Considering the President's Economic Vision

The ads are already out:  President Obama said at a press conference that "the private sector is doing fine."  Republicans are playing the clip of those few words, merry in the sense that it demonstrates that the President is out of touch.

Let's consider the remark in context, though, because it's a revealing description of how he thinks about the economy.

The truth of the matter is that, as I said, we created 4.3 million jobs over the last 27 months, over 800,000 just this year alone.  
The private sector is doing fine. Where we're seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government  and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
What's really interesting about this set of remarks is not the factual claim, but the interpretation of the facts.  The facts cited are roughly correct:  for example, government jobs really have declined rapidly during the Obama administration.  The reason is roughly what he says it is:  lots of state and local governments operate under balanced budget amendments, and aren't free to deficit-spend past their eyeballs, hair, and ten-gallon hat.

What we're left with, then, is the interpretation of the facts.  It's pretty clear that the recovery is unusually anemic by historic standards.  It's also true that the 4.3 million jobs 'created' haven't made up for the number of jobs lost:  when you take account of the number of people who have left the workforce entirely, things look different.

Also, we can see that the private jobs that do exist are objectively worse than the jobs that used to exist.  Consider the movement from full-time to part-time jobs by employers -- a way of avoiding having to provide the benefits that have become an expected part of full-time labor in America, and thus a way of paying workers lower total compensation for each hour of work.  Or consider the increasing classification of lower-wage jobs as "seasonal" rather than "part-time."  A seasonal worker can be paid below minimum wage.  And of course, raises and bonuses for lucky workers who do still have full-time jobs are not much forthcoming, while the costs of energy and food are spiking.

All this means that workers are being pinched horribly:  many can't find work, and if they can it pays less than it used to pay, especially relative to the costs they encounter.  They may now  have to buy benefits on the open market, where they are also more expensive.  Companies are finding people will take these jobs in spite of the vastly reduced compensation, though, because there are so many people who have no work that the market value of your work is just less than it used to be.  Presumably you aren't a worse worker, but you're not worth as much anymore.

This is interpreted as "fine."  OK; that's the Republicans' point.

What I find as interesting, though, is the complaint about the shrinking of government.  What the President really finds to be out of order is that state and local governments are having to respond to the economic crisis by tightening belts.  The main thing he wants to fix is to achieve higher levels of government employment.

The thing is, though, this was a policy decision by the electorates of these states and localities.  They can change the laws themselves, if they want to do so.  What they decided was that, during hard times when tax revenues are lower, government should spend less.  That means cutting some of the nice things that we enjoy government doing -- parks and recreation services, librarians, and so forth -- as well as being more careful with essential services.  Perhaps taxes or fees can be raised to pay for these, but if not, services must be more carefully allocated so as to do with less.

If people get tired of this, they can vote to rescind balanced budget amendments.  They want it this way; and at various times, 32 states have passed resolutions asking for a Constitutional Convention to require the Federal government to act this way as well.

So what we have here is a stark difference of opinion, among broad sections of the public, about how government should respond to fiscal crises.  The President is painting this as a government failure, but in fact it's the state and local governments acting exactly the way their citizens want them to act.

There's another issue behind the decline in government jobs.  The failure of Congress to pass a budget for years now has led to tremendous uncertainty; combined with the failure of the so-called "super-committee," even many Federal departments are going to get cut and nobody can be quite sure how big the cuts will be, or whether Congress will finally move to avoid them.  Thus, even some Federal departments -- certainly this is true for DOD -- have great uncertainty that is keeping them from starting new projects or hiring new people.

This last is a much clearer case of government failure.  Congress has failed as an institution, but not in failing to provide extra goodies for state and local governments to use in dodging the will of their constituents.  Congress has failed to do its most basic duty for the good order of the Federal government.

That's the one aspect of the situation the President didn't talk about.  He sees a problem where state and local governments are acting appropriately according to the mandate they have received from their citizens; he sees no problem where Congress is blatantly failing to perform its most basic function.

The private sector?  Well, whether or not you agree that it's "fine," it should be obvious that it's not of particular interest to him.


E Hines said...

There are some other things here of interest to me, although my concerns predate President Obama's remarks which you cite.

..the 4.3 million jobs 'created'....

This is a particular peeve of mine, emphasized in no small part by the failure of the Republicans--or of any prominent Conservatives--to comment on it. Even accepting the argument that that's an accurate number, the feds--Obama, his Fed Banker, anyone else--offer no evidence that these jobs were created by Obama's policies and were not, instead, created by an ordinary business cycle recovery--a recovery that's being held back by those policies as completely as the business cycle recovery in 1937 was held back--destroyed then--by FDR's policies.

The failure of Congress to pass a budget for years now....

"Congress" has not failed; the Senate and the President have failed, dragging down the House with them. The House has passed two budgets and sent them to the Senate. The senate refuses even to consider a budget, whether the House-passed ones or any of their own. The President's last two "budgets" have been so insulting that they've been skunked--not even a single Democrat has found it within him to hold his nose and vote for an Obama budget.

Back on the jobs question, the House also has passed some 20-25 jobs-related bills and sent them to the Senate--where they languish as that august body refuses even to discuss these, as well.

Finally, a quibble: They may now have to buy benefits on the open market, where they are also more expensive.

More expensive to whom? Eliminating/reducing subsidies only reallocates costs to the purchaser; it doesn't reduce the cost being paid.

This is a failure of government. But it's a failure driven by only a part of that government, that in the name of bipartisanship refuses to act bipartisanly.

Eric Hines

Grim said...

More expensive to whom? Eliminating/reducing subsidies only reallocates costs to the purchaser; it doesn't reduce the cost being paid.

Well, but they're both: they're more expensive to the worker, but they're also just more expensive. If you're buying benefits as an individual on the open market, you're losing out on the economies of scale that work to lower rates for corporate or government benefits packages. It costs everyone more money to do business this way -- including the insurance agency.

Texan99 said...

What strikes me about the President's comment is his failure to see that it's a good thing if the private economy is fine and the public sector is shrinking. If the private sector were really "fine," of course, it would be blowing and going hard enough to hire whichever members of the public sector were willing to work for a market rate doing something people really want to get done, other than at gunpoint.

E Hines said...

...buying benefits as an individual on the open market....

If they really were buying benefits on an open market, that would be a valid concern. However, with 50 different states mandating what benefits must be included in a policy (at this point, I'm limiting myself to health "benefits") and what premiums, or premium ranges, will be permitted, and with the Federal government inserting itself into that market (vis., Sebelius' September 2009 letter to America's Health Insurance Plans threatening any insurance company that didn't roll over with elimination from the government's health insurance exchanges), I suggest that no open market exists.

Eric Hines

bthun said...

Mr. Hines,

"If they really were buying benefits on an open market,"


"I suggest that no open market exists."

Inclusive of your comment and based on my personal experience, my SIL's experience selling insurance, along with doing a good deal of research and reading on the matter as I shop, annually, for health insurance coverage, I think I'll agree with your suggestion.

For the most part, I think I'll agree with the items in your 17:34 comment too.

Yup. The private sector, including the labor force participation rate, is just peachy.

Topic Review:
A.) The Federales have a high percentage of morons and/or malfeasant criminals, both elected and appointed, engaged in misconduct and misrepresenting their Constitutional duties to the public. All of which are, undoubtedly Green Yobs.

B.) There is an usually high percentage of morons represented within the Electorate.

C.) The Forth_Estate/Fifth_Column, in concert with the Federales, lies at every opportunity, and with an amazingly straight face.

D.) All of the above.

Now I think I'll shuck the exoskeleton and prepare for an onslaught of beer, supper, then an hour in the shower, followed by more beer.

Life is good today.

Anonymous said...

I thought his statement about the number
"jobs created" was wholly disingenuous. We are still suffering net job losses, because we are not keeping up with the number of workers being added to the workforce.

It's like bragging that you are making 5M dollars a year, when your expenses are 6M.


douglas said...

"The private sector? Well, whether or not you agree that it's "fine," it should be obvious that it's not of particular interest to him. "

I'll give him more credit than to be disinterested- I think he's revealing his true opinion- that the private sector is supposed to be shrinking- it's fine because it's doing what it should be doing- the problem as he sees it is that Government isn't growing enough for his taste (as the post points out).

bthun said...

"it's fine because it's doing what it should be doing- the problem as he sees it is that Government isn't growing enough for his taste (as the post points out)."

Thomas Sowell published an interesting take yesterday on the madness that is the O's methodology.

I thought it interesting anyway...

douglas said...

Reading Sowell's column, I'd put O down as a working fascist with a bent to socialism and ultimately communism. But ripe for corruption, as those systems inevitably bring to the 'controllers' in them.