Posted on 04/09/2004 3:53:39 PM PDT by Eurotwit
The recovery isn't jobless after all. What should John Kerry do?
OVER the past 70 years or so, one thing that has not changed is American politicians' readiness to make comparisons between the present times and the Great Depression. John Kerry, indeed, has built his candidacy for the White House on the technique. He campaigns against George “Herbert Hoover” Bush for presiding over “the greatest jobs loss since the Great Depression”. This week, Mr Kerry and his Democratic big-gun supporters spread out across the country to highlight the candidate's “new direction” for the economy, one that will create 10m jobs rather than destroy them, as Mr Bush prefers to do. There was much talk of the Depression along the way.
Elsewhere in the West, it is generally accepted that people no longer live in black-and-white lines, with their coat collars turned up. But in the United States, surely the comparisons are justified? A lot of Americans think so, as any morning spent tuned to the call-in shows will testify. After all, are Americans not working ever-longer hours just to keep above water? Is not their private prosperity being appropriated both by a rapacious government and by corporations making record profits? Are not jobs being destroyed at a vicious pace? And are not low-wage countries like China and India to blame?
Mr Kerry certainly thinks so. And yet, by so many measures, life in the United States shows steady, material improvement. Americans, on average, spend less of their lives at work than ever before. Companies are indeed making record profits and, in recent months at least, have grabbed a bigger share of the national pie. Yet household income is growing, and American private wealth is also at a record, standing at $44 trillion, give or take. And though the chances of finding a new job are lower, the chances of losing your job in the first place are less than during the boom of the 1990s.
Many people will buy none of this, and the one irrefutable concern that has grabbed Americans' attention this year is the flood of jobs going overseas. Now, if your textile mill in West Virginia closes down, that is very bad news indeed for you and for your community. But at the national level, more jobs are outsourced to America than the other way around. American workers, in other words, are net beneficiaries of outsourcing (it goes without saying that consumers always were). And in the cross-border trade of white-collar services, a chief concern, America's surplus with the rest of the world is not shrinking; it is growing.
These points will not bother a Democratic presidential candidate, so long as the economic mood in the country remains ornery, and so long as he can point to net job losses (over 2m of them in this case) under the incumbent. No matter that the recession which caused the losses began two months before Mr Bush took office.
So how do a month's good job figures affect the picture? Enough to cause Air Force One to break out with riotous glee on April 2nd, when March's employment report was beamed up to it. Enough, indeed, to suspect that even as he welcomed the news (he could hardly do other), Mr Kerry also felt a foreboding in the pit of his stomach. For not only had 308,000 jobs been created in March; the number of new jobs in January and February were also revised sharply upwards. Far from a jobs “recession”, if this trend carries on it will look very much like a robust jobs recovery.
Thinking the unthinkable
Even then, a Democratic candidate will not necessarily give up hope. For employment in one area of the economy, namely manufacturing, has been in secular decline for decades. From that point of view, bemoaning job losses in manufacturing seems a sure-fire bet, particularly since 2.7m jobs have been lost since 2001, a largely cyclical decline. And it so happens that the key swing states in the coming election are ones that have seen manufacturing jobs lost in droves: Ohio, Michigan and Pennsylvania. Perhaps the chief plank of Mr Kerry's economic policy so far is to channel tax credits to manufacturing firms seen to be losing jobs overseas.
Time, then, to think the unthinkable: a recovery in manufacturing jobs. There are reasons to believe one may be under way. The beneficial effects of a cheaper dollar are starting to be felt, with output climbing. A closely-watched survey by the Institute for Supply Management reports hiring among manufacturers at a 16-year high (though the government's employment report still paints a less robust picture). Firms appear to be rebuilding their inventories, and they will presumably need to hire more workers to do that.
For Mr Bush, March's employment report has recharged a flickering campaign. The more jobs that are now created, the less the president needs to defend his economic record, which is certainly open to criticism. Mr Bush, after all, has at times caved in to protectionist pressures. And even the tax cuts at the core of his economic campaign could have delivered a far bigger bang for the buck. They are highly regressive, favouring those who live off income more than salary. And they may even have helped delay the jobs recovery, thanks to tax provisions allowing businesses to write off against tax a higher proportion of any capital investment they make. That made it cheaper, other things equal, to invest in machines rather than people.
With jobs growth, Mr Bush does not need seriously to rebut such matters. But for Mr Kerry, all this is uncomfortable. His proposals for a bleak world are sweeping—for instance, he proposes to provide cover for the 40m-plus Americans who currently lack health insurance—and they are costly, for he is also committed to halving the federal deficit. He now has no choice: the better the economy gets, the bleaker his message will have to become. Will voters still buy it?
This statement truly demonstrates how ignorant of economics this guy is... and he is writing for the Economist!! First the reference to the "national pie", as though a nation's wealth is finite (the old zero-sum argument). Second the idea that the conpanies "grabbed" a bigger share of the pie is ludicrous. The companies are the ones that make the pie!!!
Besides, why should they bother flipping burgers when they can just sit home and let someone else support them? Every high school dropout should be entitled to a job that isn't demeaning....perhaps running a big corp would be acceptable?
I do to. It is one of the few mags I buy "off the rack". I enjoy the fresh perspectives frequently at odds with American news. What I find unusual with this article is the incisive political commentary. Maybe I haven't read the mag enough recently.
The pie metaphor is a favorite of those ignorant of economics and the not-so-ignorant eager to demagogue that "since the rich are getting richer the poor must be getting poorer".
As for your focus on the use of the word "grabbing", I put that down to nitpicking.
I, on the other hand, put that down on an anti-capitalism mindset, of which the whole article reeks. Words are powerful tools - don't "misunderestimate" them.
Even in your selection: "Yet household income is growing, and American private wealth is also at a record, standing at $44 trillion, give or take." the tone is begrudging with a tinge of surprised disappointment.
And if you insist on characterizing my reaction I would describe it as allergic rather than nitpicking.
ACHOO!!
The Rodney Dangerfield economy.
Many people will buy none of this, and the one irrefutable concern that has grabbed Americans' attention this year is the flood of jobs going overseas. Now, if your textile mill in West Virginia closes down, that is very bad news indeed for you and for your community. But at the national level, more jobs are outsourced to America than the other way around. American workers, in other words, are net beneficiaries of outsourcing (it goes without saying that consumers always were). And in the cross-border trade of white-collar services, a chief concern, America's surplus with the rest of the world is not shrinking; it is growing.The fundamental principle of protectionism and controlling the border is that there are no jobs - as a Democrat would define a job - in the Third World. Not only so, but there must never be any jobs in the Third World - and no Third-World natives are to come here.
The alternative to that "philosophy" is to get on the back of the tiger of innovation, and try to stay there while Third-Worlders are trying to import jobs from here as fast as they can learn to do them. Obviously insane, if the number of jobs is a fixed quantity irrespective of innovation, and obviously the only moral course from the point of view of how you are actually treating people not born in the US.
My bottom line is that no one can be forced to lead, and hiring people is nothing else but leadership. Paying people is giving them credit for the work they are doing, and profit is the credit the leader accrues from his leadership. Thus IMHO high taxes on high incomes are simply parasitical behavior on the creation of the jobs we critically need, since we have to expect to continuously lose old jobs while the working-age population tends to expand.
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