Home > unemployment > Austerity—American style (3 graphs)

Austerity—American style (3 graphs)

June 14, 2012 Leave a comment Go to comments

from David Ruccio

Ben Polak and Peter K. Schott are right:

It has become commonplace to contrast the American and European responses to the Great Recession, with stimulus in the former and austerity in the latter. European austerity has been at the level of member states and local governments — there is no meaningful federal government of Europe to provide either stimulus or austerity. But the United States has also seen unprecedented austerity at the level of state and local governments, and this austerity has slowed the job recovery.

Here is what government employment looks like since 2007: total, state, and local (from the Bureau of Labor Statistics).

Not only are the numbers of government employees moving in exactly the wrong direction, falling rather than rising in the midst of the Second Great Depression and therefore keeping unemployment much too high. They’re exacerbating, in the form of deteriorating local government services, the austerity being imposed on wages and working conditions by private employers.

This is austerity—American style.

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  1. robert r locke
    June 14, 2012 at 9:39 am | #1
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    What is so infurating about all of this is that we went through the same drama, austerity, at the beginning of the great depression 1929 and argued about how it should be confronted. Orthodox economics provided no clue, so Keyes devised a policy add on to neo-classical economics that would deal with an economy stuck in high employment equalibrim. Economics seems to be spinning its wheels ever since — while we are stuck in the poverty web.

  2. ezra abrams
    June 15, 2012 at 5:31 pm | #2
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    The y axis on the first graph has a scale of 4.3% of the max value
    The y axis on the second graph has a scale of 2.9%
    The last graph is 3.4%
    Not to mention, there is an ~ 4x absolute diff in magnitude (roughly, 5K vs 22K) so the diff in the 5K is relatively insignifncant
    there is no indication for federal – is that hwat the word “total” means ? (it can’t mean state+local, cause if you sum graphs 2 and 3, you don’t get graph 1)

    roughly, employment just prior to the recession, or at the start, was about 1% over 1year (rough) it would be nice to see a longer time series , so we can get an idea of how the last few years fit

    if obama stimulus money (aka porculus in the right wing world) had an effect, the slope around end 2008/2009 should be less – I don’t see it, but perhpas that is masked by other effects

    beyond that, why does keynsian thought require an increase in gov’t employees, as opposed to an increase in total employees ?
    And, many of those state/local employees were non tenable, ie they had (afaik – maybe i’m wrong here) retirement plans that, for *whatever* reason, were not realistic; the recession just made the problem with retirement suddenlyloom (ie, the pols promised retirement, and then failed to provide revenues consistent with those promises, the times just had a story on how many public pension plans are funded assuming an 8% return on investment, which is clearly as close to reality as S Hannity [in a sick way, I get amusement from sean]

    • David F. Ruccio
      June 15, 2012 at 5:58 pm | #3
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      To explain: federal employment (which is not directly shown) is the difference between the total (top graph) and state (second graph) plus local (third graph) government employment. The graphs themselves (and therefore the axes) were generated by the program on the BLS web site. The same site can generate longer time series. I was just trying to highlight what has happened with state and local government employment during the Second Great Depression.

  3. davetaylor1
    June 17, 2012 at 8:27 am | #4
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    David and Ezra, I think both your points well made.

    Robert, “What is so infurating about all of this” is not just our not having learned the lesson of what you so brilliantly summarised as “Keynes’s policy add on to neo-classical economics”. It is the fact that what makes retirement REALISTIC is having the understanding and machinery necessary to keep on more or less automatically reproducing and distributing the necessary REAL resources, which we already have.

    What is making it LOOK unrealistic is not a shortage of money (which can be printed as necessary) or marketing; it is fundamental dishonesty in the capitalist system for the automatic creation and distribution of money, i.e. usurious ‘reserve’ banking and monetary ‘profit’ seeking via legalisation of land-theft, fraud, oppression, monopolisation, price fixing (not least in the stock markets) and blackmailing of government. Not only is this diverting money and hence access to the necessary real resources from the 99% to the 1%; monetary superfluity in the context of their personal mortality is blinding the 1% to the necessity of MAINTAINING the real resources.

    • merijnknibbe
      June 17, 2012 at 12:43 pm | #5
      Reply | Quote

      I agree, alas.

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