The drumbeat for another stimulus program continues with Harold Meyerson adding another rat-a-tat-tat:
Boosting the economy without increasing government spending on jobs is squaring a circle, however. Standing athwart the prospects for a second stimulus is the universal belief that the government has already enacted a massive stimulus program, to the tune of $787 billion, even as unemployment has risen to 10.2 percent. If that’s what $787 billion produces, the thinking goes, why bother to try again?
In fact, that spending has saved or created more than 640,000 jobs, and possibly as many as 1.6 million, the Congressional Budget Office reported this week. More important, total government spending to combat the recession is far less than $787 billion.
It’s a hobby horse from which Paul Krugman has never dismounted:
So it’s time for an emergency jobs program.
How is a jobs program different from a second stimulus? It’s a matter of priorities. The 2009 Obama stimulus bill was focused on restoring economic growth. It was, in effect, based on the belief that if you build G.D.P., the jobs will come. That strategy might have worked if the stimulus had been big enough — but it wasn’t. And as a matter of political reality, it’s hard to see how the administration could pass a second stimulus big enough to make up for the original shortfall.
I’d have more confidence in this approach if the empirical evidence for the effectiveness of deficit spending in producing economic stimulus were stronger and if those supporting a jobs program or some other “second stimulus” had a stronger grasp on how businesses actually work today rather than, say, in 1950. The whole “shovel-ready” metaphor that failed is a fine illustration of that. Quite of few of those projects involved no shovels, were far from ready, and created remarkably few jobs.
I think that the sad, hard reality is that we’re not seeing enough creative destruction rather than too much of it. The fattest, least productive sector continues to be government which has been the sector showing the steadiest growth for the last eight years. I’m no anarcho-capitalist and I definitely think there’s plenty for government to do but I also think that it needs to do a lot more with a lot less and has practically no motivation to do so.
A key problem is that good policy and good politics are at odds. Extending unemployment benefits, while charitable and politically popular, is paying people to stay where they are when the jobs may be elsewhere. We should be seeing a flood of émigrés from states with high rates of unemployment to states with significantly stronger economies. That that’s not happening tells us we’re doing something wrong.
I think we need to find a better way, a means of ensuring that people aren’t seriously in want while avoiding moral hazard. I don’t have a fool-proof approach for this ready to hand but I’m willing to listen to proposals. Unfortunately, I can’t imagine any better way that won’t be tremendously unpopular and the more effective it is the less popular it’s likely to be.
My what a good little shill he is. Never mind that there is a huge amount of uncertainty about jobs “saved” and as for created the number is negative, at least on net. So he is just spewing partisan talking points.
And technically he is lying about the CBO estimates. The range isn’t 640,000 to 1.6 million but 600,000 to 1.6 million and, in reading how the CBO does it, I’m not sure they are factoring in the various reports of phantom congressional districts, “jobs” that turn out to be raises, or even stories like the 9 pairs of work boots being equal to saving 9 jobs.
Can we get these guys to admit they were wrong? Where are DeLong, Krugman and the rest saying, “Hey, our beliefs about a strong rebound were just flat out wrong”? In particular I call the readers attention to this post by N. Gregory Mankiw.
It seems that Krugman, et. al. are admitting they were wrong. They should have the intellectual honesty and guts to stand up and say we were wrong, and Krugman in particular should apologize to Mankiw for calling him evil.
And it fits in with the story many Keynesians like Krugman like to tell. They’ll talk about sticky wages and prices. How workers wont want to lower their wages to find work, and will wait as long as possible before switching fields, taking lower pay, etc. They’ll talk about menu costs, and other things keeping business from adjusting their prices. But then when you point out that unemployment benefits increase the time that workers can avoid making the siwtch and/or taking lower pay you are called evil or heartless, and so forth.
I think this notion of migration as a means of curing local unemployment is interesting, but I’m not entirely convinced. We have a number of people who are upside down on the mortgage who probably can’t move. I also wonder about the effect of greater specialization in the workforce. My grandfather was a farm laborer in the Great Depression. He essentially migrated from town to town presenting himself as muscle for any kind of labor that was needed, eventually getting hired for an assemblyline. Migration seems easier with generalized skills, but if you have semi-specialized skills particularly ones which match your community, you might be just as well off moving down the work scale in your present community. Third, if migration is a good response to unemployment, we should spend more time giving people good information on what jobs are available where. The fact that some of these lower density states in the Great Plains have low unemployment overall doesn’t suggest that it would be a good idea for half of Detroit to migrate to North Dakota.
PD –
I generally like to read your posts as they are almost always even handed and interesting. This one flummoxed me.
“We” can find jobs information right here:
http://www.careerbuilder.com/JobSeeker/Jobs/JobResults.aspx?lr=cbcb_ct&siteid=cb_ctnpqsb&use=all&s_rawwords=&s_freeloc=&s_jobtypes=ALL&uJobsFoundCount2%3Ajlrd=30&Submit=FIND%C2%A0JOBS%C2%A0%C2%BB&cbRecursionCnt=1&cbsid=435074b2e43e4dd7851b8e0a54de22a3-313181303-wx-6
It took me 30 seconds. About 200,000 listings. This “there are no jobs thing” is a lazy persons way to say “I don’t want to make the changes necessary to find/get a job,” and the mismatched skills crowd to say “I want a gift, I don’t want to obtain the skills employers want.”
I don’t see how we owe everyone a cushy solution to changing employment trends.
While not quite as negative about it as Drew, let me suggest another way of thinking it. If people are choosing to remain unemployed in order to improve their balance sheets, doesn’t that suggest different policies than if they’re unable to find jobs because none are available?
Drew, I know I didn’t explain myself well, but I was responding to this statement:
“Extending unemployment benefits, while charitable and politically popular, is paying people to stay where they are when the jobs may be elsewhere. We should be seeing a flood of émigrés from states with high rates of unemployment to states with significantly stronger economies.”
I don’t disagree the first sentence. I question whether the second sentence reflects the current state of the economy. I’m trying to imagine a mid-level AIG employee that’s been sacked, packing his family into the jalopy and moving across the country, town to town, looking for a job that utilizes his job skills. No, it’s more likely he migrates to a non-skilled job at far lesser pay. I’m wondering whether migrating to a new place remains a significant protection against unemployment or underemployment, at least in a bad economy.
My other point about whether people have good information to migrate might be outdated. But in the 80s recession, people laid off in my rust belt hometown, packed up and moved South to where the jobs had gone. I don’t sense that dynamic here.
the blue-collar community I lived in
Dave, I’ve seen Drew negative, that ain’t nothing.
I think a question to answere might be whether underemployment is an issue of enough concern that the unemployment period should try to minimize it. I don’t know.
PD, and Dave –
I’ve attempted to explain myself before. Look, if we were sitting down to dinner you would find me to be the most quiet, soft spoken, low ego quotient and deferential person you have ever met. I’m actually a very nice guy. Really.
My posting persona derives from the debates we have in our investment partnership ( I have three partners) who are New York oriented and are the antithesis of me: crazed Italian wild men. Our debates are, uh, “robust.” You better speak up. Why?
Look, we invest on behalf of the proverbial widows, orphans, and teachers of the world etc. That’s a heavy, heavy load. Real responsibility. Political snark is nice, investment results are brutally revealing. We take our mission very, very seriously. Hence, our intense deliberations. So when I make an argument on this cite (or OTB) I may take the “Drew’s Partnership’s Scorched Earth MO” into a venue where it is not warranted, but please give me a break. I really, really, just want the best for the economy. Its a “robust’ POV, and hopefully good for me, and my clients and the general populice.
And as you might imagine, I’m not seeing this with Team Obama’s approach.
Drew, I have absolutely no problem with your tone.
Neither do I, Drew.
On a tangent one of my very first clients was a New York Italian. I quickly learned that the only way I could communicate with him effectively was to sit next to him, literally elbow to elbow, and shout at the top of my lungs. If I didn’t, he didn’t think I was serious.