Angry economic undercurrents

June 1st, 2016 at 9:12 am

There are lots of nuanced dynamics afoot in the political economy right now. I try to understand a few of them in today’s WaPo.

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5 comments in reply to "Angry economic undercurrents"

  1. Smith says:

    Yes but if you’re saying the economy isn’t great, the fact is liberals (progressives and moderates too) can’t vote (in good conscious) for the candidate who wants to make America great again. The other candidate who agrees the economy isn’t great lost by 46% to 54% (43% to 57% in popular votes), California and New Jersey notwithstanding. This is a problem, one of rhetoric, but also political and economic in nature. Will swing voters in swing states feel they are better off than they were four years ago? Maybe. But is this the best we can do? Hardly. Lucky for us no one will have the presence of mind to ask the leading Democratic candidate “Is the economy great?”

    Now either the economy is great or it isn’t great. But I guess that may all depend on what your definition of is is.

  2. John Daschbach says:

    I did a quick in my head calculation walking the dog today. Using 150 million workers, and assuming the NAIRU is 4% (3% unemployment here in CO is producing sizable inflation) and the real unemployment and underemployment rate is 8% then there is a 3% gap, or 4.5 million jobs. If you assume the job multiplier is, on average, a modest 2.25, then the public sector needs to create 2 million real jobs. If we assume a fully burdened rate/job of $100,000/yr, that’s $200 billion/yr or ca. 1% of current GDP. With negative real interest rates on Tsy, you could do all of it with no tax increases. You don’t need any new job programs, you just have to marginally increase existing jobs in infrastructure, scientific research, health care, social work, teachers, FBI, TSA, … Small upward changes in the budgets of all public sector job areas should have a low corruption and inefficiency rate. I suspect the real number of public sector jobs needed is perhaps half that. A little common economic sense would go a long way.

    • Smith says:

      Clinton’s program is $100 billion a year, but, that includes expenditures that are not new spending. What do I mean?
      Look at the cost of debt free college, $350 million over 10 years or $35 million a year. Except for a possibly hoped for expected increase in enrollment, this adds exactly nothing to the economy, there is no increased resulting economic activity. In fact there could be a decrease as the taxes collected to pay for the benefit takes money out of circulation, which accounts for the decrease in student debt. Deficit spending to pay for the program would instead provide a measure (eventually unsustainable) of stimulus. But so would collecting taxes for new roads, or new research, or increased public jobs per the comment above.

      Look at the table on funding:
      See the possible outcome on enrollment:

      Public college should be free and should be paid for with new revenue (taxes), but until increased enrollments required expansion, or a better educated workforce increased productivity, the money allocated doesn’t add a penny to needed stimulus for full employment.

      • Smith says:

        Billions, billions and billions, not millions. College cost billions. Mistake in above figures similar to a typo, but at a higher cognitive level than motor function.
        $350 billion over ten years for Clinton program, or $35 billion a year.

    • JF says:

      Govt jobs are full time and would supply another competitor for labor.

      And this is another one of the reasons why the republican party wants to shrink self-govt, lowering employment in govt jobs makes for an even more distorted labor market, one that would continue to see wages stagnate and increasing part-time job-offers and other signs of a distorted market, even as profits increase and economic shares concentrate further. It is part of their overall strategy. It can and should be seen for what this is, and instead, adopt fair market policies to support our employment to population ratio with an less distorted labor market (and perhaps to remediate and correct for the windfall ‘rents’ collected during the period when the labor markets were distorted by these political strategies).