June Jobs, Part 3: Somebody Do Something!

July 8th, 2011 at 12:46 pm

If there’s a bright spot in today’s terribly lousy jobs report, it’s that it occurred before a weekend when the Obama administration and leading members of Congress are slated to meet on an issue of great urgency to the nation.  It’s just not exactly the right issue.

There’s every reason for these negotiators to complete their work on the debt ceiling, get that source of econo-anxiety behind us, and plot a path to fiscal sustainability.  Obviously, we need to hold off before starting down that path—a recovery that looked fragile yesterday looks frail today, and so spending cuts or tax increases must be delayed for at least a year if not two.

But as the President himself said today at the top of his statement on the jobs report, what matters most to people right now is economic security, and for the broad American middle class, that means jobs and paychecks.

So these folks need to open their meeting on Sunday with a new agenda item: short-term measures to revive the job market.

I know this will not be the most popular agenda item in that room.  In that regard, it’s essential to point out that short-term, temporary jobs measures contribute almost nothing to the long-term deficit and debt, and are thus not inconsistent with the group’s fiscal mission.

The President laid out a few ideas today, much like those from his press conference a week ago (see here for my take).  I think he’s on the right track—clearly in “could” vs. “should” mode—e.g., given the hemorrhaging of state and local jobs state fiscal relief would be a great idea.  But it’s an extremely heavy lift.  (R’s don’t have much interest in supporting school teachers, cops, etc…and D’s aren’t anxious to send more money to R governors who complain about big gov’t while they’re cashing the checks.)

Along with the no-air-pocket strategy—the payroll tax break and extended unemployment insurance run out at the end of this year and thus must be extended for another year—we could use a significant infrastructure program.

The President mentioned the usual ideas here–road, bridges, railway—and I’m for ‘em.  But as I’ve stressed, at least the first two in that list turn out to be more capital than labor intensive, and less popular compared to what I think is a better alternative: FAST (Fix America’s Schools Today).

You really don’t know until you try it, but I remain confident that this work repairing the nation’s stock of public schools is labor intensive, meaning it will have a strong bang-for-the-buck in terms of job creation, the spillovers are highly positive, and this is work you can see in your community.

I also think Dean Baker’s idea of work sharing—reducing everyone’s hours a bit instead of laying off somebody (and using UI payments to make up a portion of the wage loss)—could help, though I doubt it’s a “quick route back to full employment.”  Take up in states that already have it is low, and so this might be hard to scale up…still, we should try–this program also has a very high bang-for-buck in terms of preserving jobs.

These ideas were important before the release of today’s jobs report.  With the new information we now have, they’re essential.

Print Friendly

31 comments in reply to "June Jobs, Part 3: Somebody Do Something!"

  1. fausto412 says:

    We can only hope JB, we can only hope.


  2. jonathan says:

    Jared, I’m afraid you don’t get it. I’ll harp on this because it is a huge flaw, one that opens the door to the GOP.

    I’m tempted to put this in capitals, but I’ll resist: they want to contract government. Repeat until you get it.

    When John Boehner says we need to focus on jobs, he means specifically that we need to contract government because that will create private sector jobs. That is the GOP belief system. That is what they are selling to the public. The public is buying it because at least it is something, even if it’s just plain nuts.

    This jobs report is great news for conservatives: private employment grew and government employment was down by a lot. That makes the top line number look really bad but it says to the GOP, “Look, the private sector is working and it will only work better if we keep reducing government. Then things will take off.”

    If the next president is Republican, you can bet they will try to eliminate the EPA, the FDA, the SEC. If not completely eliminate, then hobble them so they can do nothing.

    You don’t the war that’s actually being waged. They are presenting an absolutely negative view of America: we can’t build infrastructure, we can’t provide healthcare, we can’t do anything. They blame all that on the government so they can be incredibly negative, selling a vision of utter bleakness for the future, unless of course we cut government, free the private sector from regulation and taxation. They are selling despair and a way out of despair. It’s all belief. It’s all economic nonsense but that is what they are doing and you’re arguing about whether we should a short term jobs measure. Try joining the real war.

    The GOP’s vision is essentially religious: there is darkness, we walk through the valley of the shadow of death – here, for example, rendered as debt – and we will not survive unless we are steadfast in our beliefs. Government is the evil, the private sector is the solution. Faith will show us the way. Return to God, to the vision of the Founders. Simple message. Rooted in American religious convictions.

    Take Obama’s “Yes, we can.” That was practical: we can do what we work together to achieve. The GOP mocked that. They have their own version of “Yes, we can.” It is faith-based. Yes, we can if we believe.

    The Democrats will not engage them on beliefs so they are guaranteed to lose.


    • John says:

      I think jonathan’s right. This is an ideological war, no less severe than the Civil War, though I hope no blood will be shed.

      I just shortly ago mentioned John Nichols’ book, “The S-Word.” An important point he made therein – subtle but stating the obvious – was that the issue of slavery was an economic issue, regarding whether capital or labor is superior. Slavery is the extreme case where labor is literally property, and the Civil War was an effort to refute that aspect of the ideology of capitalism, i.e., that capital was so superior to labor that it was legitimate for laborers to be the legal property of capitalists.

      The Republican Party was literally born to fight that war on the side of labor, or more generally, on the side of humane society. The Republican Party has renewed that war, but now on the side of capital. Lincoln and others must be spinning in their graves.

      The problem we face, primarily I think, is an ideological vacuum in opposition to the interests of capital, and it’s not being filled because those who should be opposing the unfettered interests of capital instead want to endorse much of those interests. That isn’t opposition, and it isn’t balance.

      Either we are a democracy – not just electoral, but economic as well – or we aren’t. That’s the heart of the struggle. One dollar one vote isn’t democracy. Democracy must include full economic empowerment for all citizens of a nation, else it’s not democracy at all.

      I find it troubling by now that when Americans quote the Declaration of Independence, they stop at “pursuit of happiness.” But that’s not the important part of that thought. It continues:

      “That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed”.

      It doesn’t say, “That to secure these rights, markets are created by the wealthy, yada, yada, yada”. Just sayin’.


    • Andrew says:

      How can you say “Yes we can” was practical in terms of today’s awful unemployment report?

      “Yes we can” relys on government to stabilize and help grow the economy. It has done neither and has rendered the American economy impotent. Is your dream scenario to expand government to curb unemployment? You want to build more bridges, roads, railways?

      Oh, hey, how about putting broad band in MN at at average of a million of dollar a pop, never mind the local companies offer the service? Great, that’ll create them jobs.

      Oh, I have an idea, lets okay stimulus money to the Fed/ATF/DEA to get guns to the cartels in Mexico? At the expense of innocent Mexican, American, and a Border Patrol agent’s life. “Si Se Pudue!”

      Cash for clunkers? Is Detroit out of the hole yet?

      “We can do what we work together to achieve,” is a nicely written rhetorical bridge to nowhere much like this this administration’s solution for job creation.

      Your right, as a conservative I want to contract government. The public is buying it because they know the private sector is at least more fair and easier to work in than a government job. We’ve had government growth these last two years and right now we’re staring down the barrel of 9.2% unemployment, really this is the “Yes we can” your wanting the public to buy — again — unlike the first time. Hindsight 20/20 says was “plain nuts” then and to keep on hoping in it – well I don’t want to be rude.

      I mean, in fact just today, I read my home state has been put on some EPA list that could cost our state’s job, “The Texas Public Utility Commission estimated the standard could force 18 plants — many of which were built in the 1970s — to install expensive equipment, change fuel or prematurely retire,” And we (the consumer) are going to have to pay for it, the workers in the retired plants with their livelihood.

      I’m sorry, but Obama’s hope is America’s misery.

      BTW, my company did a reduction in pay for awhile, we still laid off some folk, but we’re out of the woods now. I say that would be a good last resort. My dream scenario is to make massive cuts in government spending, don’t raise the debt ceiling, lower the minimum wage (to get our teenagers/unskilled workers to work), close corporate loopholes, and cut back on regulations (i.e. repeal health care.)


  3. fausto412 says:

    Watching the video on the sidebar with larry kudlow and you. wtf is that lady talking about? the government is the reason banks aren’t lending?

    Since she is the one who owns a business, the regulators not allowing banks to lend? i mean, wow, that’s not even an established fact. what is her logic? higher capital requirements? because those weren’t put in place for the first 2 years of the crisis. and if banks aren’t allowed to lend where is all this profit coming from? isn’t lending a big part of what a bank does?

    I don’t know anybody who runs a business and makes their decisions based on what tax policy will be in the near term. maybe specific actions like buying some equipment. but whether or not you need to add headcount is solely based on how much business you are doing.


  4. alex says:

    the FAST idea is a good one but you still need to keep in mind that competitive bidding requirements will inevitably delay the time it would take to get the projects moving forward.

    while school modernization is certainly more labor intensive than roads, bridges, and rail, its not all that much. in CA the direct construction labor + fringes share for heavy and highway is between 17-19% while about 21-24% for commercial building construction. but while H&H has lower labor share, its construction values are often much higher.

    lastly, while there are a variety of school repairs that can be done quickly, those that can be performed in house by currently employed or easily recalled district staff aren’t all that high value and i’m uncertain what the total tab for those would be or whether its big enough to have a substantial impact.

    the sum of all this is that while i don’t believe that there’s any quick-fix way to get out from the time lag inherent in public construction its something worth doing nonetheless since planning funds would go into outside professional services and the economy is crippled enough that we’ll still need help in a year or two when some of these projects would be ready to start.


  5. Sandwichman says:

    Whether or not work-sharing — or, more generally, work time reduction — is a “quick route back to full employment,” the historical record would suggest it is the ONLY route back. Over the past 30 years, there has been a huge interruption of the long-term historical relationship in the U.S. between labor productivity and working time and it may take quite a while to turn that situation around and repair the damage. But the process needs a kick-start sometime.

    Juliet Schor touched on that long-term historical trend and on the employment implications for the future of work-time reduction versus “growth” at her blog and I would like to cite a few paragraphs:

    http://www.julietschor.org/2011/06/counter-intuition-101-why-recent-bad-economic-news-means-its-time-for-working-less/

    So what’s the alternative to slashing government programs, budget cutting, and more concentrated wealth at the top? The centerpiece of a new approach is to re-structure the labor market by reducing hours of work. That may seem counter-intuitive in a period when the mainstream message is that we are poorer than ever and have to work harder. But the historical record suggests it’s a smart move that will create what economists call a triple dividend: three positive outcomes from one policy innovation.

    The first benefit of hours reductions is a significant reduction in unemployment. In the wealthy countries, many of the jobs lost in the 2008 downturn will not re-appear. The revolution in information technology has made many jobs unnecessary, raised labor productivity, and undermined a good swathe of the labor market, as firms introduce radical technological and product innovation. (And some of the jobs are being created in low wage countries.) This is familiar territory, as it has been occurring since the 19th century. The buggy and barrel makers are long gone. Toll takers and the workers in DVD factories are on their way out. So too are household tax accountants and retail check-out clerks.

    Historically, market economies have absorbed this displaced labor in two ways. The first is the creative of jobs in new industries making new products. The 20th century brought automobile workers, higher education administrators and medical personnel. But new jobs, spurred on by growth in GDP, are only half the story. The other mechanism for maintaining balance in the labor market has always been reductions in hours of work. Without the advances of a shorter workweek, vacation time, earlier retirement and later labor force entrance, the economies of the OECD would never have attained the “golden age” of high employment that prevailed after the1930s depression. Between 1870 and 1970, hours of work fell roughly in half. These countries have re-balanced the labor market by re-distributing work to make its allocation fairer. We need shorter hours because it is unrealistic to count on growth in GDP to absorb all this current and future “surplus” labor. Rich countries just never grow that rapidly. So the austerity economics that says work longer and retire later has it exactly wrong.

    But even if GDP growth could solve the unemployment problem, it shouldn’t, because the cost in GHG emissions is prohibitive. North America and Europe have already blown their carbon budgets and until we re-structure energy systems, growth isn’t reconcilable with responsible emissions levels. Here too shorter hours of work provide a dividend. They are associated with lower ecological and carbon footprints. Countries that work more pollute more. That both because their scale of production is larger (the GDP effect) and because time-stressed households and societies do things in more carbon intensive ways than societies in which time is more abundant. Longer hours of work lead people to travel, eat, and live faster-paced lives, which in turn require more energy.


    • John says:

      If I may add, for emphasis…

      It seems to me that many economists make two mistakes regarding the impact of IT.

      The first is that it’s not like previous kinds of productivity-improving technology, which were net job-creators. The basic purpose of IT is exactly the opposite: it’s purpose is the elimination of labor. I don’t need to “measure” that – I’m a computer scientist; it’s what the entire discipline is about, those few of us bother to think in such terms broadly enough to recognize the negative side of our work.

      It’s not replacing horses with cars; horses didn’t require human labor to make them useful as factors of production, while production of cars originally was extremely labor-intensive itself.

      As I’ve said, the factor of production that IT is replacing is labor itself. That is (or should be) stating the obvious, at least to a computer scientist.

      Second, it’s not something off in the future, when the bulk of human labor is replaced by robotics and automation. The effect started when the simple _perception_ of the purpose being fulfilled began to take hold, and that was decades ago now. To the extent that prospective employers make decisions which value IT as factors of production even incrementally over human labor, their decisions devalue human labor commensurately: they buy machines instead of giving raises, then instead of hiring new people, and eventually in addition to laying off people they believe they no longer need. That happens without any free-operating robotics or automation whatsoever, and in fact happens – e.g., in medicine – when IT in fact makes labor _less_ productive. What matters is not the technology itself, but its effect on business decision-making. That effect is now deeply entrenched.

      The simple connection, of course, is that labor is the primary source of consumption and thus demand. Less labor, less demand. So less demand is not a root cause, it’s just a symptom.


      • Jim Edwards says:

        I also work in software and I think Paul Krugman said it best, “There’s an infinite amount of work.”

        For example, I make computer games. That involves artists who now earn a good living due to increased demand. We hire testers who get to play games for a living, and so on. It’s a $70 billion industry that wouldn’t exist in a world with an army of file clerks.

        Traffic lights replaced traffic police. Container shipping replaced huge numbers of laborers. The steam engine killed John Henry. Except for John Henry these are good things.

        Now we have the economic Bermuda triangle of electronic distribution. If the cost to produce one more good is zero then marginal analysis says make it and charge zero. But what about the cost to make the product in the first place? From what I understand the market doesn’t care.

        This leads to an interesting question. If robots produce all our daily needs and production cost of goods is zero, what does economics look like? Is our society one where zero scarcity means free goods for all or a world of artificial scarcity to preserve the market forces?

        This is important to ponder because we have one foot in that world already and piracy laws and copywrite laws show how little we understand the economics of the new reality.

        Our rising wealth gap is the US choosing one option. Northern Europe has chosen the other. As with our jobs, our world is too becoming binary.


        • Sandwichman says:

          Strictly speaking, there is NOT an “infinite” amount of work. Infinity is not a quantity — it’s an abstract concept. What you mean is there is an indefinite amount of work.

          Yes, there is an indefinite amount of work but there is not an indefinite amount of effective demand for it. That means people who want the work done AND who have the ability to pay it.

          For a while, the gap between those who want and those who can pay may be met by credit. But there are limits. We may not be able to define what those limits are, but we know them when we see them. The present jobs crisis is a result of running up against those limits.


          • Jim Edwards says:

            “Strictly speaking, there is NOT an “infinite” amount of work. Infinity is not a quantity — it’s an abstract concept. What you mean is there is an indefinite amount of work.”

            By what “you mean” you are referring to Paul Krugman whom I quoted. Further, the demand or lack of demand, the desire to pay for it or not has no basis on “work.” If a tornado demolishes a building, work was done. It makes no difference if it was paid for or not. It makes no difference if it is desired or not. The physical property of work was done.

            “Yes, there is an indefinite amount of work but there is not an indefinite amount of effective demand for it. That means people who want the work done AND who have the ability to pay it.”

            – This is the classic fallacy of economics 101. If a man is drowning, no one will throw a life preserver until he can prove he can pay for it. We know from experience that this is not the case.

            Economics studies the rationing of scarce resources, not the profitability of profitable resources. The number of people willing to teach Photoshop tricks is huge. Even though the videos are free, it is still work. This is my point. The desire to provide benefit to society, the desire to help other people is far greater than the desire to make a buck. If we are free from basic necessities, how many of us would “work” to make the lives of our fellow humans better? How many of us would value a “like” over a dollar? Evidence shows it is a lot!

            This then is the question. Do we only reward work that can demonstrably turn a profit, like DVD region encoding and massive government regulation to enforce, or do we reward those who make our lives better for no individual profit like Jonas Salk?

            Like I said, I believe the digital age is making this question more and more binary.


          • Sandwichman says:

            Jim,

            Beware those “classic fallacies of Econ 101.” Some of them just aren’t so. Also, you’re weaving back and forth between one concept of “work” and another. The work a tornado does is not paid employment. O.K.? People do a lot of work without getting paid. That is also not paid employment. What the BLS reports on is paid employment.


          • Sandwichman says:

            BTW, Jim, I’m sympathetic to your broader point. There is no shortage of useful work that could be done and no necessity that it all be performed within the current system of wage labor. Even commenting on this blog is work. More valuable work, I would suggest, that making up excuses about headwinds and soft patches. But at some point the work people do has to be putting food on their tables and a roof over their head. How we get there — incrementally or in a giant leap of the imagination? — is the strategic question.


          • Jim Edwards says:

            I’m sorry if I gave the impression that you were making an econ 101 mistake. I meant it’s a fundamental mistake of the science. People were working long before there was money. Hope that clarifies.


  6. John says:

    Another general though regarding the specific idea of work-sharing, Dr. Bernstein. Sandwichman may or may not agree with this.

    The fundamental weakness of capitalism is that it holds no regard for equality; it always seeks advantage. In the limit, the few become wealthy beyond imagination and the many become impoverished. It’s the unavoidable nature of the beast.

    Government cannot simply be a bandage on capitalism, trying to avoid the unavoidable. Democracy means more than just that.

    Work-sharing is another of the forms of democracy that go beyond just political enfranchisement, i.e., elections for political representatives every once in a while. It’s a beginning towards full economic democracy, and a reflection of a serious intent to make society more equitable.

    I fully endorse the idea of work-sharing, and have suggested it as an alternative to myself being laid off. But I can tell you from experience that employers won’t do it voluntarily; they will have to be forced to do it. Why? Because when they cut staff, they’ll want to keep winners and drop losers. That’s just the nature of capitalism. It has to be government – or more generally, community or society as a whole, if not just good unions – that force their hand.

    Freedom is not well understood. Everyone can’t be absolutely free. One person’s freedom can be another person’s oppression, if not enslavement. It can’t be the individual that makes that call; it has to be society more broadly. The founders of this country knew that; they institutionalized it. We’re just missing it. Time to restate what should be obvious about what democracy really is.

    If businesses are given “carrot” incentives, they’ll just use their freedom to act in their own self-interest, invariably, and that self-interest may not include the welfare of their employees, especially if they have incentive to reduce and/or eliminate employees altogether. So the issue is not just economics; it’s a better understanding of freedom itself, and thus democracy itself. There is no democracy when one man’s economic power rules – or destroys – the lives of many others. We can and must do better, else it’s not just capitalism that’s failed, or socialism that’s failed, it’s democracy that’s failed.


  7. The Raven says:

    No croaking jokes today–this is just too grim.

    I think you’re still stuck in Obama’s Reality Distortion Field, guy. Obama believes in austerity. That’s what he says to, apparently, everyone except you. The Conservative Democrats believe in austerity. The Wall Street Republicans believe in fewer and worse jobs for the vast majority of Americans. The Tea Party Republicans are just crazy, but generally support policies that lead to austerity. The Progressive Democrats do believe the right things, but they’re out of power.

    Given these political realities, I think this is the most likely outcome: The conservative Democrats, led by Obama and Reid, will cut a compromise with the Wall Street Republicans, led by Boehner and McConnell. This will include substantial austerity for the lower class and continued support and amnesty for the upper class.

    It’s time to focus on what can be done without any major faction of Federal elected officials on our side, in an era of 1950s politics and 1930s economics. Now, there are a few groups. I think the military command is largely on our side. Most of the civil service. What’s left of the unions. So…time to get cracking.


  8. Dusty says:

    These ideas were important before the release of today’s jobs report. With the new information we now have, they’re essential. Yep, I agree.


  9. David Illig says:

    Former President Clinton recently suggested other ideas in a Newsweek article that make sense and parallel your ideas. Specifically, I like the emphasis on funding grants to improve energy efficiency through out the economy with a focus on commercial and residential building energy efficiency retrofitting. Such projects can start relatively quickly and many do not reauier specilized skillsets beyond an ability to do manual work and in some cases familiarity with construction techniques. These projects have the advantqge of producing jobs and producing reduced reliance on foreign energy.

    Unfortunately, I do not see any obvious way to get the Reps to focus on such efforts.



  10. Geoff Freedman says:

    I am not surprised by the job numbers. First and formost the Federal stimulus to local governments have been winding down for some time. States and municipalities are laying off and even the Federal government is laying off now (that was in the latest job report).

    We have excess capacity, so private enterprise isn’t hiring. This state of affairs is not due so much to the tax laws as currently written as it is to a lack of demand in general. 85% of our aggrigate net worth is in the hands of 20% of our population. The other 85% (which have only 15% of aggrigate net worth to begin with) are so indebted because of excesses in the last decade,that unless we progress the tax rates they will never be able to begin consuming again. We also need to have an EFFECTIVE stimulus package (as opposed the TARP which had no strings attached and Obamas package – which wasn’t large enough to address both structural problems and short term issues in the economy).

    Then we have the the Republicans playing chicken with debt limits, and the Democrats leaning over backwards to compromise. What business in their right mind would hire people when faced with potential Fiscal Armageddon especially in light og these other issues.

    Combine that with an inefficient health care system with costs that are almost out of control, military spending which has increased from a total of over 404 billion in 2001 (including Dept of Veterans affairs, Homeland Security, Intelligence Services, State Dept and Foriegn Aid) to 1 Trillion in 2010 at a time when we reduced taxes by 330 Billion during the Bush years, and its no wonder we are where we are today.

    Banks are still too big to fail with too much junk on (and off) their books that need to be re-evaluated, derivatives are still unregulated, and a modern version of Glass Steagull has yet to be implimented.

    We are in a state of fiscal insanity and we are headed off the cliff. Is it time for Greek style riots?


  11. davesnyd says:

    How about more options of what to do?

    I like the idea of a public works WPA project– whether or not they are more capital than labor intensive, as you say. End of the day, we’d have some updated infrastructure.

    Other work programs– even paying people for highway cleaning and beautification, for instance– should be considered.

    Let’s pry money loose from the corporate coffers: gently (by offering accelerated depreciation schedules) or not so gently, by taxes or fines (for malfeasance during the meltdown) or the like. Or use taxation policy to push them to either distribute or internally invest their money.

    There’s a lot of talk of saving money by raising social security and medicare. In reality, if we’re worried about jobs, we ought to be doing the opposite– at least for medicare. Lower the retirement age to 55, raise the FICA tax to cover the costs, and let people retire early. It might not raise the percent employed number but it would lower the unemployment rate.

    It’s time to get serious about having the Chinese currency float. A more correct exchange rate would have to improve the trade balance– and, thus, our employment. The cost will be inflation but it is hard to worry about that right now. Tariffs on Chinese imports until they allow an open exchange market should be enacted.

    They should also be enacted until China puts needed product safety laws in place and enforces them. These tariffs ought to be used to higher inspectors at the ports to do the needed safety checks.


  12. Misaki says:

    What is really happening here is the President is making the general public aware that they can either reduce the deficit, or they can communicate to Congress what types of jobs they want the government to create.

    If there is no strong demand for infrastructure development expressed by the public after seeing this message and this job report, the government will continue to work on reducing the deficit.

    I also think Dean Baker’s idea of work sharing—reducing everyone’s hours a bit instead of laying off somebody (and using UI payments to make up a portion of the wage loss)—could help, though I doubt it’s a “quick route back to full employment.” Take up in states that already have it is low, and so this might be hard to scale up…still, we should try–this program also has a very high bang-for-buck in terms of preserving jobs.</blockquote
    In light of this statement, I find it difficult to understand why you do not seriously consider the proposal to do similar, but without needing government to finance the lost wage.

    Not only does it have implications for the effort to balance the budget, but also for the motivations involved. With "work share" using UI benefits, when an employee works less the nation loses because that employee is a drain on the government’s budget, and employees have little reason to voluntarily participate in the program because leeching off the government is not socially desirable.

    When that wage is, instead, taken from the company being worked for, the company itself may have less desire to allow it but the worker has more reason because it does not harm the government’s effort to balance the budget, and as has been pointed out major companies can easily afford it (http://krugman.blogs.nytimes.com/2011/07/02/net-lending-by-domestic-business/).

    But it is, again, up to the nation to decide. If there is no major demand from the public for Congress to spend more or to address the job problem without spending, the unemployment rate will simply remain where it is.


  13. Jim Pharo says:

    “get that source of econo-anxiety behind us,”

    This is funny. It’s almost as though you think that once we “deal with” the current GOP freak-out over “DEFICITS! DEFICITS! DEFICITS!” we will, um, move on to something productive.

    Except of course no such thing is going to happen. We can already see the emerging narrative: the Democrats have been so inept, that businesses can’t hire people, due to the fear of increased taxes and onerous regulation. I expect the GOP to press for a series of nutty ideas about limiting the ability of government to do anything, all in the name of jobs.

    This is the difficulty with a strategy of appeasing bullies. They are never satisfied. Just ask Lincoln.


  14. wasabi says:

    Payroll (SS) tax cuts should *not* be on the table at all. They are a two-edged sword. Cuts cause SS to impinge on the general budget and thus give ammunition to Repubs who want to eventually dismantle SS. Further, all talk about reducing SS cost of living increases is inappropriate and should be rigorously rejected.

    Jared, please come out in favor of the president calling the Repubs’s bluff not to raise the debt ceiling. They only made that threat because they believe the president is a coward who will cave in preemptively. If he stands up to them, they will be forced to blink. Should they refuse to blink, he could use the 14th Amendment if he wanted. It would be better than unnecessarily giving away $4 trillion in cuts with only minor taxes on the rich. That proposal is simply unacceptable to any red-blooded Democrat.

    Last but not least, Massive Austerity during a recession (yes, we seem to be reentering one, since the stimulus is over now) is economic madness. Massive austerity would surely push the economy into a double-dip recession and increase unemployment next year, while increasing the deficit. No president has ever been reelected with unemployment over 9% except FDR, but in his case unemployment was coming down. And you know what happened in 1937. Please ask Obama to just say No! to anything above the already negotiated cuts! A $4 trillion giveaway would be a disaster and counterproductive. I see dark clouds on the horizon.


  15. Misaki says:

    *It has come to my attention that many people think the reason that there aren’t more jobs is that companies are not doing well.*

    This is one of the main oppositions to increasing wage for lower amounts of work. It therefore follows that people should support a DECREASE in the average wage for permanent employees working full time, if they are given the option of instead working part-time at the original wage rate (or even a higher wage rate if full-time employees get the reduced rate). Wages would eventually equalize anyway, but apparently people don’t realize that. http://pastebin.com/Q86Zhgs9


  16. Misaki says:

    What does “low consumer demand” really mean?

    From http://www.calculatedriskblog.com/2011/07/more-employment-return-of-teen-and.html : ‘That is why so many companies identify their number one problem as “lack of customers”.’

    But as helpfully pointed out to me,
    of course that is utterly and 100% meaningless and stupid.
    It is like sayng the number one problem of cancer researchers is they have not found the cure. It is a given that no business has too many customers and no researchers have too many cures for cancer. OMG!!!!

    More specifically, this means businesses would not increase profits by lowering their prices, because the slight increase in sales would not make up for the loss in per-unit profit, even if their product is significantly cheaper than others on the market.

    Decreasing the cost of a car from $35k to $25k will make a rich person buy it instead of a $200k luxury car, because they don’t care about saving $10k. In other words, companies that are NOT profitable enough are the ones who feel like they have problems from lack of customers.

    Companies that are profitable don’t feel like they have a lack of customers because they are profitable, even if they could make more profit for every customer.

    This lack of competition is the same as described [here]: http:/pastebin.com/Q86Zhgs9 and derives from the very slightly higher amounts of utility of the more expensive goods, even if the utility is only “having a brand that people will recognize”. This is what lack of customers really means, that the low-end companies have problems not the high-end ones, and is exactly what changing the wage system would fix by lowering profits for the high-end companies and increasing demand for products of the low-end ones.


Leave a Reply

Your email address will not be published.

Current ye@r *