Pace of Job Losses Once Again Accelerating
People had been taking heart in the fact that for the fast two months the rate of deterioration of the labor market situation had been declining. Well, now it’s speeding up again with 467,000 jobs lost last month. And with a whole slew of states now facing budget crises, I think we’re looking at a midsummer wave of anti-stimulus from those jurisdictions.
Now I think the Obama administration is going to pay a price for not having acknowledged the problems with the stimulus bill they signed in January. A minority of observers thought a stimulus would be a bad idea. A majority of analysts favored stimulus, and the analytic framework they used to support that conclusion suggested a stimulus that was substantially larger than the one enacted by congress. If the administration felt that was the best they could get, then fine—you sign the bill and take what you can get. But they should have clearly and publicly articulated that while the ARRA was a useful step, it would likely prove inadequate to the scale of the problem. Then in the event that it did prove inadequate, they could say they had pointed this out at the time and maybe the Senate should stop ruining everything.
Instead, though, they proclaimed themselves pleased as punch with ARRA which now creates a situation where it’s not clear what they can really say.
52 Responses to “Pace of Job Losses Once Again Accelerating”
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July 2nd, 2009 at 9:41 am
Obama got rolled by Larry Summers.
July 2nd, 2009 at 9:50 am
Totally agree, Matt. They only way the first pile of crap stimulus bill makes sense is if it was understood, by all, that a second stimulus would be systematically assembled by a small, elite team of masterminds controlled by the White House.
But no. We prefer to let every Tom, Dick, and Sally toss in random ingredients to create one lousy jambalaya, and pronounce ourselves satisfied.
Like my Mom used to say when I would nose my way into the kitchen, “get the hell out of here. Too many cooks spoil the broth.” She was right.
July 2nd, 2009 at 10:00 am
Instead, though, they proclaimed themselves pleased as punch with ARRA which now creates a situation where it’s not clear what they can really say.
How about:
“It turns out that we now need a bigger stimulus than we originally thought. Let’s get to work.”
July 2nd, 2009 at 10:06 am
Not Krugman. He was calling for a larger stimulus while the bill was being debated, often qualified his endorsement for the stimulus that was passed, and has taken up the “second stimulus” banner again in the past couple weeks. Pretty consistent.
July 2nd, 2009 at 10:09 am
Now I think the Obama administration is going to pay a price for not having acknowledged the problems with the stimulus bill they signed in January.
Yeah, as conservatives pointed out ad nauseum, the problem with the so-called “stimulus” bill was that it didn’t stimulate. The money was slated to be spent mostly in 2010 and beyond. You know how much money the Department of Transportation has spent so far? Not even half a billion dollars. So much for “shovel-ready”.
Unforturnately, liberals never cared about actually stimulating, as opposed to plain old-fashioned spending. So it’s not shocking that the fairly non-existent “stimulus” isn’t working.
July 2nd, 2009 at 10:12 am
Obama should have included a WPA style program. The problem with Obama is that he is very timid.
July 2nd, 2009 at 10:13 am
True.
I don’t think the Republicans complained about the timing of the spending, they mostly bitched that there weren’t enough tax cuts. In fact I seem to remember that work was done to cut the spending in the bill in order to keep Republicans happy.
July 2nd, 2009 at 10:14 am
5: So were you opposed to slashing state aid then? Those would have prevented cuts that did take occur in 2009, but our wonderful moderates in the Senate insured they were removed.
July 2nd, 2009 at 10:18 am
I don’t think the Republicans complained about the timing of the spending, they mostly bitched that there weren’t enough tax cuts.
Republicans complained that there weren’t enough tax cuts because *tax cuts can be implimented very quickly*.
July 2nd, 2009 at 10:23 am
It’s not like stimulus money is free, which is what you, and Paul Krugman for that matter, seem to think. It comes either from:
– increased levels of taxation
– increased levels of borrowing
– both
Believing that federal stimulus is a good idea is like thinking that I can help myself out by taking $10,000 in additional debt on my credit card. Sure, I can buy some nice stuff with that – but eventually, my creditors want to be paid. At best, you are buying amelioration now in return for slowdown later.
Great idea, that. And no, I don’t care that Krugman has won a Noble. One, it wasn’t in this area. Two, this is basic common sense. Something he seems to lack.
July 2nd, 2009 at 10:25 am
I think Matt needs to at least consider the possibility that Obama bashing our efforts to deal with the economy may be a self-fulfilling prophecy. In other words, Obama has to consider more than just politics with the tone he strikes.
By the way, the stimulus is already having an effect on disposable incomes through the transfer payments, but unfortunately increased savings rates have limited the stimulus effect from those increases in income (although repairing household balance sheets should pay off down the road). That, of course, just confirms the point that direct spending is the most effective form of stimulus.
Also unfortunately, it is true that the direct spending in the stimulus is just getting started, and will be strung out through the next fiscal year and a bit beyond. The unavoidable lag in these matters was a good argument for starting the stimulus six months or a year earlier, but there was not a lot Obama could have done about that.
In any event, as many of us pointed out at the time, we were very likely to still need an ongoing stimulus into the next fiscal year and, probably, somewhat beyond. That prediction has proven accurate, so the argument that the stimulus wasn’t worth doing simply because it would take some time to ramp up has in fact proven to be wrong.
July 2nd, 2009 at 10:27 am
10: Hey, bozo, thinking that federal deficit spending during a downturn is like taking out debt on your credit card shows that you, in fact, do not know what you are talking about. When a federal government is spending its own fiat money, it’s a much different story.
July 2nd, 2009 at 10:29 am
Believing that federal stimulus is a good idea is like thinking that I can help myself out by taking $10,000 in additional debt on my credit card.
No, it isn’t, because the US government is not “like” an individual consumer. But thanks for your comment, President Hoover!
July 2nd, 2009 at 10:31 am
Indeed Administration is in a ‘bind’ about this non improving employment picture. As Matt says, they were happy about the tangled stimulus bill and now it is not showing the results.
The bill was fundamentally compromised is a fact. With emphasis on all sorts of tax cuts and need to please Sen. Snowe and other honchos in Senate; it lost the focus of direct and quicker employment generation. Help to States – that was the good part and that still is considering how States are falling over the cliff. Direct tax savings – looks like it is reflecting in increased savings rate instead of giving any boost to consumption. Some talked about giving coupons to each tax payers which can only be spend. None of those creative ideas were followed due to the perceived risks in that and here we are.
The other glaring failure is of VP Biden. He was asked by Obama to look after the execution and to see that ‘money’ gets out of the gate fast. That is not happening. In the week when Administration wanted to have renewed focus on pushing stimulus projects, it saw the slowest spending on that! No doubt, Obama White House is lackadaisical on this front (spending the money quickly and effectively) and essentially blind in terms what it can do.
Obama Administration used some great Media skill and with the help of luck created the metaphor of ‘green shots’ to get out of the ‘bank stress tests business’. That was a brilliant political manoeuvre. But when it comes to employment, the political magic cannot solve the problem. The problem must be solved at the core and no gimmicks can serve well.
Slowly it will dawn on Media and ‘powers be’ that chances of recovery will start receding if employment does not hold. It is not holding now. The need to devise smarter stimulus package was high because with deficits looming so large there is ‘no borrowed’ money in the world to try it again. It is hard to have another stimulus package. Where is the money? What will give in for that? Do we simply print it more? That is non-sense and those who say that are wrong there.
The solution now is:
- squeeze in whatever is there in stimulus package to work quickly and effectively;
- pending Energy and Transportation Bills (new money) in Congress should be geared towards generating some direct and quick employment; (no fancy things in some indeterminate future);
- continue policies like GM bailout where Administration blatantly sold itself to Labor at the cost of bond holders (for the simple reason because even thousand jobs saved is an addition in this environment); i.e. continue the ‘employment programs’ like GM for a while;
- and finally some tax increase early next year to finance new inputs to employment creation.
But boy, it looks grim and Administration has on it’s own walked into a dangerous zone.
July 2nd, 2009 at 10:31 am
Republicans complained that there weren’t enough tax cuts because *tax cuts can be implimented very quickly*.
And as people pointed out in response, they are also very inefficient at stimulating the economy in this sort of scenario, which is proving true. Again, the various transfer portions of the stimulus are indeed increasing disposable incomes, but most of that is just going right back into savings.
This is why it made sense at the time to have both tax cuts (faster to start but relatively inefficient) and direct spending (slower to start but relatively efficient when they arrive) in the stimulus. Nothing we have learned since then changes that logic. We just now know that our employment predictions were too optimistic (even the more pessimistic predictions), so the stimulus probably should have been bigger all around.
July 2nd, 2009 at 10:36 am
It’s a rare instance of Matt mischaracterizing what Obama said. They were pleased with what they achieved on the stimulus bill given the political constraints and they said they’d take another look in the fall to see how things were going, as DTM pointed out yesterday.
Will it be harder to get another stimulus bill? Harder than what? Making the original bigger at the outset? I don’t know about that. Also as someone pointed out yesterday, they can do it on the down low. And now they have Al “Rush Limbaugh is a Big Fat Liar” Frankin instead of Norm Coleman.
Right now you have the auto industry and the parts makers going through some “creative destruction” so there are tons of job losses. Meanwhile the Japanese apply their soft power via Toyotas and Hondas.
July 2nd, 2009 at 10:37 am
At best, you are buying amelioration now in return for slowdown later.
Which is fine: the whole goal is to moderate the business cycle, and unwinding the fiscal stimulus down the road will just be coming at a time when we want to moderate the pace of the economy anyway.
Honestly, I really don’t understand why people keep writing these faux-common-sense posts anymore. Maybe you don’t believe in counter-cyclical policies, but you should at least acknowledge that is the plan and deal with it on those terms. In other words, ignoring that this is a counter-cyclical strategy just makes you look ignorant.
July 2nd, 2009 at 10:46 am
Washington (AP) In a joint press availability today President Collins and President Nelson called for a second stimulus package, this one focused on immediate employment and assistance to states wracked by declining tax revenues and soaring demand for social programs.
“Hey, so we fucked up the last time,” President Nelson said, “every dog gets two bites.” President Collins’ spokesman said “We knew everyone from Krugman to the guy who parks my car said the first package was too small by a factor of two, and not enough of it went to unemployment and food stamps and such. But $800 billion is such a nice round number, and who knew the states were in such trouble?”
It is not yet sure out of which ass will be pulled the arbitrary round number down to which the second package will be whittled to make Senators feel useful.
July 2nd, 2009 at 11:04 am
Seriously this country is fucked. Too many competing interests are limiting the potential and direction where we can go.
We simply are too beholden to corporate interests across the industry spectrum and they are in it only for themselves. The concept of “doing it in the best interest of the country” has gone out of the window a long time ago.
July 2nd, 2009 at 11:07 am
James Robertson:
Believing that federal stimulus is a good idea is like thinking that I can help myself out by taking $10,000 in additional debt on my credit card. Sure, I can buy some nice stuff with that – but eventually, my creditors want to be paid. At best, you are buying amelioration now in return for slowdown later.
The problem is that this is a bad analogy, since a government, intertwined within an international system, is not like a person.
They’re taking on debt b/c the alternative is worse.
July 2nd, 2009 at 11:18 am
I would have preferred a larger stimulus package from the getgo like most progressives. But I think the final size of the package wasn’t as big a problem as the composition of the spending elements. From the getgo I thought the most effective way to get the money out was to do a projection — say four years — of total sub-federal level budget shortfalls, and simply dole out cash to the states to plug this gap. I know some money was indeed spent on this priority — but as I recall it covered only about half of the multi-hundred billion dollar gap faced by state and local governments over the next few years.
On the bright side, if Democrats were to make this type of spending the focus of a second stimulus package, I have a notion it might be easier to get through Congress, because of all the pressure that could be brought to bear by state and local politicians on their elected representatives in Washington.
July 2nd, 2009 at 11:18 am
Thank God for Obama! See how wonderful he is!? If only we didn’t elect such an ignorant fool to run our country.. it’s turning into a dictatorship.. sorry but we are all screwed
July 2nd, 2009 at 12:12 pm
James Robertson,
Believing that federal stimulus is a good idea is like thinking that I can help myself out by taking $10,000 in additional debt on my credit card.
Comparing a Macro-economic problem to your personal finances shows that you’re an idiot.
July 2nd, 2009 at 12:14 pm
the stimulus failure is a great illustration of why obama is the wrong president at this point in our history.
he needed to do something bigger and bolder.
he needed to provide leadership and move HIS legislation though congress.
instead, he did what he does all the time.
he negotiated with himself.
he allowed himself to be snookered by republicans who shaped and watered down the bill and then voted against it.
he did not get the bill that the country needed. lots of folks knew it and said it at the time.
this is his clear pattern.
bold statements.
crippling compromises.
a final piece of legislation that is passed, yes, but so watered down so that it really doesn’t accomplish what it needed to accomplish.
obama gets to brag about “winning” and passing bills. and he hopes that voters don’t pay close attention to the specifics.
voters get screwed.
July 2nd, 2009 at 12:17 pm
it’s not clear what they can really say
How about “New evidence (point at recent report) shows that the problem is bigger than originally thought, so we need to increase our efforts”? All you really need is some scary-sounding economic statistics to justify the change of position, and there ought to be no shortage of those.
Bush was the captive of a base that equated changing your mind when faced with new evidence with betraying your convictions, and possibly believed that himself. Obama and his base are different – being the reality-based community is considered a *good* thing in the reality-based community, so responding to reality is a positive trait.
Of course, some people like Krugman will point out that they said at the time that the problem was bigger than the administration thought, and the solution should be bigger too. The administration will have to admit that Krugman and others in the same camp have been proved right. But I don’t think that will be an insurmountable problem, because unlike Bush, Obama isn’t pathologically opposed to changing his mind when faced with new evidence.
July 2nd, 2009 at 12:41 pm
Actions that Obama could take but hasn’t because he is a DLC democrat and in thrall to Goldman-Sachs:
- fight for bankruptcy cram-down
- order the CFTC to limit oil futures speculation
- order the IRS to change the ruling on 15% tax rate for
hedge funds
- nationalize insolvent banks and fight for a new Glass-
Steagal
- fight for a massive reindustrialization program
July 2nd, 2009 at 12:50 pm
James Robertson sayeth: Great idea, that. And no, I don’t care that Krugman has won a Noble. One, it wasn’t in this area. Two, this is basic common sense. Something he seems to lack
At least he can spell. He didn’t get that ‘Noble’ out of a cereal box. But seriously, Krugman predicted that Obama would have precisely this problem when Obama needed to go back for more stimulus. Maybe its time to start considering the track record of people when deciding whom to believe.
July 2nd, 2009 at 12:56 pm
Actions that Obama could take but hasn’t because he is a DLC democrat and in thrall to Goldman-Sachs:
These actions not taken have little to do with Goldman Sachs. What they have to do with is the administration’s desire to preserve political capital and the president’s poll numbers until a solid, progressive healthcare bill reaches his desk.
After that, look out America.
July 2nd, 2009 at 1:03 pm
I would prefer that you were right Jasper.
If Obama hadn’t appointed Summers, Geithner, Gensler, Shapiro and Emanuel I would feel better about it.
July 2nd, 2009 at 1:05 pm
http://michaelscomments.wordpress.com/2009/07/02/oh-frabjous-day-unemployment-rate-increases-by-only-0-1/
Boy, did they get this wrong. It almost makes you think that they don’t know what they’re doing. If they got the impact of the stimulus so wrong, why believe any of their projections?
July 2nd, 2009 at 1:40 pm
A very good article re Obama’s missteps:
http://www.newdeal20.org/?p=275
July 2nd, 2009 at 1:42 pm
@Raoul Paste: “Maybe its time to start considering the track record of people when deciding whom to believe.”
Outrageous! We need to put the past behind us and focus on the future!
July 2nd, 2009 at 1:57 pm
Some more background on Obama’s bankers-in-residence:
http://www.counterpunch.org/
July 2nd, 2009 at 1:59 pm
jasper, i wanted to start with your comment: what i think makes sense as a second round of stimulus is to offset every state in the country going on a sales tax holiday. what i would specifically do is take each state’s sales tax receipts for july 1, 2006 – june 30, 2007 and provide that state that amount of cash if they suspend their sales tax for the next 12 months.
even given the increased propensity to save that i suspect will be a long-term outcome of the current unpleasantness, i think this would act as a giant “sale” sign to encourage consumption.
my quick ballpark (http://www.taxfoundation.org/research/show/286.html) is that this would amount to $250B, so it’s not enough, but i think it would be a very sucessful stimulative program.
more broadly, people who think that obama could have gotten a bigger stimulus at the start of the year clearly weren’t paying attention at the time: the notion that that were 51 senators in favor of a bigger stimulus is unfounded in reality.
as for the moronic Als of the world, it is, of course, impossible for a stimulus passed 3 months ago to make a major difference by now. it’s worth noting, for example, that unemployment continued to rise for something like 18 months after the 1981 reagan tax cuts and, of course, job growth after the bush tax cuts was nothing close to the bush administration forecast, not that Al would bother to note such things….
July 2nd, 2009 at 2:09 pm
Micheline -
Couldn’t agree more about a WPA-like program for the second stimulus. Which is why I wrote this.
July 2nd, 2009 at 3:03 pm
[...] “Obama administration is going to pay a price,” writes Matthew Yglesias, “for not having acknowledged the problems with the stimulus [...]
July 2nd, 2009 at 3:37 pm
Not sure how true this is- I remember a lot coming from the WH saying that the stimulus wasn’t a panacea, from Obama’s “don’t make the perfect the enemy of the necessary” to Rahm’s “Krugman’s not wrong, but ask him how to seat Al Franken first”.
That being said, not sure how much “selling” Obama really has to do. It doesn’t take much to convince Senators to spend money anyway, so just point to the bad numbers and put some of the money in each of their districts.
July 2nd, 2009 at 6:29 pm
It seems that some fiscal stimulus was needed back in January, and I believe Obama’s stimulus was a good thing. Unfortunately, back in January, I simply assumed that banks would resume lending to people fairly soon. If banks in the United States really can’t provide credit, the government should provide some basic financial services, like accepting deposits at 2%, and lending money at 6%. Seems like it would be nice to have a “financial system”, if anyone remembers what that was like. People won’t spend when they’re scared to death of losing their homes.
July 2nd, 2009 at 6:31 pm
ming, it’s important to understand: demand for loans from the credit-worthy is weak right now. why would anyone want to borrow money right now? (i mean, of course there are people who need to borrow money right now, but voluntarily take on debt to fund lifestyle on the household side or to build plant and order equipment on the business side? not happening for a reason, and the reason has more to do with no ROI than with banks being unwilling to lend.)
July 2nd, 2009 at 7:25 pm
mpowell (#10):
10: Hey, bozo, thinking that federal deficit spending during a downturn is like taking out debt on your credit card shows that you, in fact, do not know what you are talking about. When a federal government is spending its own fiat money, it’s a much different story.
Translation:
Increasing our debt won’t be a problem because we’re planning to screw over our creditors when the time comes to repay the bills.
The real problem with stimulus is that it takes resources away from other uses. Whether you borrow, tax, or print the money, the actual resources that are used to build things get used up whenever you spend money. For the stimulus to be effective to have to assume that the government’s use of those resources is going to bring greater benefits that what they would have been used for otherwise.
And even if some resources would “go to waste” without the government spending, you have to consider how many complementary resources it takes to bring those “idle resources” out of idleness.
July 2nd, 2009 at 8:31 pm
no glaivester, the point of stimulus is to make up for declining demand: the resources are sitting idle. if they weren’t sitting idle, the economy would be in better shape.
all the rest of your comments are just so much phony mumbo-jumbo around that core conceptual misunderstanding of what it means to be an economy whose size is shrinking at the same time it is deleveraging….
July 2nd, 2009 at 9:33 pm
The real problem with stimulus is that it takes resources away from other uses. Whether you borrow, tax, or print the money, the actual resources that are used to build things get used up whenever you spend money.
As howard also suggests, the real problem is that people like Glaivester don’t understand that the labor of a person unwillingly unemployed is not a resource that can be saved up for later. So every working day that goes by with that person unwillingly unemployed is a permanent waste of a potential economic resource. And this applies in general to idle economic resources that can’t be conserved for later.
And even if some resources would “go to waste” without the government spending, you have to consider how many complementary resources it takes to bring those “idle resources” out of idleness.
Once you properly identify all of the idle resources in question, including labor, any relative inefficiencies with respect to government production (and for many categories of goods there may not even be any such inefficiencies) are easily swamped by the gain of putting those resources to work.
July 3rd, 2009 at 4:37 am
That problem with stimulus spending is that it does not occur in a policy vacuum. While the Obama Administration is pushing economic stimulus it is also pushing for new regulation schemes in the financial, health, energy, transportation, and manufacturing sectors. Why would anyone think about investing in the private sector when new environmental, energy, health, financial, and employment regulations could easily make it impossible to make a profit.
Also, stimulus spending also requires the government to eventually cut spending when the economy starts to recover. Yet, the Obama Administration has signaled to the private sector that government spending will continue to grow no matter how the economy performs.
In the long run, how can anyone expect the economy to recover when the White House is signaling to everyone that profit are a bad thing that will severely limited in the future?
July 3rd, 2009 at 6:44 am
Re: Why would anyone think about investing in the private sector when new environmental, energy, health, financial, and employment regulations could easily make it impossible to make a profit.
Beacuse there’s always money to be made in such areas, and not just in spite of the regulations, but often because of them. With universal healthcare the healthcare industry gains more paying customers, for example. And if the oil companies have a brain in their corporate heads they will break into alternate energy now. Economies are like ecologies: there’s always some way to survive and flourish, provided you are willing to evolve and adapt.
July 3rd, 2009 at 12:51 pm
superdestroyer, jonf has dealt with some of your comments, but the one that astonishes me is your notion that government spending is going to grow.
duh.
government spending has continued to grow for decades now; unless i’m mistaken, business survived.
July 3rd, 2009 at 1:52 pm
Howard,
The problem with ever growing levels of government spending is that taxes are going to have to rise to make up for it. The private sector should be anticipating the increased taxes and the uncertainity of allowable deductions in the future. AT least during the Clinton Adminstration the U.S. went through six years with no major changes in taxes or regulations.
Also, Jonf does not seem to know how health care investment works. The planning horizon for health care has to be a year or two at most since CMS can always lower reimbursement rates for procedures from a profit making level to a money losing level. See cardiac care or orthopedic reimbursement changes in the past.
Energy companies have invested in non-oil based energy and the returns have been lousy. Also, who knows what the subsidies and taxes will be in the future.
The problem with trying to do everythng at once is that the level of risk to the private sector is massive. Why not wait instead of betting on what the government is doing.
July 3rd, 2009 at 2:09 pm
Re: Also, Jonf does not seem to know how health care investment works.
Let me repeat: Economies are like ecologies: there’s always some way to survive and flourish, provided you are willing to evolve and adapt. Now, if energy or healthcare firms insist on sticking with a business model that no longer works in a new environment then, yes, they may well fail. The key word here is “adapt”, as in “find a new business model” if the old one is no longer profitable. Maybe we were better off back when business managers didn’t go to college for an MBA. They were much more innovative, more able to change with changing times.
July 3rd, 2009 at 2:12 pm
Re: Also, Jonf does not seem to know how health care investment works.
Let me repeat: Economies are like ecologies: there’s always some way to survive and flourish, provided you are willing to evolve and adapt. Now, if energy or healthcare firms insist on sticking with a business model that no longer works in a new environment then, yes, they may well fail. The key word here is “adapt”, as in “find a new business model” if the old one is no longer profitable. Maybe we were better off back when business managers didn’t go to college for an MBA. They were much more innovative, more able to change with changing times.
Re: The problem with trying to do everythng at once is that the level of risk to the private sector is massive.
The risks may be large, but so are the opportunities. Smart creative people will focus on the opportunities and flip their middle finger to the risks. (Rather odd that I seem to be more a believer in the potentials of capitalism than you are. I do not think businesses deserve– or need– stagnant, unchanging markets.)
July 3rd, 2009 at 2:15 pm
JonF already dealt with most of the substance of superdestroyer’s complaints. I’ll just add that even the basic logic doesn’t make sense: if regulatory uncertainty is the issue, then that is a reason to hurry up and get the relevant regulatory reform done, not to leave it hanging.
July 3rd, 2009 at 4:42 pm
Thanks, MY, now I’m too worried to enjoy cookouts and fireworks.
I’m thinking Pres. Obama’s undoubtedly has serious political problems on his hands. Some of the details discussed in the stimulus/econ policy are lost on many Americans. One thing’s for sure: Americans can judge results vs. promises. Obviously if the stimulus was sold as boost to the economy and most aren’t seeing that through jobs #s the Obama admin. will likely be taking a uppercut to their political capital…not to mention that healthcare, foreign policy, environ. issues are sure to further erode it.
I’m curious as to what will happen when the money actually does finally come out, any analysis from those w/ more econ. knowledge than my lowly self?
Time for a switch in legislative strategy. The Prez has to step up his leadership efforts and stop hanging back. Also needs to hit home the details in his plans, often there’s not enough. The Senate plays dirty and is blatantly self-interested. Emphasis on their input down the road will keep leading the Admin. to take hits for mediocre and ineffective policy.
July 3rd, 2009 at 4:43 pm
As howard also suggests, the real problem is that people like Glaivester don’t understand that the labor of a person unwillingly unemployed is not a resource that can be saved up for later. So every working day that goes by with that person unwillingly unemployed is a permanent waste of a potential economic resource. And this applies in general to idle economic resources that can’t be conserved for later.
Yes, but what if the person is idle because the resources needed for him to do a job are in shortage? The assumption here is that only idle resources will be put to work, and that there are no non-idle resources in shortage that the stimulus will exacerbate the shortage of.
Generally, Keynesian theory assumes that the problem is lack of demand, and that demand should be restored by the government buying surpluses. Not considered is that lack of demand may mean that the economy is producing the wrong things (which stimulus will only exacerbate), and that putting idle resources to work may very well mean using complementary resources that are not idle and thus impoverishing the private sector.
For example, putting people to wrok building a bike path through a park might put a lot of idle people to work, but it could exacerbate any shortages of asphalt or of the raw materials used to produce asphalt.
July 4th, 2009 at 10:26 am
Re: Not considered is that lack of demand may mean that the economy is producing the wrong things (which stimulus will only exacerbate), and that putting idle resources to work may very well mean using complementary resources that are not idle and thus impoverishing the private sector.
Those “idle resources” are not mere numbers on a spreadsheet, nor simple machines we can stick on a shelf to gather dust. They are human beings. No I will shout that: THEY ARE HUMAN BEINGS. Putting them to work is morally exigent and if that means our rich folk (AKA “the private sector”) are a bit impoverished that’s just too damn bad.