Down the Memory Hole

June 14th, 2011 at 1:08 pm

Listening to the Republican debate last night, I was once again struck by the extent to which these folks are stuck in a tattered old box when it comes to economic policy.  Deregulation, supply-side tax cuts, turn the entitlements over to the market, etc…the very agenda that got us into this mess.

That’s not a surprise, of course—it’s what anyone who’s been paying attention would have predicted.   But you have to wonder why anyone whose income is, oh, I don’t know…like under $1 million, would hear those ideas and say, “Yeah…that’s the ticket!”

But, alas, people tend to have short memories about such things, and there’s a lot of noise to muddy the water.  So, allow me, in one simple graph, to provide a reminder.

The figure compares average monthly job losses and gains in two periods: the first quarter of 2009, when the President took office, and the last three months (averaging over three months is a good way to smooth out random variation and get at the underlying trend).

Source: BLS

Back in early 2009, we were losing jobs at a rate the likes of which I’d never seen—780,000 per month—2.3 million jobs lost in the first quarter.  Over the past quarter, we’ve been adding jobs at a rate of 160,000 per month (and that includes last month’s disappointing 54K gain).

Readers of this blog know that I don’t think that’s good enough.  I and others are actively agitating to do more to build on this progress.  But let us not forget where we were.

Am I saying ideas like those the R’s were espousing last night are directly responsible for that first bar above?  Only kind of.  I am saying this: that policy agenda very much helped to create the conditions under which deregulated capital markets could inflate a housing bubble, generating sharp inequalities along the way and defunding and defanging government’s ability to do much about it.

There’s another graph to look at, however.  This one shows two other important indicators—real GDP growth and unemployment—of then versus now.  GDP growth has been growing for almost two years, though clearly not fast enough to bring down the unemployment rate, which is higher now.  The damage done by the Great Recession is still with us and employers are simply not creating enough jobs to bring it down.  In other words, we’re nowhere near out of the woods.

Sources: BLS, BEA

But it would be the height of economic self-destruction to take that same path back into those same woods.

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7 comments in reply to "Down the Memory Hole"

  1. Tyler says:

    At CBPP, you wrote, “…another round of the payroll tax cut would benefit the economy…”

    I agree, and I like that it’s a politically feasible solution. Not sure if you watched This Week over the weekend, but Senator Shelby actually said he does not believe stimulus works. In other words, “I will not support any new spending.”

    In such a political climate, I appreciate your offering solutions that actually have a chance of getting through Congress.

  2. John says:

    The Miami Heat made it to the NBA Finals. Great accomplishment, really, no kidding. Just not good enough if the goal was to win the title.

    I still like Lebron James. But as a person with Asperger Syndrome, I’ve got a lifetime of experience with the kind of reaction he got, pointing out after losing game 6 that he made $14.5M this year and none of his critics probably made anything like that.

    I like you too, JB. But I gotta tell you, you don’t do yourself any favors with this line of argument. We know. The crazies are just crazy. Defending your record in their terms just sounds to people like us like you’re not so focused on us and what we face, but more on the game of politics.

    What I really, really dislike about your “should vs. could” idea is that it smacks of politics as a game. It’s like the political conventional wisdom that says not to bring a bill up for a vote unless it’s certain to “win.” Frustrates the heck out of those of us paying attention, because we want to see how people vote, so we know who our friends and enemies are. And, I’m sure, that’s why politicians don’t want to do it – they don’t want anybody to know where they really stand. But like Obama, they want to talk a good game during campaigns, and do what the heck gets them campaign funding once in office, even if the exact opposite of what got them elected.

    Lots of us are paying better attention than that. We’ve got the time, and we have nothing better to do, after all.

    Stand up and be counted on the “should”, before playing political games with the “could,” and this admin might find itself a bit more popular with its base. Don’t even mention it in those terms. Just fight for the “should”, and let the chips fall where they may. So you don’t look like you’re just gamin’ for votes next election. Just sayin.

    Something is only good enough when it’s good enough.

    More Stevie, since this is long…

    • John says:

      Let me be clear. Stimulus talk isn’t even “could” anymore. You had one chance, and you blew it. Game over.

      We need to know what “shoulds” our leaders actually will stand up for. We don’t know yet. Surprises in that respect are a subversion of democracy, and feel like betrayal. They ARE betrayal.

      Talking to capitalists in capitalists’ terms is talking in conservative terms, not in terms of the “middle class.” It’s says, “I’m one of them, not one of you.”

      It’s Lebron James pointing out he made $14.5M and you didn’t. And that unless you had $500 to burn, you only get to watch the games on TV, not in person.

      If you talk on that level, you just lose the discussion, even if you’re right.

      Here’s a pivot.

      Get Obama to stand up and say, “I don’t care if it is socialism – I’m gonna fight for single payer because PPACA isn’t good enough! I’ll use the courts to do it! And I’m gonna propose and fight for direct support of the unemployed because waiting for businesses to use tax breaks to hire isn’t good enough! I’ll issue executive orders to hire millions into government jobs! And I’m gonna bring the full weight and authority of my office and the law down on the heads of those who work against the interests of the 99% of the American people who are the real America, and I’m not gonna have secret meetings with the 1% so that I can get campaign contributions to keep my job! I don’t want their money, and I don’t want their advice, since it only helps them, not the 99%!”

      “I am Barack Hussein Obama, and I AM President of the United States!”

      Leadership. That’s his job. Worked for FDR. Power HE doesn’t use is power WE don’t have.

      (He might hire Laurence O’Donnell as a speech writer, BTW…)

  3. Davis X. Machina says:

    ‘But you have to wonder why anyone whose income is, oh, I don’t know…like under $1 million, would hear those ideas and say, “Yeah…that’s the ticket!”’

    Two words: Team spirit. Red Sox fans aren’t Red Sox fans because of a careful hedonistic calculation, or because of rational self-interest. They’re Red Sox fans because it’s their team.

    American politics is easy to understand, provided you sell your copy of The Federalist Papers to some unsuspecting AP Government student and buy a big foam “We’re #1” finger with the proceeds.

  4. Michael says:

    This seems weird to me — the official GOP line is that tax cuts and deregulation is the answer.

    The official Obama line is that different tax cuts and slightly different deregulation is the answer.

    So . . . the two of you agree on the basic but are fighting on details. The moral dudgeon seems kinda silly. Yes, the first stimulus was the barest breath of good policy. But that’s over, it’s not being discussed, and there is, again, very little difference between an employer-side payroll tax cut and any other tax cut for the wealthy.

    Yes, in a functioning labor market, an employer-side payroll tax cut would largely fall to employees, due to the tiny elasticity of labor supply. But that’s in the long term, so it’s irrelevant to any stimulus argument. Which means that you’re talking about how awesome your tax cut for the wealthy and powerful is, but how awful their tax cut for the wealthy and powerful is.

  5. readerOfTeaLeaves says:

    Coming from a different place than commenter John, but I sure resonate with the frustration – and I sense that for 98% of the US public, the informative charts are not (yet) effective enough in communicating very important ideas.

    That’s not because the public is dumb.

    I’m saying: your charts up against Richard Shelby pontificating on the Sunday Jabberfests means that Shelby gets away with pontificating and exercising raw, destructive power.
    Did Christine Amanapour show your charts?!
    Does Richard Shelby even want to understand them?
    (I rest my case.)

    I think that ‘John’ is offering some really good advice.
    Tell me in lebronJamesian what it is you mean by all these graphs and charts. What’s Richard Shelby’s ‘game’, and how would the Dems’ game look different?
    Who would get a ball? a basket? court time?

    I don’t play basketball, but here’s my best stab at the ‘story’ that I truly would love to hear, if only to slow America from sliding into a banana republic:

    It is as if Richard Shelby claims that the Efficient Market Hypothesis, which he claims always and everywhere solves the Great Problem of Wasteful Government Spending means that only a very few number of basketballs, nets, and courts should ever exist.
    This will ensure they are all used efficiently.

    Unfortunately, this means that both the NBA and college basketball leagues are a waste of time and money.
    Shelby’s version of basketballEconomics means that we don’t even get to play high school ball. And under shelbyRules, if you want to play in your own neighborhood, then try rolling up a pair of socks and knit your own basket, — because Richard Shelby does not believe that Americans need basketballs.

    In Richard Shelby’s basketballEconomics, only about 100 people out of 100,000,000 (the 100 who give him large donations) deserve to play at all.

    The rest of us lack the proper basketballDiscipline.
    Allowing enough balls to be created for all of us to have a chance to play would simply be wasteful.

    He thinks there should be only 10 basketballs.
    That’s it.
    Very efficient, like markets!
    10 baskets, 10 balls, 10 courts.

    Because more courts and more basketballs would only mean that people would lose all fiscal discipline and then basketballMarkets would not work.

    Under shelbyBasketball, a ‘stimulus’ (i.e., enough balls and baskets to go around) is ‘undisciplined’.

    Also, in shelbyBasketball no one ever, ever cheats. Because markets are so efficient that cheating can never, ever happen. And that’s another reason to sharply restrict the number of basketballs: less cheating.

    I guess that I’m saying: the Dems badly need to take more rhetorical jump shots.
    My analogies may be dumb, off base, and badly wrought, but at least there’s some way of revealing Shelby’s views as deeply damaging to the larger social organism.

    Personally, I have a pretty comfortable life.
    But it burns me to underwrite vast amounts of mortgage and insurance fraud at the federal level through taxes, and then to see things like a video of Richard Shelby, who is culpable in creating this disaster, allowed to continue parroting the same nonsense that we have had for 30 years. Actually, if he were only jabbering but had no power, I could probably ignore it far more easily. The problem is, he still has power. Until his views are placed into a context where they are revealed as the numbskull notions they are, we will continue to have problems.

    I believe that if this continues, America will devolve into a Banana Republic, and we’re already well on our way.

    I **really** don’t want to live in a Banana Republic, nor a third world nation. I’ve done enough traveling to know that I never, ever want to live in a hell hole like some of the places that I’ve visited — but if we are to avoid that fate… well, more charts that include basketball analogies, perhaps?

  6. Jeff H says:

    I grew up in a single parent home, and watched my mother live through the examples she learned in the great depression. Here we are, all of us are living through the great recession, but where pray tell are the lessons learned?