Showing posts with label unemployment. Show all posts
Showing posts with label unemployment. Show all posts
Monday, August 27, 2012
On the Failed Job Creation Front, Obama Has Completely Run Out of Ideas
Unemployment is the millstone around President Obama’s neck in the 2012 election campaign. Attentive voters understand he is offering excuses — a worse-than-expected economy, financial crises requiring longer recoveries, bad luck of tsunamis, droughts, and the Euro — not solutions. Obama cannot deliver solutions because a real jobs program contradicts his core principles, alienates his base, and infuriates his crony contributors. He can only promise more of the failed policies –stimulus and tinkering — of his first three and a half years
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Obama’s last foray into job creation was his American Jobs Act (AJA) submitted to Congress on September 12, 2011. Labeled “Stimulus 2” by its critics, Obama’s shopworn list of remedies, promised to “put more people back to work and put more money in the pockets of working Americans….without adding a dime to the deficit.” The AJA’s temporary tax credits to businesses that hire, extension of the payroll tax holiday, and more money for teachers and infrastructure stalled in both Houses and had to be taken up piecemeal. The payroll tax holiday extension passed Congress. Small businesses decided his tax credits for hiring were not worth the trouble.
A deafening silence followed. Obama’s vaunted Jobs Task Force has not met for more than a half year. Obama is out of ideas. He can only offer excuses, criticize those offering new solutions, and divert attention from the worst recovery in history with chatter about the rich not paying their fair share and his opponent’s tax returns.
One year ago, on the eve of the President’s jobs address, I wrote Why Obama Cannot Support a Real Jobs Program. In this piece, I showed what a real jobs program looks like and how it largely would have increased jobs, to use Obama’s AJA message, “without adding a dime to the deficit.” Here is the substance of what I wrote then as advice to the President:
go to forbes.com
Tuesday, June 14, 2011
The President’s Waste-of-Time Jobs Council
It took GE’s Jeff Immelt and Amex’s Ken Chenault and their “26 private sector leaders and people standing up for the rights of workers” 90 days to issue five “fast-action” recommendations to create “more than one million jobs.” (WSJ, June 13 “How We're Meeting the Job Creation Challenge”).
The Presidents Jobs Council’s recommendations are either:
1) Obvious (better education and training), or
2) Require more government spending (more SBA loans, more infrastructure spending), or
3) Make money for GE (install energy saving devices in buildings) or for Amex (issue more tourist visas), or
4) Call upon federal, state, and local licensers to do their jobs expeditiously as they are supposed to do anyway.
The Jobs Council will issue longer-term recommendations later. I lose all optimism, when I read that “government, business and labor (read: crony capitalists and big labor) need to work together to get this done.”
I do not need 90 days and millions of government money to give you my “Jobs Council” recommendations:
1) Reduce energy costs by halting the EPA’s attack on coal and drop regulations that require renewable energy to produce electricity. These measures lower the costs of doing business and encourage hiring.
2) Limit the duration of unemployment insurance. Unemployment insurance cannot be a permanent entitlement. Empirical studies show unemployed persons exit unemployment near the end of their benefits.
3) Withdraw the NLRB’s ruling against Boeing’s new plant in South Carolina. The federal government and its regulators cannot be seen as blatantly anti-business. We cannot have an economy in which the government interferes in key investment decisions.
4) Allow for increased mobility of occupational licenses across state borders by attacking special-interest protection of licensed occupations. Increased mobility lowers unemployment.
5) Drop all attempts to prop up underwater mortgages and let the housing market clear as quickly as possible. Phase out Fannie Mae and Freddie Mac. Housing will not expand until the industry reaches an equilibrium.
6) Have a bi-partisan agreement that reduces government spending and debt now, not in the distant future. The lack of agreement creates too much uncertainty about future taxes.
7) Provide businesses certainty as to their current and future tax liabilities. No business will hire without knowing its bottom line after taxes. Keep marginal tax rates low.
8) Adopt a bi-partisan solution of the unfunded liabilities of Social Security and Medicare starting now, not in the distant future.
9) Reform the education system to teach everyone basic skills of reading, writing, and math. With these skills, people can acquire the specific skills business needs.
10) Put teeth in the requirement that all regulations must produce benefits in excess of costs with realistic estimates of both.
11) Repeal Obama Care to give employers certainty as to their true employee costs. Let employers compete for workers by offering better health insurance and employees choose among employers for health insurance benefits.
12) Follow the dictum of Franklyn Delano Roosevelt and prohibit collective bargaining for public employees. The public is the "boss" of public sector workers not greedy capitalists.
13) Ratify outstanding free trade agreements. Expansions of trade lead to job expansion.
I guarantee that my jobs program will actually create jobs and economic growth. I imagine most honest economists would agree with me.
Neither political party, however, has the will or gumption to enact it.
The Presidents Jobs Council’s recommendations are either:
1) Obvious (better education and training), or
2) Require more government spending (more SBA loans, more infrastructure spending), or
3) Make money for GE (install energy saving devices in buildings) or for Amex (issue more tourist visas), or
4) Call upon federal, state, and local licensers to do their jobs expeditiously as they are supposed to do anyway.
The Jobs Council will issue longer-term recommendations later. I lose all optimism, when I read that “government, business and labor (read: crony capitalists and big labor) need to work together to get this done.”
I do not need 90 days and millions of government money to give you my “Jobs Council” recommendations:
1) Reduce energy costs by halting the EPA’s attack on coal and drop regulations that require renewable energy to produce electricity. These measures lower the costs of doing business and encourage hiring.
2) Limit the duration of unemployment insurance. Unemployment insurance cannot be a permanent entitlement. Empirical studies show unemployed persons exit unemployment near the end of their benefits.
3) Withdraw the NLRB’s ruling against Boeing’s new plant in South Carolina. The federal government and its regulators cannot be seen as blatantly anti-business. We cannot have an economy in which the government interferes in key investment decisions.
4) Allow for increased mobility of occupational licenses across state borders by attacking special-interest protection of licensed occupations. Increased mobility lowers unemployment.
5) Drop all attempts to prop up underwater mortgages and let the housing market clear as quickly as possible. Phase out Fannie Mae and Freddie Mac. Housing will not expand until the industry reaches an equilibrium.
6) Have a bi-partisan agreement that reduces government spending and debt now, not in the distant future. The lack of agreement creates too much uncertainty about future taxes.
7) Provide businesses certainty as to their current and future tax liabilities. No business will hire without knowing its bottom line after taxes. Keep marginal tax rates low.
8) Adopt a bi-partisan solution of the unfunded liabilities of Social Security and Medicare starting now, not in the distant future.
9) Reform the education system to teach everyone basic skills of reading, writing, and math. With these skills, people can acquire the specific skills business needs.
10) Put teeth in the requirement that all regulations must produce benefits in excess of costs with realistic estimates of both.
11) Repeal Obama Care to give employers certainty as to their true employee costs. Let employers compete for workers by offering better health insurance and employees choose among employers for health insurance benefits.
12) Follow the dictum of Franklyn Delano Roosevelt and prohibit collective bargaining for public employees. The public is the "boss" of public sector workers not greedy capitalists.
13) Ratify outstanding free trade agreements. Expansions of trade lead to job expansion.
I guarantee that my jobs program will actually create jobs and economic growth. I imagine most honest economists would agree with me.
Neither political party, however, has the will or gumption to enact it.
Wednesday, May 11, 2011
Reading David Brooks and Missing William Safire
David Brooks’ “The Missing Fifth” (NYT, May 10) sent me to Google to confirm that Brooks is really the token conservative in the NYT’s stable of liberal columnists. Yes, the internet chatter says it is true.
I try to read Brooks’s columns, but I am hard pressed to find anything conservative in what he writes. Am I alone in this assessment?
Take Brooks’ “Missing Fifth.” In this column, he asks why America has lost its “energy” as reflected in the fact that only eighty percent of American men aged 25-54 work today versus 96 percent back in 1954. According to Brooks’ source (the OECD), the American “Missing Fifth” is the highest among the G-7 countries. I suspect this is because almost 3 percent of US males in this age group are in jail. Three percentage points of Brooks’ twenty percent have lost “energy” because they are sitting in jail. If so, this brings us down to the “Missing Seventeen Percent.”
Any conservative thinker, when confronted with the question of non-working adult males, would consider the incentives and human motivations underlying the “Missing Seventeen Percent.” Brooks mentions the increase in Americans on permanent disability, but he does not ask why. It is doubtful that we collectively became less healthy in the last three decades. Nor does he ask whether there are incentives to qualify for disability that were not present earlier.
Consideration of disabilities is a diversion, however. Unlike the Netherlands where at one time some ten percent of the work force was on permanent disability, our numbers are small.
Brooks does not ask whether the costs of “not working” have dropped. In 1954, unemployed men had a small percentage of their lost earnings replaced and only for a short time. Today, it is a much different story. Nor is he curious about other countries, such as Germany, where unemployment benefits have become an entitlement. With growing political pressure to extend unemployment benefits, we are only a few steps behind Germany (which is trying to correct its earlier mistake).
A glance at the latest BLS statistics shows a 9 percent unemployment rate for adult males and another three percent or more for “discouraged workers ” or workers marginally attached to the labor force. Thus, Brooks’ “Missing Fifth/Seventeen Percent” is explained mostly by unemployment and tenuous attachment to the labor force.
Brooks does not ask whether food stamps, AFDC, or more generous and extended unemployment benefits have anything to do with this. I do not know the answer, but these questions should be asked.
Instead, Brooks goes into a rambling discussion of human capital and the rise of services and other structural issues and commits the old Marxian fallacy about machines replacing men. At least Brooks concedes that Keynesian solutions are not the answer.
His proposed solution to the “Missing Fifth” is that we (meaning the government) must spend more on community colleges, wage subsidies, and extending unemployment benefits to potential entrepreneurs. Brooks’ knee-jerk reaction is: If there is a problem, the government must fix it. There is no curiosity about whether the government has caused the problem.
Brooks’ writings evoke in me nostalgia for William Safire. How about the venerable NYT hiring a real conservative columnist?
I try to read Brooks’s columns, but I am hard pressed to find anything conservative in what he writes. Am I alone in this assessment?
Take Brooks’ “Missing Fifth.” In this column, he asks why America has lost its “energy” as reflected in the fact that only eighty percent of American men aged 25-54 work today versus 96 percent back in 1954. According to Brooks’ source (the OECD), the American “Missing Fifth” is the highest among the G-7 countries. I suspect this is because almost 3 percent of US males in this age group are in jail. Three percentage points of Brooks’ twenty percent have lost “energy” because they are sitting in jail. If so, this brings us down to the “Missing Seventeen Percent.”
Any conservative thinker, when confronted with the question of non-working adult males, would consider the incentives and human motivations underlying the “Missing Seventeen Percent.” Brooks mentions the increase in Americans on permanent disability, but he does not ask why. It is doubtful that we collectively became less healthy in the last three decades. Nor does he ask whether there are incentives to qualify for disability that were not present earlier.
Consideration of disabilities is a diversion, however. Unlike the Netherlands where at one time some ten percent of the work force was on permanent disability, our numbers are small.
Brooks does not ask whether the costs of “not working” have dropped. In 1954, unemployed men had a small percentage of their lost earnings replaced and only for a short time. Today, it is a much different story. Nor is he curious about other countries, such as Germany, where unemployment benefits have become an entitlement. With growing political pressure to extend unemployment benefits, we are only a few steps behind Germany (which is trying to correct its earlier mistake).
A glance at the latest BLS statistics shows a 9 percent unemployment rate for adult males and another three percent or more for “discouraged workers ” or workers marginally attached to the labor force. Thus, Brooks’ “Missing Fifth/Seventeen Percent” is explained mostly by unemployment and tenuous attachment to the labor force.
Brooks does not ask whether food stamps, AFDC, or more generous and extended unemployment benefits have anything to do with this. I do not know the answer, but these questions should be asked.
Instead, Brooks goes into a rambling discussion of human capital and the rise of services and other structural issues and commits the old Marxian fallacy about machines replacing men. At least Brooks concedes that Keynesian solutions are not the answer.
His proposed solution to the “Missing Fifth” is that we (meaning the government) must spend more on community colleges, wage subsidies, and extending unemployment benefits to potential entrepreneurs. Brooks’ knee-jerk reaction is: If there is a problem, the government must fix it. There is no curiosity about whether the government has caused the problem.
Brooks’ writings evoke in me nostalgia for William Safire. How about the venerable NYT hiring a real conservative columnist?
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