Where are the jobs? Perhaps they exist.

[TurtleMeister]

So the plan here is to lower the income for mainstream (blue collar) type workers to that of third world countries where many jobs are being outsourced, but while living in the USA where the cost of living is higher?

It's not just a plan. It's already happening.

Just a few personal facts:

1) I've worked in the electrical / electronics industry for over 35 years.

2) About ten years ago the company I worked for (for almost 25 years) moved all manufacturing operations to Mexico.

3) The company I work for today is the only manufacturing facility left in America that makes our product.

4) Today I earn a little more than one half what I earned ten years ago.

5) About 90% (and that's conservative) of my co-workers are legal immigrants. It's difficult for me because some of them do not speak good English.

 

[hamster143]

So the plan here is to lower the income for mainstream (blue collar) type workers to that of third world countries where many jobs are being outsourced, but while living in the USA where the cost of living is higher? If enough companies reduces wages to survival level in the USA, which is a 70% consumer based economy, the economy goes downhill, because a huge chunk of the income that was used to buy those consumer products goes away.

But why is the cost of living here higher? And in what ways?

Food is not substantially more expensive, especially raw ingredients. In some cases it's cheaper because of government subsidies. Clothing is about the same. Electronics is about the same. Electricity and gasoline are similar. Cars are substantially cheaper, as any European will attest.

There are three reasons why the cost of living appears higher, those are, housing, healthcare, and education. Housing appears to be more expensive, but that is partly because Americans have a different opinion of what's 'normal' (IIRC, Americans have at least double the average square footage per capita vs. most developed countries, to say nothing of China or Brazil), partly because of government subsidies such as section 8, and partly just simply false (the average price of a 2-bedroom apartment in Moscow surpassed $500,000 some time around 2005, and has remained above that level ever since.) Furthermore, getting rid of the minimum wage would allow the cost of construction of new housing to drop dramatically (90% of the cost of new construction is typically labor and permits), making housing more affordable for all.

Healthcare is, indeed, incredibly expensive here, by any reasonable standards, and that is, of course, caused (1) by absurd regulations that require you (or your health insurance company) to pay $100 to your doctor to get a prescription for a bottle of Amoxicillin (market price in India: $0.50) any time you get sick, and (2) by a severe shortage of doctors, caused by more absurd regulations which limit the number of spots in medical schools and residencies, and ensure that the shortage can't be filled by imported doctors. But that is only a factor for the reasonably well-off, because people out of labor force and people working for anything near the minimum wage (and their children) tend to get their healthcare through Medicaid/S-Chip, courtesy of taxpayers.

I don't want to go into education now, that's a complicated problem, but let's just say that we can safely drop the minimum wage to $1/hour (where it should be) while still allowing bright poor students to get college education.

The ultimate objective is to have a healthy economy. In a healthy economy, aggregate output is maximized, there's no such thing as "discouraged workers", and unemployment does not have tendency to stay high at a huge cost to taxpayers. The American economy is not it. Close to 20% of all working-age (25-55) adult males are unemployed at any given moment (and most of them have no interest in working or looking for work). For females that's close to 1/3. Many others only appear to work, while inflating the apparent GDP by far more than their real contribution, the demand for their labor tenuous at best (it's very uncommon outside the U.S. for secretaries/administrative assistants/clerks to make $20/hour). It is no surprise that a shock like the last recession can knock a large segment of population permanently out of labor force, and the national GDP into a lower trajectory.

Fortunately, there are countries that have it worse (France comes to mind), but that's nothing to be proud of.

 

[WhoWee]

I thought this was quite interesting. According to this and other reports seen, we should have the employment rate Obama had hoped for. Apparently this informaton came out in the latest jobs report.


http://www.msnbc.msn.com/id/39235412/ns/meet_the_press-transcripts/

Ivan, this is a great find! Really!

There's only one (maybe 2?) problems.

First, what have all of the unemployed people been doing for the past 18 months while on unemployment (and COBRA)? I thought Obama had already encouraged everyone to go back to school. I'll try to find a stat on the amount of funding that has gone to re-training and "skill based" training/trade schools.

Next, the increase in job postings might have something to do with all of the "commission only" sales postings - this Career Builder search shows 100,000+ openings.

http://jobs.careerbuilder.com/jobse...=&as:excn=&as:exnt=True&SearchBtn=Find+Jobs+»

A similar "Work at Home" search demonstrates 22,586 opportunities.
http://jobs.careerbuilder.com/jobse...ExpHigh=gt50;ExpLow=0;MaxLowExp=-1&IPath=QAKV

However, the most telling search might be for "Employment" - 53,950 openings for people to find jobs for other people.
http://jobs.careerbuilder.com/jobse...ExpHigh=GT50;ExpLow=0;MaxLowExp=-1&IPath=ILKV

Sadly, "Construction" only yielded 14,117 results
http://jobs.careerbuilder.com/jobse...ExpHigh=GT50;ExpLow=0;MaxLowExp=-1&IPath=ILKV

 

[airborne18]

Note that I don't know the source of Clinton's information. I saw his interview and heard a few other reports of the same. Presumably the source of his comments will emerge soon enough.

I don't conclude that something is fishy just because I didn't expect it.

Ivan, here is one of the sources for raw quantitative data that I use in some of my econ models. You really want to gauge wages and employment levels, this one is gold.

http://www.fms.treas.gov/mts/mts0810.pdf

There are a few indicators out there that track employment listings. One of the services has a really good one that is sort of scientific and it does it by metro area and job classification. The problem is that it is not free, and it is very expensive.

 

[WhoWee]

According to airborne18's post - student loans (year to date) are $36,462 million up from $21,340 million in the prior year. An increase of 70.86%.


Plus, the Department of Labor reported "Total-Employment and Training Administration" outlays increased from $133,414 million to $233,048 million.


Interestingly, the Department of Homeland Security DECREASED spending from $53,126 million to $47,436 million.


A bright spot was that the Small Business Administration increased it's "Business Loans Programs" spending from $1,735 million to $5,226 million...kudos Mr. President.


On the other hand, I still haven't figured out the 2011 Budgeted amount of $200,000 million (up from $5,265 million current year) for "Reduction of Operating Cash, Increase (-)" ...is this the money they plan to print?

 

[russ_watters]

Ok, I was posting this weekend from a blackberry and had to limit my post length, so I coulnd't get too deep into this. So sorry if I'm backtracking a little (and it looks like hamster has done a pretty good job explaining what I could only hint at):

I thought this was quite interesting. According to this and other reports seen, we should have the employment rate Obama had hoped for. Apparently this informaton came out in the latest jobs report.

The jobs that are being opened don't have qualified people applying for them. We need a system to immediately train them to move into that job. And I hope we'll have some commitments coming out on that. There are five million people who could go to work tomorrow if they were trained to do the jobs that are open, and the unemployment rate in America would immediately drop from 9.6 to about 7 percent or 6.9.

http://www.msnbc.msn.com/id/39235412/ns/meet_the_press-transcripts/

As noted, this is just a politician speaking in politician-BS. There are always a certain number of open jobs and they can't all be immediately filled because, obviously, it takes a finite amount of time to fill a job. For a new job, you have to advertise, collect resumes, interview, then make a decision. Unless you're desperate to fill the job, this process will take weeks or months. So this is obviously just a nonsensical statement. You can't claim credit for something that is an always-existing, structural component of unemployment. However, there is an implied claim behind this that you picked-up on:

You [hamster] are citing a jobs report from July. Clinton was resonding to the one that came out last week. All that you have shown is that we have added 2 million unfilled jobs to the market since July.

The report he's citing clearly shows "September 8" as the release date. It takes time to gather and release data. Newer numbers probably do not exist yet and I have no idea where Clinton got his 5 million.

In some fairness to Clinton, this was an off-the cuff response in an interview and there is a good chance he just pulled it out of the air. Nevertheless, if jobs were opening at a rate that gave us 2 million more total today than two months ago (I'm not inclined to accept this claimed fact that doesn't exist), because it takes a finite amount of time to fill a job, they can't be filled instantly (as I said above). All this means is that there is a slight lag between job creation and unemployment decreasing. This isn't rocket science, isn't profound, and isn't an excuse for Obama being wrong for the past year. Remember, Ivan - Obama claimed unemployment wouldn't exceed 8% and would drop faster than this. If, as you are claiming, in the past two months the jobs situation has gotten dramatically better, that still makes him wrong for a year -- then suddenly catching up to his prediction.

Now, based on the above and as explained by hamster, this has nothing to do with skills. So even setting aside the unsubstantiated claim of fact, the reason for it is still just BS - and, frankly, is just another unsubstantiated claim of fact.

Slick Willy is pulling your chain and you're buying it because it is something you want to hear.

Once again, many of the jobs lost will never come back.

How exactly is 'some of the jobs have returned' contradictory to 'many of the jobs will never return'?

Yes, and I never said that all new jobs were once old jobs. The point was that the creation of entirely new jobs [eg buidling wind turbines, or building electric cars] would explain why we don't have qualified applicants for them.

Ok, I guess I misunderstood there. As I said, what I'm hearing here is opposite what I typically hear from liberals. The statement that many jobs will never come back has typically implied to me that they will be replaced by lower quality jobs, not that they will be replaced by higher quality jobs (which sounds like a positive thing to me).

 

[ThomasT]

Slick Willy is pulling your chain and you're buying it because it is something you want to hear.

Yes, this is certainly a possibility. I don't think Ivan Seeking has sufficiently argued his premise yet.

But I do agree with him on this:

I love the complaint about minimum wage hikes.

It didn't make any sense to me either.

Well, there are about 100 million Chinese who work in manufacturing, and they survive just fine making less then the current U.S. minimum wage. Obviously, they don't have cars or iPhones, but it's doable.

And we can legalize sweat shops and child labor while we're at it.

Prices for many commodities are set based on what people can afford to pay. for example, without a $8/hour minimum wage and the government that is always happy to step in with TANF, section 8 and whatnot, low-end housing would be much cheaper everywhere.

I'd be surprised if there's any significant correlation between these programs and housing, or any other, prices. The number of people in these programs is only about 4% to 6% of the adult population. I'd guess that the minimum wage, tanf, section 8, food stamps and public housing have a very small, but positive, effect on the overall economy -- and that increasing any or all of these would have a very small, but positive, effect on the overall economy. The positive effect on the lives of the small percentage of our population that needs this help is, however, relatively large.

 

[Gokul43201]

Remember, Ivan - Obama claimed unemployment wouldn't exceed 8% and would drop faster than this.

And how do you interpret this failure?

I see it as being, in large part, a failure in Obama's - actually Obama's economic team during his campaign, when this forecast was made - ability to accurately estimate unemployment trends. Basically, his team grossly underestimated how deep a jobless recession he would be inheriting.

After all, if I recall correctly, unemployment was above 8% even as Obama was being sworn into office, and was passing 9% barely three months later (that's before anything significant in ARRA could come into effect; even by the Obama team forecasts, it was expected to take over a year for the job growth effects to fully kick in - Edit: my memory is somewhat off, see figure below).

Edit: Attached below is the picture often cited (see how the real numbers start trending sharply above the expectation even before Obama is in office):

Monthly numbers from BLS: http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000

 

[airborne18]

And how do you interpret this failure?

I see it as being, in large part, a failure in Obama's - actually Obama's economic team during his campaign, when this forecast was made - ability to accurately estimate unemployment trends. Basically, his team grossly underestimated how deep a jobless recession he would be inheriting.

After all, if I recall correctly, unemployment was above 8% even as Obama was being sworn into office, and was passing 9% barely three months later (that's before anything significant in ARRA could come into effect; even by the Obama team forecasts, it was expected to take over a year for the job growth effects to fully kick in - Edit: my memory is somewhat off, see figure below).

Edit: Attached below is the picture often cited (see how the real numbers start trending sharply above the expectation even before Obama is in office):

Monthly numbers from BLS: http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000

The issue with jobs is more complex than a few data points. There are multiple policy decisions that have prolonged the recession, and the blame can be spread out across Obama, Congress, and the Fed.

The real failure was not having a stimulus, but it was having a stimulus that targeted money to the bottom of the economy, and it was not delivered quickly. It almost became a political payback system. When you want to stimulate you throw the money very quickly at the middle and top of the economy where job creation is instant.

The administration took fundamental economic theories and tried to push the outcome. And that is what failed. You cannot really stop a recession by doing X. It is an organic process and you have to allow the curve to hit bottom. All they did is prolong the bottom.

They also banked on the Census jobs to keep the unemployment rate down, and then they figured 3rd and especially 4th qtr hiring would continue where the Census stopped. Well that would have worked if the real estate market would have bottomed out.. And if they didn't burn off pending demand through the random incentives to buy cars and appliances.

 

[CRGreathouse]

Congress, not the president, is mainly to blame.

 

[mheslep]

Stating that Obama's economic team underestimated the depth of the recession as inherited is only a possible theory, not economic ground truth. Another, more likely one IMO, is that the recession was correctly assessed and the prescription via a government spending fire hose was flawed and greatly over estimated in its impact.

Edit: with regards to timing, Romer's report containing the chart above was released January 10, 2009 (as indicated by the divergence of the with/without curves), the Recovery Act was passed Feb 19th, and Romer et al should have fully aware of the limitations in the speed of dispersing the stimulus, as those concerns were expressed by Keynes himself.

 

[nismaratwork]

Stating that Obama's economic team underestimated the depth of the recession as inherited is only a possibly theory. Another, more likely one IMO, is that the recession was correctly assessed and the prescription via a government spending fire hose was flawed and greatly over estimated in its impact.

I'm just going to throw this out here, and it's basically a question: how about barring a stroke of genius or act of pure idiocy... this recession has roughly followed the course it would have with anyone in office?

CRGreathouse is right about congress... very little gets done at this point, so the President (Obama or McCain) could accomplish little. The Dems are just not disciplined enough to break Rep blocks, and the Reps would have been blocked by the Dem majority. The bickering has turned into what seems to be real acrimony, and the only people winning are the ones getting paid to just be in power.

 

[turbo]

Stating that Obama's economic team underestimated the depth of the recession as inherited is only a possibly theory. Another, more likely one IMO, is that the recession was correctly assessed and the prescription via a government spending fire hose was flawed and greatly over estimated in its impact.

Quite likely. Past administrations have vastly overestimated the stimulative effects that they championed.

Still, the right-wingers were in denial for years about the recession as it occurred. We had detailed discussions on this forum years ago regarding the recession that we were falling into (obvious to some) only to be told "don't worry, be happy". My wife and I sold our old house in a nice development over 5 years ago, downsized drastically, and have settled in nicely in a small comfortable place that we can retire in. Lots of our friends said "what the hell are you doing?" and lots of members on PF discounted our choices, with sometimes irrational arguments like "we are not officially in a recession". Guess what? Rear-view pronouncements mean nothing, and nobody makes any money retro-dicting economic or market moves. My wife and I have sheltered our earnings and are not at any risk from financial institutions apart from the creeps that may be gaming some of the funds that we are invested in. There is no way to eliminate that, unless you are fantastically wealthy.

 

[WhoWee]

The issue with jobs is more complex than a few data points. There are multiple policy decisions that have prolonged the recession, and the blame can be spread out across Obama, Congress, and the Fed.

The real failure was not having a stimulus, but it was having a stimulus that targeted money to the bottom of the economy, and it was not delivered quickly. It almost became a political payback system. When you want to stimulate you throw the money very quickly at the middle and top of the economy where job creation is instant.

The administration took fundamental economic theories and tried to push the outcome. And that is what failed. You cannot really stop a recession by doing X. It is an organic process and you have to allow the curve to hit bottom. All they did is prolong the bottom.

They also banked on the Census jobs to keep the unemployment rate down, and then they figured 3rd and especially 4th qtr hiring would continue where the Census stopped. Well that would have worked if the real estate market would have bottomed out.. And if they didn't burn off pending demand through the random incentives to buy cars and appliances.

Part of the problem was the size of the Stimulus - didn't anyone in the Administration see the movie "Brewster's Millions"(?) - it's hard to spend large sums of money - the whole notion that nearly $1 trillion of projects could be "shovel ready" is nonsense.

That criticism aside, I agree that the spending targeted the wrong ENDS of the economy. First the banks, auto industry and unions were bailed out (we won't even discuss the damage done to overall confidence in the US when the bond holders were robbed)- then the bottom of the economy via the states.

Completely overlooked was micro, small, and mid-sized businesses - the 2 to 500 employee type businesses. These businesses are the ones that sustain the job market. These businesses aren't operating manufacturing facilities in China, Mexico, or on ships off the coast (garments).

 

[Gokul43201]

Stating that Obama's economic team underestimated the depth of the recession as inherited is only a possibly theory, not economic ground truth.

I can see no other way to explain a graph that shows late 2008 and early 2009 unemployment numbers significantly lower than they really were. Can you? How could they have gotten the historical record wrong?

The only possibilities I can conceive of (besides, just being so doped up they didn't know what the current unemployment numbers were) are:

1. The graph was made back in mid-2008, when the records still matched the plot, or more likely,

2. The unemployment numbers were revised upwards by BLS at a later date (I imagine this is verifiable).

Both of these scenarios indicate that Romer & Bernstein had underestimated the rate at which unemployment was growing in late 2008. In fact, if they believed their graph was accurate in at least the historical record, they HAD to have been underestimating the unemployment growth in late 2008.

Another, more likely one IMO, is that the recession was correctly assessed and the prescription via a government spending fire hose was flawed and greatly over estimated in its impact.

If the recession was correctly assessed, and the stimulus had no effect, then we wouldn't have seen unemployment greater than 9%. So you must admit that either their assessment was low, or the stimulus bill worsened unemployment to the tune of an additional 1% - that's not an overestimate, it's a sign error!

 

[airborne18]

Part of the problem was the size of the Stimulus - didn't anyone in the Administration see the movie "Brewster's Millions"(?) - it's hard to spend large sums of money - the whole notion that nearly $1 trillion of projects could be "shovel ready" is nonsense.

That criticism aside, I agree that the spending targeted the wrong ENDS of the economy. First the banks, auto industry and unions were bailed out (we won't even discuss the damage done to overall confidence in the US when the bond holders were robbed)- then the bottom of the economy via the states.

Completely overlooked was micro, small, and mid-sized businesses - the 2 to 500 employee type businesses. These businesses are the ones that sustain the job market. These businesses aren't operating manufacturing facilities in China, Mexico, or on ships off the coast (garments).

I agree with you on this point. The issue is that we are a service based economy, and that is not easy to stimulate. The one way to really use the money to build jobs, middle income jobs that we are lacking, is to boost defense spending. And that was taken off the table.

The other issue, which I mentioned in another thread, is that they gave consumer incentives. Which actually can prolong a recession if you pull the trigger too early, which they did. That is one of the basic rules of economics that they violated, they plugged in numbers and thought if they did it sooner that it would stop the free fall. It is the physics of economics, you need to let it hit bottom on its own.

The other part of it is that our auto industry, or anyone industry in our economy is large enough to spark a recovery on its own. Building and real estate have been the cornerstone of our economy for most of the last decade. The issue now is that too much equity has been taken away from the middle class, which is the key to the economy.

 

[mheslep]

I can see no other way to explain a graph that shows late 2008 and early 2009 unemployment numbers significantly lower than they really were. Can you? How could they have gotten the historical record wrong?

My read is that only one month of data, Jan 2009, diverges from the 'with/without' graph before the Recovery Act was passed, and that's what, off by .2%?

2. The unemployment numbers were revised upwards by BLS at a later date (I imagine this is verifiable).

Yes could be, they've done so a couple times in the last ~20 months.

Both of these scenarios indicate that Romer & Bernstein had underestimated the rate at which unemployment was growing in late 2008. In fact, if they believed their graph was accurate in at least the historical record, they HAD to have been underestimating the unemployment growth in late 2008.

Again, the graph was released January 2009, and my read of the graph is that it essentially matches the historical record until the ~.2% difference in January.

If the recession was correctly assessed, and the stimulus had no effect, then we wouldn't have seen unemployment greater than 9%. So you must admit that either their assessment was low, or the stimulus bill worsened unemployment to the tune of an additional 1% - that's not an overestimate, it's a sign error!

Seems to me that's entirely possible, in conjunction with other actions by the Congress that would not be included in the model (healthcare).

 

[russ_watters]

Yes Gokul, I agree that the 8% thing was no more or less than a gross misunderstanding of the economic reality at the time. Fast forwarding, I see nothing - including in this thread - that suggests to me that the Obama administration's grasp of economics has improved since then.

It still looks to me like shooting from the hip and pulling economic data and theory out of thin air.

 

[nismaratwork]

Yes Gokul, I agree that the 8% thing was no more or less than a gross misunderstanding of the economic reality at the time. Fast forwarding, I see nothing - including in this thread - that suggests to me that the Obama administration's grasp of economics has improved since then.

It still looks to me like shooting from the hip and pulling economic data and theory out of thin air.

Forgive me for saying so, but that's how it always appears in every administration for the last century at least. It's generally only in hindsight that success or failure becomes apparent, and even then the role that a given administration played in that success or failure is still debated. Isn't this an argument that has no possible means of resolution in this forum, according to the standards of proof that are required?

The more I read and participate in these P&WA threads over this last month or so, the more I find the ones related to recent administrations are mostly just a means to express personal views and preferences (and I include myself in retrospect). Very little in the way of agreement or evidence to change minds ever seems to emerge... you just learn what political leanings the participants have. Surely there can be a higher standard met here, or at least one that can be attempted.

 

[TurtleMeister]

Isn't this an argument that has no possible means of resolution in this forum, according to the standards of proof that are required?

This is a sub forum of the "PF Lounge". I'm not sure, but I don't think the standards are quite as strict here. I enjoy learning the personal views of members and mentors.

 

[nismaratwork]

This is a sub forum of the "PF Lounge". I'm not sure, but I don't think the standards are quite as strict here. I enjoy learning the personal views of members and mentors.

I don't mean that anyone is violating guidelines, and it is good to know where people stand, but at some point it becomes an endless cycle of bickering and not an exchange of new facts or ideas.

 

[TurtleMeister]

but at some point it becomes an endless cycle of bickering and not an exchange of new facts or ideas.

Well, when it reaches that point I guess it's a judgment call for the mentors. But I thought you were referring to "the standards of proof".

 

[nismaratwork]

Well, when it reaches that point I guess it's a judgment call for the mentors. But I thought you were referring to "the standards of proof".

I don't mean that they aren't valid, just that when it comes to economics and the like, it's nearly impossible to NOT find something that meets standards AND agrees with you.

 

[Gokul43201]

Yes Gokul, I agree that the 8% thing was no more or less than a gross misunderstanding of the economic reality at the time. Fast forwarding, I see nothing - including in this thread - that suggests to me that the Obama administration's grasp of economics has improved since then.

It still looks to me like shooting from the hip and pulling economic data and theory out of thin air.

Russ, you realize you are talking about economists who publish highly cited papers in top journals, as though they are a bunch of crackpots and dilettantes, and your own grasp of economics far exceeds theirs?

 

[Gokul43201]

Again, the graph was released January 2009, and my read of the graph is that it essentially matches the historical record until the ~.2% difference in January.

The Romer & Bernstein report estimates unemployment growth at about 1% (of additional unemployment) over 4 to 4.5 months around the end of 2008/beginning of 2009 (from the plot). The reality was that unemployment actually grew by 1% in about 2.5 months during that time (from BLS). That's an underestimate by nearly a factor of 2.

I consider that more than insignificant!

 

[xxChrisxx]

I don't know how to clean sewers.

We would be in pretty bad shape if no one did.

I assume that you are implying that this is a needed skill with no takers?

It's implied that its a ****ty job.

 

[Gokul43201]

...
2. The unemployment numbers were revised upwards by BLS at a later date (I imagine this is verifiable).

Yes could be, they've done so a couple times in the last ~20 months.

Verified, at least in essence (this does not provide the history of the revisions, and which - or how much - of them had been applied at the time the R & B report was being prepared, nor is it an original source): http://norris.blogs.nytimes.com/2009/03/06/will-job-numbers-keep-being-revised-down/

Here are the total job losses reported for recent months, as originally reported and as shown in the latest revisions.

August 2008: Initially 84,000, revised to 175,000

September 2008: Initially 159,000, revised to 321,000

October 2008: Initially 240,000, revised to 380,000

November 2008: Initially 533,000, revised to 597,000

December 2008: Initially 524,000, revised to 681,000

January 2009: Initially 598,000, revised to 655,000

If the recession was correctly assessed, and the stimulus had no effect, then we wouldn't have seen unemployment greater than 9%. So you must admit that either their assessment was low, or the stimulus bill worsened unemployment to the tune of an additional 1% - that's not an overestimate, it's a sign error!

Seems to me that's entirely possible, in conjunction with other actions by the Congress that would not be included in the model (healthcare).

I'm curious to find out what the opinion of the economic community is on this. Are there any professional estimates of the effects of the last 18 months of legislation on unemployment rates?

 

[Gokul43201]

I'm curious to find out what the opinion of the economic community is on this. Are there any professional estimates of the effects of the last 18 months of legislation on unemployment rates?

What I've found with a quick search:

CBO (Feb 2010): ARRA cut unemployment by about 0.8% in 2009, and expected to cut it by over 1% (cumulative) through 2010¹.

A broader statement on the effects of all legislation was made in their previous report²:

Federal fiscal policy supported economic activity in 2009, both through the effects of legislation (especially the American Recovery and Reinvestment Act) and through the effects of the automatic fiscal stabilizers—automatic changes in federal revenues and outlays caused by the ups and downs of business cycles. Fiscal policy will boost output and employment to an even greater extent in 2010, according to CBO’s estimates, but its impact will decline in subsequent years. In addition, increases in tax rates scheduled in current law will begin to restrain economic activity in 2011.

So far, all of this is a very long shot from the assessment that recent legislation has raised unemployment by over a million jobs.

1. http://content.usatoday.com/communi...yment-would-have-topped-11-without-stimulus/1 (and links within)

2. http://www.google.com/url?sa=t&sour...QvJ6l2jXEjOheGDMg&sig2=OwCrYNSWwXRfOLp2eGbBEg (PDF file)

 

[mheslep]

Regarding economists who "publish highly cited papers in top journals", or for that matter scientists and engineers, when the discussion centers on on a paper actually published in a peer reviewed journal it deserves the respect usually garnered here at PF. When such an economist or scientist writes as a political appointee in government, or spouts off in blogs, then they are fair game for public criticism of those in power just like everyone else, as well they should be. Because as Hume said,

“When men are most sure and arrogant they are commonly most mistaken, giving views to passion without that proper deliberation which alone can secure them from the grossest absurdities”,​

not

"When men, excepting of course the highly published and cited, ..."​

 

[Gokul43201]

Regarding economists who "publish highly cited papers in top journals", or for that matter scientists and engineers, when the discussion centers on on a paper actually published in a peer reviewed journal it deserves the respect usually garnered here at PF. When such an economist or scientist writes as a political appointee in government, or spouts off in blogs, then they are fair game for public criticism of those in power just like everyone else, as well they should be. Because as Hume said,

“When men are most sure and arrogant they are commonly most mistaken, giving views to passion without that proper deliberation which alone can secure them from the grossest absurdities”,​

not

"When men, excepting of course the highly published and cited, ..."​

Do you also consider them crackpots and dilettantes? I suspect not.

IMO, saying Romer, Goolsbee, et al have a lousy grasp of economics would be just like saying Scalia is clueless about jurisprudence. And pointing out that the former group consists of highly respected economists with strong publication records is essentially akin to responding that Scalia has a top notch academic and professional background.

PS: You will find no complaints from me for attacking the content of a blog, opinion column, political report, etc. I welcome more of that - heck, it's what I'm virtually begging for. But that's a different deal than simply name-calling, which of course, if fair game too, since it's just someone's opinion.

 

[mheslep]

So do you also consider them crackpots and dilettantes?

No those are your terms, but I'd say in general technical political appointees are capable, as Russ said, of "shooting from the hip and pulling economic data and theory out of thin air" for purposes of political expediency, though that's not how I'd characterize the Romer Bernstein economics forwarded for the stimulus plan. If you ask me what I believe is the most likely human failing here, I'd say a common case of myopia and group think, similar to the mindset of the DoD's WMD pre Iraq people: not fabricated, but they saw there what they wanted to see.

 

[mheslep]

[...]
IMO, saying Romer, Goolsbee, et al have a lousy grasp of economics would be just like saying Scalia is clueless about jurisprudence. And pointing out that the former group consists of highly respected economists with strong publication records is essentially akin to responding that Scalia has a top notch academic and professional background.

To my mind nobody here is saying Romer etc don't have superbly competent backgrounds. But I agree with Hume that everyone, even experts, are subject to the conjuring the "grossest absurdities" without "proper deliberation", especially when adding political pressure to the mix. SCOTUS judges discuss their opinions amongst themselves for deliberation, both publicly (oral argument) and internally, and have then their final opinions attacked, sometimes vehemently, by their similarly qualified peers in print which we can all see. Contrast that with White House econ advisor reports, where there is no 'dissenting opinion' at the bottom.

 

[Gokul43201]

To my mind nobody here is saying Romer etc don't have superbly competent backgrounds.

I don't know what it means to have a competent background. But I've certainly read a post that essentially called them incompetent, and claimed they have a poor grasp of economics (two years ago, as well as now).

Contrast that with White House econ advisor reports, where there is no 'dissenting opinion' at the bottom.

I'm all for dissenting opinions, so long as they are well-reasoned. Let's have some of those instead of dissenting ad hominems.

 

[Gokul43201]

More content-related discussion... from Zandi & Binder, July 2010 - not peer reviewed, far as I'm aware, but it's value is in that it seems to be an independent calculation using (possibly proprietary) modeling tools (from Moody's), and provides another data point (the third one that I've found and cited) in the landscape of estimates.

The U.S. government’s response to the financial crisis and ensuing Great Recession included some of the most aggressive fiscal and monetary policies in history. The response was multifaceted and bipartisan, involving the Federal Reserve, Congress, and two administrations. Yet almost every one of these policy initiatives remain controversial to this day, with critics calling them misguided, ineffective or both. The debate over these policies is crucial because, with the economy still weak, more government support may be needed, as seen recently in both the extension of unemployment benefits and the Fed’s consideration of further easing.

In this paper, we use the Moody’s Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government’s total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government’s response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.

When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable to financial-market policies such as the TARP, the bank stress tests and the Fed’s quantitative easing—we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls. These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration. To our knowledge, however, our comprehensive estimates of the effects of the financial-market policies are the first of their kind. We welcome other efforts to estimate these effects.

http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf

 

[mheslep]

More content-related discussion... from Zandi [...]

Sorry, full stop. Zandi's is as near a contra-indicator as I know of in the world of forecasters, despite his status as a go-to for business reporters and the talking head circuit. If Zandi calls for the sun to rise tomorrow I'd short it, not based on who he is, but on his record of economic forecasts.

http://www.ritholtz.com/blog/2010/09/zandi/

Associated Press – Feb. 4 2006

“The pendulum, which had been fully in favor of employers, is swinging back in favor of employees,” said Mark Zandi, chief economist at Moody’s Economy.com.”

Newsday – ProQuest Archiver – Aug 9, 2006

“It’s at least three or four quarters before we see the bottom of the housing market,” Zandi said.

Wire & Staff Reports – Oct 27, 2006

“The housing market correction is in full swing but it probably has another year to go before it bottoms out,” said Mark Zandi, chief economist at Moody’s Economy.com.

Los Angeles Times – Jan 6, 2007

“Mark Zandi, chief economist for Moody’s Economy.com, said jobs and wages were growing too fast for their own good. He warned that higher wages could induce companies to raise prices, which could lead workers to demand higher wages — an inflationary wage-price spiral.”

[Note: The chart below shows 3-mo. Changes in total civilian compensation. It seems not to demonstrate any wage-price spiral:

Marketwatch - March 26, 2007

"Zandi sees a bottom for sales in spring as sellers become more motivated and start cutting prices." [Note: In August 2010, new home sales fell to the lowest level since 1963, when the government began to keep records.

[...]

CNN Money – Sept. 4, 2007
[...]“I don’t think consumer spending will fall unless the job market is contracting. And I’m fundamentally optimistic we won’t see job loss,” Zandi said.”

CNN – Oct 7, 2007

(on the employment numbers)

Well, wasn’t bad. Its certainly a lot better than feared, it suggests that the economy is not going to slide away into recession, but the economy is still not creating a whole lot of jobs, certainly not enough to keep the unemployment rate from rising and it did in the month and I think it will continue to rise as we make our way into next year. “

[...]
CNN – April 25, 2009

“WILLIS: You know what’s interesting though, you know, because all we care about is seems like are housing prices in this country. I spoke with Mark Zandi this week who follows this, frankly, maybe one of the best databases, Zandi says we are at the bottom in the housing Market, so that is at least some good news, here.

Especially see his housing predictions all the way through.