages at the expense sometimes of sharper short term lows. This is the price we pay for the good times and it seems like an excellent deal. The tragedy of this president and our great misfortune as the American public is that he just does not get the way our economy works and our economic traditions. To make s sport analogy president Obama would take an althelete and strained a muscle in a workout, and rather advise the athelete to take a couple of days off he would tell him not to workout again or else the result would be another strained muscle. His little phrases don’t square with my life experience.
President Obama
“If the price of certainty is essentially for us to adopt the exact same proposals that were in place leading up to the biggest economic crisis since the Great Depression . . . the result is going to be the same. I don’t know why we would expect a different outcome pursuing the exact same policy that got us in this fix in the first place.”
To me this shows the president does not really understand the economy (perhaps Summers and Romer are letting him make a fool of himself as a practical joke). Actually, contrary to what the president thinks you do go back to the way things were, maybe with minor tweek or two, but you do you back. The president is arguing against the strawman that free market liberal economic policy always guarantees positive economic outcome. This is nonsense. What free market economics gets you are higher highs and higher averages at the expense sometimes of sharper short term lows. This is the price we pay for the good times and it seems like an excellent deal. The tragedy of this president and our great misfortune as the American public is that he just does not get the way our economy works and our economic traditions. To make a sports analogy president Obama would take an althelete that strained a muscle in a workout, and rather than advise the athelete to take a couple of days off he would tell him not to workout again or else the result would be another strained muscle. His little phrases don’t square with my life experience.
Corollary: If President Obama were Maverick in top gun after flying through the jet wash he would have never reengaged.
I suspect that the problem with deficit spending as stimulus, whether it relates to Japan or the US or any other advanced economy, is that global aggregate demand must allow an increased rate of productivity to offset earlier loses. But any Keynesian effort is unable to forecast where that global aggregate demand is to come from, that because it was waning in the first place, and, global trade conditions are worsening. Japan’s dependence on the debt levels of US citizens is an example of how unsustainable the trends have been.
Jack’s point about stimulating from the bottom was also my first inclination. But it is critical to understand the importance of global market share from the pov of the Elite. The gains via the MNCs has come to the fore in terms of holding the Empire together and that also helps to explain why the immigration gates have been left open(domestic labor costs are tied to staple good costs). It is also key to recognize that immigration provides demand support for housing. This due to the need for housing markets to be dependent on upward trading dynamics and rents. ( I am not advocating any of this)
Linda ~ “this is really puny stuff. First, it’s a tax break for an employer who won’t be likely to hire a new employee for the break–too little at stake, and new employees aren’t hired until there is work for them to do.”
It is true that small business only hires based on need. But the last decade has shown through top-line-bottom-line analysis that corporations are actually carrying a significant amount of the workforce as what I suppose is their way of proving that the private sector can absorb some of the labor surplus. But of course that means we also have an employment bubble. Which also helps explain why deficit spending to create jobs will be ineffective considering what this does to the productivity gap. It is hard to sqeeze more productivity out of our least productive workers when we don’t produce much in the first place, and at a time when productivity is peaking for the existing worforce.
Slugs,
You keep making it difficult to be civil to you given your tone and tendency to bend the truth. I looked up unemployment for the United States and saw that going into 1940 it was at 15 percent. Since FDR took office in 1933 this would be his 8th year in office. The source for this is the Bureu of labor statistics and not a story in the Atlantic monthly or on Fox. So why don’t you take that shibboleth and shove it up your butt.
http://www.bls.gov/opub/cwc/cm20030124ar03p1.htm
The Japanese only spent half of the 1990s pursuing a series of Keynesian infrastructure projects.
So you admit that their Keynesian adventure was a failure. That’s what I would say. Unfortunatly for the Japanese they refused to liberalize and fully open their economy holding on to their crony government and business elite managed economy. We certainly don’t want to be like them.
On the rest your post I don’t believe that a top down stimulus directed by the government is a wise use of our funds. I just don’t see a history of it working in our past.
Corporations will carry excess labor just to prove a point? Huh?
Cantab,
Did you even read your own link??? It clearly shows that when FDR took office unemployment was going up. It peaked in 1933 and then dropped almost 10 points over the next 4 years. And just as the economy was starting to get on track, FDR reversed course and in 1938 unemployment shot back up again. That is to say, when FDR started to follow exactly the same advice that you’re recommending today, unemployment got worse. Then after FDR went back to Keynesian policies unemployment started to fall again.
Fiscal policies in Japan worked when they were tried and didn’t work when they weren’t tried. It’s the same story as with FDR and the Great Depression. The Japanese certainly have a crony capitalist mentality and that is an economic problem for them, but it’s not what’s causing today’s problem. Crony capitalism is an aggregate supply curve problem and given the fact that Japan suffers from excess capacity it’s hard to see how making Japanese businesses more efficient and less crony would do much to solve the problem of aggregate demand. Again, you’re a one trick pony. Policies that focused on supply side problems made sense in the late 1970s and 1980s. They make no sense when the central problem is weak aggregate demand.
A top down stimulus may not be the best use of our funds, but keeping them hidden in a mattress isn’t the best use either, and that’s the alternative. There is no private sector investment demand. That means the government has to soak up excess savings.
“Krugman and Stiglitz are the leading left leaning economists.” Cantab
They may not be raving free market apologists, but left leaning they are not. Realists, yes! Some what populist and progressive? Maybe so. Left leaning is not applicable unless you think that Milton Friedman represents the middle of the road. And by the way,
neither Krugman nor Stiglitz has any direct influence on the current Administration’s economic policies. have you forgotten that Bernanke is in charge at the Fed and Geithner is still atop Treasury and Summers is the chief Economic Advisor. Exactly what positions do the two professors hold in Obama’s administration?
Cantab,
I don’t have any problems with modifying regulations. And I agree about the wind farms. The reasons against it are specious and not very convincing. I doubt that there are “hundreds of billions of dollars worth of projects” that are out there being held up because of useless regulations. That’s a number that’s hard to square with the NIPA data on net private investment. So I think that’s more of a Fox News imagined fact than anything else, but there probably are a few tens of billions of dollars worth of projects.
Offshore drilling in Alaska really doesn’t make a lot of economic sense. Most of the reasons for offshore drilling turn out to have more to do with maintaining a stream of monopoly rents from the existing pipeline than anything else. You need to be very suspicious of claims about economic growth when what’s really at the heart of the matter are fights over rents.
rusty,
I hope I did not imply that corporate execs were that deliberate in the good times. But I was trying to imply that in bad times they might do what they can to ease the government’s burden, especially if the government is helping out on the cost end. They do want things to work out, after all.
Slugs, Cantab,
I can’t remember how this goes exactly, but, some unemployment stats after the Depression include the CCC efforts etc. as employment, and some count those jobs an unemployment.
2slugs, I see you are finally plowed out! Anyway, saying this: “That’s exactly why some of us on the left were urging a MUCH bigger upfront stimulus bill. ” is a slow admission that the ARRA was misdirected. As I have said all along, it wan’t that the total was too small, but the implementation too slow and misdirected. Why did they wait til year 2and 3 (mid term election year and just before the Prez election) to try to stimulate the economy? Oh, sorry, answered my own question.
So, which was it too small overall or too little upfront loading? What has now been proven is that trying to stimulate the conomy via infrastructure spending is the wrong approach for short term stimulus. We said that in the Bush administration when you folks kept insistign it was the better approach. Luckily Bush ignored your sides advice and did what worked. Too bad this administration has to continue experimenting and thereby deepening and lengthening the recession and increasing unemployment while expanding the pain and suffering from it.
Slugs,
I take it now you agree that unemployment was at 15 percent going into 1940 (like I said it was). And yes I did look at the numbers and it jumps out that FDR’s record on unemployment was horrible (note: the first 8 years of Roosevelt averaged lower than the 4 previous years under Hoover’s — fricken Hoover!).
Anyway, on the larger picture you just have it wrong. On paper it looks like Keynesian policy might work. It just never seems to in reality. This is probably due to many reasons such as public projects crowd out private ones and the fact that you have government running the show is killing individual confidence, and they spend money on things that people don’t really want.
The demand problem is from people losing wealth because of falling house prices and falling or stagnant porfolio values. The government has nothing on the table that is going to fix this problem so its better that they do nothing.
I’m going to have to think about this – having trouble getting this in focus.
There is an argument for a larger jobs tax credit to create a tipping point on hiring and wage increases, not certain that works either.
But I;m thinking on this………..
Rusty,
My thinking here may be too general for your taste, if I remember correctly you are an accountant and so, I suppose, you have a deeper appreciation for numbers than I do. I am just an old Cowboy-Worker who reads more than his peers. But I see corporate slackers every time I leave my house. Not to say that all corporate jobs are the same, but it is easier to find Home Depot etc. employees involved in conversations with co-workers than it is to find one actually working. And so I just think that large corporations have much more flexibility in their flexibility than small business does. And, in good times the data suggests that the execs are more tolerent of slackers than in lean times. (if you could see how slowly I type you would not force me to explain anything — in any more detail than that!)
CoRev,
Aside from the fact that the ARRA put too much emphasis on tax cuts, it was not misdirected. The problem with ARRA was that it was too small for the job. The total was too small….about half the size that the CEA’s own internal analysis showed was required. Remember, the CEA’s own analysis showed that the ARRA was designed to only close about one-third of the output gap. In other words, ARRA had nothing to say about two-thirds of today’s unemployment. That’s unacceptable. The ARRA has pretty much performed as predicted. The claim was that GDP would turn positive in June/July 2009 (it did). The CEA’s economic analysis from over a year ago claimed that under ARRA there would be a spike in GDP output in 4th qtr 2009. There was. The CEA’s analysis said that the ARRA would save or create about 2 million jobs by the end of 2009. Again, most independent analysts (including John McCain’s chief economic advisor) agree that ARRA did indeed save or create 2 million jobs. The problem is that 2 million jobs is not near good enough when 8 million people have lost their jobs since the start of the recession. As to the timing, I would have preferred more upfront money, but it’s just a function of the algebra of growth rates that most of the dollar value had to be in the 2nd or 3rd year. I just wanted to see bigger numbers in all years.
Your theory about waiting until the 2nd or 3rd year for political reasons is just kookoo for coco puffs. That’s a recipe for political catastrophe. If you want to play the cynical politician game, then Obama would want to get as much out the door as fast as possible.
I’m afraid your comments on infrastructure spending versus Bush’s approach are so far off the mark that I hardly know where to begin. You simply don’t understand the math.
rl love,
Cantab was using the BLS numbers. There is no reason to exclude CCC type jobs from the employment numbers. They employed people, contributed to aggregage demand, were consistent with NIPA conventions and resulted in a stream of benefits that lasted for decades.
Cantab,
I take it now you agree that unemployment was at 15 percent going into 1940 (like I said it was).
I take it that you now agree that unemployment was dropping fast between 1933 and 1937, which is when FDR followed Keynesian policies. I also take it that you agree that Treasury View policies increased unemployment in 1938 after FDR was persuaded to reverse course and try to shrink the deficit. And I take it that you also agree unemployment fell again after FDR abandoned the Treasury View.
…public projects crowd out private ones…
No, there is no crowding out when you’re in a deep recession. Again, you have to tailor your economic policy to match the economic conditions on the ground. Crowding out is a nonproblem right now. If only it were a problem!!!
The demand problem is from people losing wealth because of falling house prices and falling or stagnant porfolio values.
The problem is that when the nominal Fed rate is at zero the Fisher effect overwhelms the wealth effect. Most econometric estimates put it at about 20 to 1. That’s one of the reasons why an economy with a zero Fed rate can be stuck in a low output equilibrium.
2slugs still insists its about the math and not JOBS and the pain and suffering his party and Prez are inflicting by foolishly delaying stimulus. For all your pontificating, you still misunderstand the negative effects of the policies you espouse.
S’all rite. Nov. wil help you.
Here’s a math question for you. How many more in Congress do you expect to jump off the sinking ship?
Remember that demographics thing you were telling me about a few weeks ago. How does that work when they don’t have jobs?
Jack
Exactly what positions do the two professors hold in Obama’s administration?
None, but I think they’re suited to teach home economics to the whitehouse staff.
rl love,
I’m just taking what the BLS published. I think the make work jobs count. Slugs point I think (since he did not contradict me) was to look a unemployment in its worse year take that as a base, and prolaim FDR a genius for dropping it from 25 percent to 15 percent. I think that if we had made a duck president it would have fallen at least as much and probably more. We had 5 percent unemployment going into the depression so getting back to that level or a few point higher should not have taken that long.
Slugs,
No, there is no crowding out when you’re in a deep recession.
I think there is. The mechanisms in the Keynesian model (winging if here) that creates crowding out are rising interest rates which supress private investment and consumption spending at full employment. I’m not talking about this kind of crowding out. If you start a government project you’re not about to hire all unemployed workers. You’re bound to bid for the government job, maybe the returns are higher than your existing work, and hire only those you need meet your needs that are already on the payroll. And since you and your crew actually have some experience, you have economies of scale technical processes that some new firm without this experience can’t replicate. So you move away from the work that you had to the more profitable government work, which is good for you, but the work that you would have been doing does not get done since there are no new replacement firms that can do it in a cost effective manner. I think this was part of what Barro is saying.
Slugs,
No, there is no crowding out when you’re in a deep recession.
I think there is. The mechanisms in the Keynesian model (winging it here) that creates crowding out are rising interest rates which supress private investment and consumption spending at full employment. I’m not talking about this kind of crowding out. If you start a government project you’re not about to hire all unemployed workers. You’re bound to bid for the government job, maybe the returns are higher than your existing work, and hire only those you need to meet your needs over what you already have on the payroll. And since you and your crew actually have some experience, you have economies of scale technical processes that some new firm without this experience can’t replicate. So you move away from the work that you had to the more profitable government work, which is good for you, but the work that you would have been doing does not get done since there are no new replacement firms that can do it in a cost effective manner. I think this was part of what Barro is saying.
CoRev,
2slugs still insists its about the math and not JOBS and the pain and suffering his party and Prez are inflicting by foolishly delaying stimulus.
Delaying the stimulus???? Huh? The problem is the size of the stimulus.
Again, you need to think about why most of the dollars have to be in the second year. Think about the algebra of growth rates. Do a thought experiment and ask yourself what would happen if 100 percent of the stimulus got dumped into one year. Think through the math.
Here’s a math question for you. How many more in Congress do you expect to jump off the sinking ship?
Don’t know, but I believe there are still more GOP retirements than Democratic ones.
Can someone explain the logic of Senator Reid’s decision to reduce the scope and funding of the jobs bill? Is there a good political insider article explaining why he did it?
Not when the NAIRU clearing rate is below zero. That’s what Barro’s critics keep trying to get through his thick skull. I know of at least four papers in the last 7 months that have all come to the same conclusion regarding Barro’s argument.
Cantab,
Unemployment was getting worse every year prior to FDR taking office. There was no evidence that the economy was bottoming out “naturally.” The economy was in free fall. FDR took 10 points off the unemployment rate in 4 years. That’s a pretty strong record. He then followed the advice that you’re giving us today and added about 5 percentage points in one year. He then reversed course again and brought it down again to where he was in 1937.
We had 5 percent unemployment going into the depression so getting back to that level or a few point higher should not have taken that long.
There have been several very good papers recently on economic recoveries coming out of a recession caused by financial meltdowns. The empirical evidence is pretty gloomy.
slugs, Cantab,
Over at Economist’s View, ann argues that The New Deal ended the Depression as opposed to WW2 bringing its conclusion. ann can show that the make-work jobs were excluded but I don’t remember if BLS stats were those that she was referring to or not, probably yes. Her argument though was reliant on the difference between these sets of stats, it was substantial, she is the most prepared blogger in the Universe. Sorry I don’t remember more.
rl:
Wrong concentration, look to the inventory and the burden. You waste your time on superficial things such as employees taliking and waiting for the next customer.
2slugs:
Is there a reason you are arguing with the village idiot???
Nice side step of your prior inane remark that had no validity, yet you simply ignore that fact and continue to demonstrate your personal irrelevancy to any meaningful conversation.
run.
You’re a uneducated piece of crap and you have no idea what the Keynesian argument is and what my argument was. You and Jack are trolls and have not place here.
Slugs,
You’re doing an “All work and no play makes Jack a dull boy” sort of thing. I just introduced a new type of crowding out based on moving previously employed resources to do government stimulus and then not having the work they would have been doing continue.
Try to process this. Don’t be a cretin retrobate like run75441.
Movie Guy,
The bill was retarded and he’s cutting our losses.
run.
You’re an uneducated piece of crap and you have no idea what the Keynesian argument is and what my argument was. You and Jack are trolls and have no place here.
rl love,
I don’t post over at the economist view. Last time I did the site owner did a search on my name from my URL. He went on to edit my post without my permission to add words that were not mine to my original post saying that I was respresenting my company rather than providing a personal opinion. In addition, he edited a return email address with that of somebody that I had helped do a paper that he found on the internet. I emailed him telling him I was going to find the people he reported to and tell them he had fraudulently altered my written words. Academia has funny standards about that. Anyway he deleted what he did. So the point is if you scratch the service you never know what sort of psychopath you’re gonna get. Mark Thoma is certifiable.
cantab:
Your despair at my presence is actually a mantle of honor for me. Furthermore, I do not find an issue with Jack’s presence and he has not fully accepted what I have said either. Jack has a place here.
Your position is nonsense, has always been nonsense, and will always remain nonsense. You are a good parrot.
Movie Guy:
Reid is no Newt and many of us are calling for his replacement.
Cantab:
What is the matter Cantab, 2Slugs the last that will grant you any credence here on Angry Bear?
Cantab,
Thoma and his followers are a cult. I was one of the regulars there for about 3 or 4 months and I was even less popular there than I am here. Someone here pointed out recently how the so-called liberals are always the ones who need to censure. What is alarming is that they are more threatened by those of us on the Labor team than they are by your group. At Economist’s View it became nasty toward the end, it is an attrition of reminders that their motives are less than honorable that drives them to attack. They are flawed and weak though and rife with hypocrisy and contradiction. And you are not the only person who told me of Thoma’s lack of integrity.~ ray
Run, don’t worry about ole Harry R. Nov. will take care of him and Queenie Pelosi.
Why are you attacking Cantie? He obviously said something that got to you. Truth? An observation that can’t be denied? He’s not a desciple of one of your heroes? Just speculating.
run,
Your handle suits you. Name-calling (“idiot” [that was an example of support] {that was an example of an example,which is another type of support}]) is cowardly and childish. So “run” is apt. If you would like to continue this conversation, we should pick up where we left off at Econospeak. Run to there, run.
run,
I have decided to name the technique from your comment in your honor. It shall from here forth be known as a “Smug-run”. And because you are so certain of the superior validity of your OPINIONS, so much so that you assume that nothing you write needs support, I am thinking of providing a ratio that shows how much support is needed to offset your propensity for presumption. I think 1 to 1 might be a good starting point for someone who fails to see the importance of employees chatting while ignoring those who actually produce things, but, eventually, if you are to be taken seriously, away from your comfort zone, well, we will need to remove the presumption altogether. It is of course a sign of limited thinking. But you should start slow and allow genuine confidence to replace your abundance of disingenuous confidence slowly.
run must be running. he is here nor there.
If it’s legal, and puts people to work, go for it! 🙂
Run.
Your emails and sidebars are not working so why don’t you consider cleaning up your act.
Run,
Your despair at my presence is actually a mantle of honor for me.
A troll’s confession.
Keynesian stimulous has done a poor job historically stimulating the economy. Robert Barro’s analysis shows that you don’t get high multiples like some of the econometric models predict. He even has the multiple below 1.0. I provided a paritial explanation of why this might be.
Your problem is that you don’t know what’s going on with the economic arguments and are prone to lash out against those that do and that are not aligned with you politically. Maybe you would be happier at the Dailykos.
Correction:
Don’t be a like the cretin retrobate run75441.
rl love,
You seem pretty reasonable, i’m surprised that you had trouble over there. Maybe he’s just developed a trusted group. There not all that good or on point. One guy talks in rhymes and there are a couble of pointless feminists there. I remember Barkley Rosser as being a a good guy, and Bakho although a hopeless liberal seemed decent too. Thoma is whackjob though and I was suprised how he conducts himself given that he’s a professor at a decent state college.
Min,
In a broke country it seems like an obvious positive thing to do.