President Obama joins the cult of economics deniers

from Dean Baker

A front page story in Sunday’s New York Times gave the country the bad news. President Obama is no longer paying attention to economists and economics in designing economic policy. Instead, he will do what his campaign people tell him will get him re-elected, presumably by getting lots of money from Wall Street. 

Headed to recession?

from Peter Radford

Well it didn’t take long for the stock and credit markets to vote on the efficacy of American economic policy. Judging by last week’s massive stock market sell off, coupled with the steady decline of bond rates, the vote is clearly a negative one. The markets are giving us the collective thumbs down. Evidently sentiment is gathering behind the notion that the economy is weak, that we have no leadership, that we have no corrective policy, and that the risk of another recession is rising by the hour. To make matters worse there is an epidemic of economic incompetence worldwide, not least in Europe where the leadership seems determined that we need a re-run of 1937. Because, presumably, the first time through was such a thrill.

Humans are persons, too

from David Ruccio

Humans are persons, who are forced to have the freedom to work for someone else, without union protection, when millions of jobs are disappearing, and still make much less than those at the top.

State senator Virginia Lyons has presented an anti-corporate personhood resolution for passage in the Vermont legislature. 

Sticky unemployment – Okun’s Law

from Peter Radford

A regular correspondent of mine – Stephan – suggests that I add an addendum to my recent comment about the current hyperbole in the media. To refresh your memory, one of my points was that even rapid GDP growth in 2011 is not likely to reduce unemployment significantly, and that to restore the economy to more normal levels of unemployment, or to reach the level economists call full employment, could take years. Lots of years. The point being that we should not get carried away by all the current breathless talk of “surges” or “booms”. That seems just to be Wall Street speak. Stocks may do well. Regular folks less so.

At any rate the basis for my assertion is something called Okun’s law, and it is to this that Stephan thinks I should make specific reference. So here goes. 

Reducing unemployment via job sharing

from Grazia Ietto-Gillies   

I agree entirely with the arguments by Dean Baker on job sharing (Nov 3d). The economic advantages of reducing unemployment via job sharing are overwhelming. Government expenditure could be used to keep people in work rather than out of work. In the medium to long term this would also lead to fewer social problems (crime rates; health problems) and thus to lower expenditure to meet those problems. It would be an excellent scheme also for Britain.

However, I fear that politically it may be unacceptable. The anglo-saxon model of capitalism has been for too long based on shifting costs and flexibility to the labour market and the workers for such a scheme to be accepted. Employers and the politicians of the right and centre-right may fear that, once a shorter week is introduced as a remedy for the recession, the employees may get used to it and demand it permanently.

However, we should continue to press for it and insist that economic sense should prevail.

Grazia Ietto-Gillies

The Job Loss from Reducing Greenhouse Gas Emissions and the Job Loss from Defense Spending

There is a major national ad campaign, funded by the oil industry and other usual suspects, to convince the public that measures to reduce greenhouse gas emissions (GHG) and slow global warming will result in massive job loss. This ad campaign warns of slower growth and the loss of hundreds of thousands of jobs, possibly even millions of jobs, if some variation of the current proposals being debated by Congress get passed into law.  

A question regarding comparability of unemployment rates

The just announced 10.2% current unemployment rate for the US is one of six unemployment rates, known as U1 – U6, that the US Bureau of Labor Statistics computes.  Today’s 10.2% figure is the U-3 rate – the one that the media almost always uses but never specifies.  U-4 includes, in addition to persons unemployed and currently actively looking for a job, persons who have given a job-market related reason for not currently looking for a job.  U-5 counts, in addition to those included in U-3, persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past.  U-6 includes U-5 persons plus those employed part time who want and are available for full-time work but have had to settle for a part-time schedule.  

At any point in time large differences exist between these rates.  For example, today’s announced unemployment rates for October 2009, in addition to U-3, are U-4 = 10.7%, U-5 = 11.6% and U-6 = 17.5%.  My question is: when we are told that at some point in the Great Depression the unemployment rate was x%, which of the four unemployment concepts that I have described is the most comparable?

Stimulus and Jobs: We Can Do Better

The Obama administration came out with its first set of numbers on the jobs impact of its stimulus package. It’s pretty much along the lines of what was predicted. To date, the package has created close to one million jobs. That is good news, but in an economy with more than 15 million unemployed workers, it is not nearly good enough. We need to do more, much more.