One of things that is now clear from the US election is that the rabid, religious and not-so-religious right in the US blew it. They had all the media, all the cash, yet still couldn’t pull it off. Here are three images that make me laugh and tell me a story about how the extreme right in the US have more or less shot themselves in the foot. They should have supported the ban on guns after all!
Obviously the big deal today is the US election result. My distant (being in Australia) and relatively disinterested (a pox on all of them) view is that the conservatives (GOP) should continue to foster links with the Tea Party and particularly senators and would-be senators who think women have a choice in rape so that the party continues to lose traction with the changing demography in the US and march off into oblivion. The other conservatives (the donkeys) won because the motor car industry is still operating and because the elephants in the room were so bad. The commentary on Australian TV today (one of my computers in my office is following the results even though I am “disinterested” :-]) has become obsessed with the “fiscal cliff” with all the experts appearing demonstrating their vast ignorance about macroeconomics. An ex-federal Opposition leader (failed) in Australia (and a former professor of economics) just said that the US deficit and debt is reaching European proportions, which tells you that he is either deliberately choosing to mislead the viewers or doesn’t know the difference between a currency-issuer (the US) and a currency-user (Eurozone nations). The election result will probably not change much. The political impasse is saving the US economy at present – the deficit is still flowing each day and supporting some growth.
On Tuesday I provided some analysis in this blog – US labour market is in a deplorable state – of the latest US Bureau of Labor Statistics Employment Situation release for September 2012. Today, I add some more calculations and analysis that I didn’t get time to write up for that blog. The UK Guardian article (October 17, 2012) – US jobs data reveals economy is bouncing back strongly from recession – would appear, on first appearances (comparing titles), to be at odds with the message I imparted in the Tuesday blog. But on closer inspection you will see that the message is consistent across both pieces of analysis. And what I provide today will bring that concordance into relief.
Last week, upon the release of the latest – BLS Employment Situation – for September 2012, which showed a drop in the official unemployment rate of 0.3 percentage points, one of the big corporate noters in the US – one Jack Welch tweeted (October 5, 2012 at 10:35 PM) “Unbelievable jobs numbers … these Chicago guys will do anything … can’t debate so change numbers”. It was clear what his meaning was in the build up to the Presidential election in November. He wanted to impugn the integrity of the President (Chicago guy) and more worryingly, the reputation of the workers at the (excellent) Bureau of Labor Statistics. Not only was his comment revealing of his total ignorance of the way these surveys are designed, framed, conducted and then processed but nearly a week later, after being taken to the cleaners by various critics, he later tried to rationalise his ignorance in a Wall Street Journal article (October 11, 2012) – I Was Right About That Strange Jobs Report. The problem is that while his tactics are questionable and his analysis poor – the bottom line is that the US labour market is in a deplorable state.
Its late Sunday afternoon in London as I write this (but already early morning in Australia) – so this is Monday’s blog – I have a busy work day tomorrow. I have been reading about an interesting debate in network theory over the last few days. I was familiar with the debate when it surfaced and have been following it off and on since. It provides a classic example of how the brightest minds can be so dumb in particular circumstances. It also provides a way of understanding how my own profession functions and might also clarify for regular readers of my blog the way I consider my colleagues. Gaining a PhD generally takes some advanced intelligence (not to mention application). But that intelligence can be so specific and not preclude attempts to apply the knowledge too broadly and most importantly to areas where applicability is impossible. Counting how many angels on a pin head is a highly complicated and sophisticated area of analysis but it has no resonance in the real world. Anyone who thinks it does is dumb.
I was going to write about last week’s ECB decision to purchase unlimited volumes of government debt which means that any private bond trader that tries to take a counter-position against any Eurozone government will lose. It means that the central bank can set yields at wherever it wants including zero. It means that all the mainstream economists are wrong if they claim that deficits drive up interest rates to the point that governments become insolvent because the private bond markets will refuse to purchase their debt. I will write about that tomorrow as I have some number crunching to do. But today – a related story – the myth that there is such a thing as a “good” budget deficit reduction when private spending is insufficient to maintain full employment. That should occupy us for a few thousand words.
I read an interesting study today from the Brookings Institute (published August 29, 2012) – Education, Job Openings, and Unemployment in Metropolitan America – which aims to provide US policy makers “with a better sense of the specific problems facing metropolitan labor markets”. The paper concludes that “the fall in demand for goods and services has played a stronger role in recent changes in unemployment” than so-called structural issues (skills mismatch etc). This is an important finding and runs counter to the trend that has emerged in the policy debate which suggests that governments are now powerless to resolve the persistently high unemployment. The simple fact is that governments have the capacity to dramatically reduce unemployment and provide opportunities to the least educated workers who are languishing at the back of the supply queue in a highly constrained labour market. The only thing stopping them is the ideological dislike or irrational hatred of direct public sector job creation. Meanwhile, the potential of millions of workers is wasted every day. Sheer madness!
Today, I present a series of vignettes that traverse a range of related topics. How Australia’s richest person thinks that billionaires work hard and create jobs and wealth and the poor … well drink and smoke a lot while socialising. Then we consider today’s investment data for Australia which is a precursor to the June-quarter national accounts release. We try to make sense of claims that Australia’s (alleged) socialist government has killed investment in mining. Then we consider how leading economic forecasters mislead the Australian public by claiming that the Australian government will not have enough money to provide dental care to the poor. Then we hop over to America and learn that government spending creates jobs and even the conservatives are saying it. All in a day’s blogging. A veritable pot pourri of lies, deception and self-serving bluster.
I haven’t much time today as I have been travelling most of the day. But the news is that Japan – soon after its government announced it would increase taxes to “rein in the deficit” is now facing a dramatic slowdown as a result of the on-going crisis in Europe and the slowdown in the Chinese economy. Perfect time to increase taxes really! But today we revisit (for the nth time) the way in which conservatives get excited by the accounting smokescreens that have been overlaid onto the monetary system to obscure certain fundamental capacities of government. The excitement or should I say – hysteria – then leads to pressure being put on policy makers by the billionaires that control the media – and, invariably – leads to poor policy choices being made. So for the nth time – the US social security system cannot go broke. The “financial gaps” that are wheeled out to prove that it will become insolvent are just accounting structures that can be altered by Congress anytime they want. If the accounting systems led to the system being in jeopardy then Congress would quickly assert their intrinsic capacities.
I was clearing out some old filing boxes today – I am moving offices soon – and came across a conference proceedings from 1976, which I had picked up somewhere in the 1980s when my own academic career really began. It was entitled: Directions for a national manpower policy : a collection of policy papers prepared for three regional conferences and published by in Washington by the US National Commission for Manpower Policy in 1976. There was a chapter in it that I recalled fondly by US economist Charles C. Killingsworth entitled Should full employment be a major national goal. He was a long-time advocate of public employment programs and understood how lacking my profession is when it comes to caring about people. In terms of public service employment programs – what really have we go to fear? Answer: not much, unless you don’t enjoy the most disadvantaged having a better life!