Opinion

Felix Salmon

Jobs fail

By Felix Salmon
June 3, 2011

There’s no need to look beyond the headlines this month: both the jobs report and the unemployment numbers for May are telling the same grim story. A pathetic 54,000 new jobs were created last month — that’s significantly below the pace needed just to keep up with population growth — and unemployment went up, to a gruesome 9.1%.

Statistically speaking, both of these numbers are flat. But flat is, obviously, not remotely good enough in an economy where all stimulus — both fiscal and monetary — is coming to an end and where the single most important indicator of whether we’re successfully recovering from the Great Recession is in the employment figures.

If you do want to go beyond the headlines, things look if anything even worse: the average duration of unemployment, for instance, just hit another new record at 39.7 weeks; a full 44% of all unemployed people have now been jobless for more than six months. And on top of that, it turns out that the government’s statisticians were overly optimistic for the past couple of months: the payrolls numbers for March and April were revised downwards by 39,000 jobs.

We can’t even kid ourselves that these numbers are tornado-related: the Labor Department explicitly says that it has found “no clear impact of the disasters on the national employment and unemployment data for May.”

The only tiny possible chink of light here is that these numbers are so bad that they might persuade bickering politicians on Capitol Hill to stop playing stupid games with the debt ceiling and start concentrating on important matters. Oh, who am I kidding: we’re in election season now. Nothing is going to happen, in terms of remotely important legislation, until 2013, for risk that Obama might be able to take credit for it.

Which means that we’re back in the hands of Ben Bernanke and the Federal Reserve Board. As QE2 comes to an end, that’s not a comforting thought.

Comments
72 comments so far | RSS Comments RSS

Well said.

Posted by MV53 | Report as abusive
 

There’s been ongoing debate for a couple of years on whether unemployment was cyclical or the result of skills mismatch. It looked like cyclical was winning, but this data definitely supports skills mismatch.

Posted by Curmudgeon | Report as abusive
 

‘…for risk that Obama might be able to take credit for it.’

Guy’s been in power since early 2009, most of that time with a Democratic congress, yet the economy still chews. I’d say he’s wearing it.

Posted by Elektrobahn | Report as abusive
 

I’m 53 and except for military service have NEVER had a fulltime job in America. I have an associates, Bachelors and Masters degree and 30 years experience and cannot even find work washing windows, scrubbing toilets or emptying horse stalls. Growing up in Ohio I could not find work except in a carwash at $4.30 an hour. I did part time stints as dishwasher, janitor, busboy, burger flipper and general laborer — that one paid $6.90 an hour with no benefits. I have my pension and disability and am now confident my days in the labor pool are finished — it will be a leisurely strole up towards early social security collection and a rocking chair while I spend the remaining years of my life watching the U.S. go down the drain from the comfort of my back porch and IPAD ver 43. Teenagers in America are facing a dismal future of pain and taxes and little opportunity unless you can invent something no-one else has thought of — or work your way into Investment Banking where you devise new and insidious methods to rip off clients, enrich your own accounts and generally concoct exoctic and unknown financial instruments confuse, confound and hijack money from unsuspecting clients who should be buying T-bills and stock index funds. As I smoke this cigar and sip a bourbon on the rocks, I’ll shed a tear for the America I knew in my youth — a world of pensions and good paying factory jobs and hard working unionized car workers who raised families on the line — and now its all gone — sold to the China Man at ten cents on the dollar or to the Corporate God CEO from an Ivy League pigstye making $87 million a year and stock options, a corporate jet and $12,000 suits who never got his fingernails dirty scrubbing hubcaps in a carwash at 20 below zero in the winter.

Posted by cyanidenowpls | Report as abusive
 

When we were seeing such numbers during Bush’s two terms we were being told we were in a “Bush Boom: the best story never told.” lol…the “Bush Boom” that averaged about 3500 jobs per month leaving us with a hole of about (150000-3500)*96 jobs in addition to the jobs lost since ’07.

Now that we’re reaping what Bush and his gang sowed we’re blaming anyone except those who put us in this position to begin with.

Has anyone ever stopped to consider that what happened in ’01-’09 broke this country for good ?

Posted by InHellsKitchen | Report as abusive
 

Globalization and free trade have forced this country to climb the value chain without necessarily having the correct educational and vocational infrastructure to do it. Especially now when you consider that the legions of unemployed have been languishing out of the workforce for a substantial period of time, structurally high unemployment will likely be here for the foreseeable future.

This country needs more high-tech workers and engineers; trying to revive manufacturing as the lynchpin of the economy is a pipe dream, but there are plenty knowledge work employers that can’t find enough competent employees (e.g. Java programmers). Hopefully the higher salaries this scarcity creates will dissuade young people from trying to be the next Gordon Gekko and actually acquire 21st century skills.

Posted by richardcm | Report as abusive
 

Participation rate was up slightly, which makes employment as a percentage of the eligible pool even more “statistically flat”. Weekly wages are up at about a 3 to 4 percent annual rate.

I’m not saying it’s pretty, but these were the silver linings that popped out at me.

And, of course, much of Washington, Congress and the President both, continue to put forth policy that they believe will help the economy. Of course, they disagree on what will help the economy, but I’m not sure additional seriousness is what’s going to make a difference.

Posted by dWj | Report as abusive
 

I’d say that this is business making a statement on what they think of the Republican Congresses ideas… one month doesn’t make a trend but if next month comes in way low again then I think the verdict is in and the TPers are cooked.

Posted by CDN_Rebel | Report as abusive
 

Felix,

According to your overlord, Peter Peterson, the debt is the largest problem facing the country. Stop talking about silly jobs which only help the lower classes.

I’m still waiting for you to square your deficit hysteria with your desire for job growth. They are mutually exclusive.

Posted by petertemplar | Report as abusive
 

HosedInAmerica said: “All young people see these days are the high tech and and engineering jobs going to Asia.”

I don’t know about that. I’m 30 and work as a computer programmer in a depressed city (Cleveland). I am currently quite happily employed but I know that if that were to change, there is no lack of opportunities in IT even in this city. We recently let go about 12 contractors in order to replace them with full time employees and I know that just about all of them had found employment elsewhere within a month. Whenever I put my resume out on Monster or Dice to see what the environment is like, I’m usually bombarded with calls and emails. I know this is all anecdotal but in my experience, high tech (in this case computer programming) is actually lacking the labor supply to meet demand.

Now that said, not everyone is suited for high tech. I agree with you that it is a pipe dream to expect 9 million manufacturing workers to transition into technical fields. If everyone could be a nuclear physicist, then they would be because it pays better.

Posted by spectre855 | Report as abusive
 

It will be interesting to see how much longer the Administration continues down the path it has chosen before it realizes that the Government does not create jobs, but rather the private sector creates real, meaningful and long-term jobs. But wait! The Administration CANNOT change paths because that would mean they were wrong and ego will not permit that. And yet the long-term answer is so apparent: government must simply introduce stability in the workplace. But wait!! The mantra of this Administration is: Now is the time for change. How’s that working out for ya?

Posted by overthehill2009 | Report as abusive
 

Re: It’s Obama’s fault. Yes it is. It is also the fault of the Republican Party. It is also the fault of the American voter who consistently votes for either the Republicans or the Democrats, and does so without demanding any accountability from either party. If, perhaps they decided on a whim, to vote for anybody, anything, other than a Republican or Democrats (Tea Party doesn’t count because they are just Republican stooges) then perhaps we could get some adults to make real, and difficult, decisions. But nope, there’s a new season of American Idiot, err, Idol, on the tube, and we care more about who’s dancing with the stars than who’s governing us.

Posted by OnkelBob | Report as abusive
 

Two Comments:
1. Salmon, this is an uncharacteristically sad post for you. Have you lost your sanguinity?
2. cyanidenowpls has left us with a piece of literature. Real literature. Thank you sir, enjoy your descent.

Posted by Metroplouston | Report as abusive
 

These comments go a long way towards explaining the problem: people can’t tell who it is that’s screwing them. Here’s a hint: if it were up to Obama and (most of) the Democrats, we’d probably be looking at a second (or is it third, now?) stimulus. Deficit reduction and cuts to government spending (i.e., job cuts) almost certainly wouldn’t be front and center.

But instead everyone says, “Oh man, this hasn’t turned out as well as I’d hoped. Guess I should try voting for the other guy.”

Posted by WHS | Report as abusive
 

Obama is an amateur who should have no hope of winning in 2012. He’s been exposed, and has no clue on the economy. He is still doing more damage and not creating any jobs. The continued uncertainty, along with a refusal to exploit any domestic energy sources will keep us in a tailspin until after November 2012.
http://www.associatedcontent.com/article  /7824656/uncertainty_and_its_effect_on_ the_economy.html?cat=9

Posted by greg_schmidt67 | Report as abusive
 

“I can only hope that when the riots begin these former workers seek out the “Free Trade” academics, politicians and corporate hacks who put them out of work and burn their houses down…”

Are you serious, HosedInAmerica?

Does the word “incitement” mean anything to you?

Posted by ProFreeTrade | Report as abusive
 

@profreetrade,

Does the phrase “social contract” and do the words “dereliction” and “treason” mean anything to you?

If you’re worried about the risk of incitement, maybe that’s an indication that the policies you advocate aren’t working, and that people are rightfully angry.

Posted by Dollared | Report as abusive
 

@profreetrade,

Does the phrase “social contract” and do the words “dereliction” and “treason” mean anything to you?

If you’re worried about the risk of incitement, maybe that’s an indication that the policies you advocate aren’t working, and that people are rightfully angry.

Posted by Dollared | Report as abusive
 

@Greg Schmidt, the only source of uncertainty is a nihilist Republican Party and it’s cynical and shadowy funders and directors.

Obama has been clear that aggressive use of Keynesian tools and aggressive control of health care costs is his first choice. These are both proven tools that would have helped our country immensely. But because the Koch Brothers and the private equity guys want to keep their low rate of regulation and their Bush tax cuts, they are driving this game of chicken with the well-being of billions of people at risk. And why do you support them?

Posted by Dollared | Report as abusive
 

Before anyone can solve the problem, you have to take ownership of the problem.
Republicans are refusing to own up to their part in this. Anyone who is blaming the job issues on Obama needs to wake up to reality. Before we had a Republican controlled house we had a Democratic majority in the house, and the Republicans blocked most of the important legislation from ever getting passed.
Then they turned around and blamed Obama for not passing legislation? (He’s the President, not congress, and they were the ones standing in the way in the first place.)
Now we have a Republican controlled congress, and the best idea they can come up with is to shutdown Medicare and abolish unions. Can somebody tell me how any of that will create jobs.

They were out to lunch when they caused the problem in the first place, and they are still out to lunch.

As long as Republicans are saying it’s “it’s the other guy’s fault”, they are part of the problem.

I want to hear our politicians start saying, “I’m sorry I messed up. Now I’m seriously going to do something constructive.”

Posted by dmetzler | Report as abusive
 

Why doesn’t this article talk about the real cause of America’s problems instead of dancing around the issues.
The government does not point guns at corporations and say go hire Chinese workers. They don’t tell computer manufacturers to go buy parts from Taiwan.

They don’t tell YOU to go buy goods made in foreign countries. The real problem is you think clothes made in China are better because the $ on the price tag is lower.

Government doesn’t tell YOU to go elect the guy that assaults the free market system by stripping it of any rules of fair play, (regulation).

They don’t tell YOU to go watch FOX news, and pretend that it’s fair and balanced, or that it’s even based on any facts at all.

They don’t tell YOU to go watch MSNBC and take opinion as fact.

They don’t tell YOU to demonize at every turn the currently elected politician just because the person you wanted didn’t win.

No the problem is not just in Washington. The problem is in the mirror staring back at you. If you really want things to get better, then stop being a part of the problem.

1) Go start a business, and hire Americans to do some work.
2) Boycott the Republican party until they get leaders who believe in honesty and fair play.
3) When somebody from the other party gets elected, support him or her above your party. (America first)
4) Plant a garden, and grow some veggies. Share some with your neighbors.
5) If you’re Republican, admit that America needs safety nets like Medicare and Social Security, and acknowledge that the free market system is a system that has rules and regulations. Without rules there is no free market. Without rules and regulations, it’s just a bunch of players trying to swindle each other. (That is not a free market.)
6) Buy American unless you worry about unemployment in China. In that case, by all means buy goods made in China. Otherwise stop complaining.
7) Next time some politician says he gives Obama a failing grade for the economy or whatever, tell him you are here to see his report card; not Obama’s. If he starts spewing out Trickle Down Economics BS, then walk away. If you want to see Obama’s report card, go talk to Obama, not FOX News.
8) Be more active in monitoring the issues and the actions of politicians. (You wouldn’t have to go ask for report cards if you stay on top of what’s going on.)
9) If you aren’t working, go find a job. Either start your own business, work for somebody else, or at least do some volunteer work. If you can move, and you can communicate, there is no excuse for being a loafer.
10) Next time you see someone draping himself or herself in the flag, and questioning the Americanness of the President of the United States, walk up there and tell them that the title of Patriot is not self-proclaimed. It is not a club they can boot people out of, or buy their way into. It is earned by putting your country first, not in talk, but in deed.

Posted by dmetzler | Report as abusive
 

I would be more opposed to re-electing Obama if the Republicans had any sort of coherent economic plan. Alas, they do not.

http://majorityleader.gov/Jobs/HRP_JOBS. pdf

(or, if the big pictures scare you – http://majorityleader.gov/Jobs/HRP_JOBS_ SUMMARY.pdf)

It’s as if they took the same document from Bush’s re-election campaign and added a youtube video (except they added something about the deficit, because they care about that now).

ARRA was pretty close to as centrist as you can get (within the realm of politics) for a stimulus (1/3 tax cuts, 1/3 keynes, 1/3 welfare).

Posted by djiddish98 | Report as abusive
 

Who’s to blame ? Here’s who’s to blame: “Independent analyses have shown that more than half of the $14.3 trillion debt is from policies enacted during the past decade when Republicans controlled both the White House and Congress, and much of the rest from lost revenues and stimulus spending and tax cuts since Mr. Obama took office at the height of the financial crisis and recession.”

And the GOP crooks who oversaw this descend into the debt hole are still in Congress playing the “fiscal conservative” con job.

Posted by InHellsKitchen | Report as abusive
 

What do you suggest Felix?

An actual solution would have been to work on the long term fiscal situation in a way that allows for short term stimulus. Instead, we got the largest new entitlement in history *after* the financial crisis and mere political opportunism when sincere attempts are made to address the long run fisc.

Present “Keynesian” solutions would have been unrecognizable to the man himself. Actual Keynesianism means government countermovements to the business cycle amid structural fiscal stability. If you enact short term stimulus amid gross structural deficits you are firmly in the Zimbabwe economic school.

This is no Great Depression situation. Then, there was massive deflation, the dollar was way too strong, commodities all crashed. Today, things are opposite and there isn’t the room for stimulus that there was then. The dollar is weaker, commodities including oil and many others are at the roof. Inflation is not negative but firmly positive. Additional stimulus is therefore as likely to hurt as to help. Gas is at $4 per gallon, food prices are up and Walmart is already warning about inflation in the pipeline, based on their international supply chain.

But you know all this already, don’t you?

If America addressed the long-run fisc many advantages could accrue. Investment, which has been fleeing our shores could return. Business and personal confidence would return, gas and food prices would come down and yes, there would be scope for short-term Keynesianism. Best of all would be a return of optimism in America’s (and the world’s) future that would unleash all manner of other intangibles.

Posted by DanHess | Report as abusive
 

@hosedinamerica

Who are you to impose your will upon others on who they decide to trade with? Secondly, who is worth more as a human being, you or person in India/China that are “stealing” your job? Do they have a human right to improve their standard of living, or should they live in poverty until the sun explodes? This is a question of morality, not politics.

Posted by Matt-Chicago | Report as abusive
 

yeah, nothing will happen “for risk that obama will take credit for it.” lol. he’s already done PLENTY.

we tried the “stimulus” strategy. didn’t work. the recovery was underway (according to the experts) before ANY of the “shovel ready” “timely and targeted” stimulus was expended. we were told that the stimulus would keep unemployment below 8 percent. a year after “recovery summer” unemployment is now 9.1 percent and rising and the labor participation rate has steadily declined.

somehow, spending all that money, adding trillions to the national debt, creating a massive new entitlement program, adopting a new regulatory scheme … made things worse.

obama isn’t eager to take the lead anyway. he never is. he’ll just let the republicans act (on medicare, for example) so that he can go on the attack. he has NO IDEAS, no plan for dealing with the national debt, massive unemployment, or any of other ills.

Posted by jondaly | Report as abusive
 

Obama told us if we just let him pass the massive corrupt stimulous bill UNEMPLOYMENT wouldn’t go over 8%! UNEMPLOYMENT went over 10% and now after trillions and trillion and trillion in wasted spending with borrowed dollars UNEMPLOYMENT is over 9% again and going back up. What has Obama given us with his extreme left wing agenda? Massive wasted corrupt spending! Mountains of debt that threaten to crush us. 9.1% UNEMPLOYMENT and going higher. A new useless, endless, unauthorized war against a nation that was no threat to us. The massive corrupt spending, the debt, Obamacare, the war. Its all a massive failure. Obama’s extreme left wing ideology has failed miserably. Obama has done so much damage it will take decades to get our nation out of this decline. We need to get the corrupt spending and debt under control and start digging out. So far Obama is just making it worse! Far worse. He has overtaken Jimmy Carter as the worst President in at least 100 years!

Posted by valwayne | Report as abusive
 

Automation, computers, internet business, exporting jobs and unrealistic shareholder expectations/downsizing is doing in jobs faster than we can hope to create them! Makes the case for deep spending cuts and modest tax increases-this is the new normal! Call it a generation of deflation for those living miles above the rest of the planet and miles above their means with monster government and little will to change until it’s a full blown crisis! Vote for anyone that’ll cut government spending or pay dearly and soon-it’s our only prayer,ugly, but our only prayer!

Posted by DrJJJJ | Report as abusive
 

Note: Do your homework, democratic congress for most of the last 10 years folks FYI! Also, it’s not who’s to blame now (both parties), but can we find the will to balance a budget some day somewhere in the US, if not kiss your quality of life goodbye period!

Posted by DrJJJJ | Report as abusive
 

I dismiss all the antiRepublican rhetoric easily. I ask two questions of those who think Obama and the Demos plan is working. Where is their plan? Where is their budget?…………………………I’m waiting……………………………………….still waiting…………………………..MMMH….Mum.

Posted by racinrick | Report as abusive
 

@DrJJJJ Republican congress from 95-07, democratic congress from 07-11 (ie only during the crisis and immediate aftermath), republican congress now… I’d call that mostly republican congress. Frankly I don’t care who takes responsibility for it, I just want both sides to do something to work together. Democrats say ‘let’s talk about it’ Republicans say ‘our way or the highway’… who’s leading for progress there?

Posted by CDN_Rebel | Report as abusive
 

Unfortunately, we are stuck with a president who does not have a clue. No clue on how to fix the economy. No clue about foreign relations. Just totally clueless.

Posted by dfox7 | Report as abusive
 

@racinrick They do have a plan actually: rollback the Bush tax cuts on all, institute a 30% inheritance tax (instead of 0% now) – that’S the revenue side. The cuts look at revamping healthcare in America so that Medicare/aid doesn’t cause such a burden on the public dole. Also military budget would be slashed by 20% with a 3yr freeze on new projects. As well, a new plan to help calm social security costs (but nothing really solid on that one, just vague talk since the problem really is 30yrs away yet). The breaks come in the form of subsidies to ANY company doing R&D on new energy that can be plugged into the energy grid or go in a gas tank.

That’s the plan, and they’ve stated it many times before. All the Republicans say is end social benefit program for the poor and slash taxes for the rich. Which plan sounds more sensible to you for America, mind you not necessarily making your wallet happiest.

Posted by CDN_Rebel | Report as abusive
 

@racinrick, There is an Obama budget plan and a Congressional Progressive Caucus People’s Budget plan. Try the Google some time. Then get back to us and give us your critique.

Posted by Dollared | Report as abusive
 

@overthehill2009, how is that trickle down working? With all those tax credits, loopholes, subsidies for the Corporations and rich who pay few or zero taxes… wasn’t that the point?

@dmetzler, thanks goodness… I thought most American had just pulled the wool over their eyes and were hoping for the best.

Posted by hsvkitty | Report as abusive
 

Hmmm…CDN_Rebel and Dollared. Maybe I need to look it up. But, in my conservative ways I probably just dismissed it as more unworkable rhetoric….the last plan I saw was the one in W. Cleon Skousen’s “The Naked Communist”. Ok, I did the Google thing and see where Paul Krugman endorses it…..another Koo koo Keynesian who thinks we’ll never run out of money. Don’t think that fits me.

Posted by racinrick | Report as abusive
 

@racinrick – so you say you can ignore Dems because they have no plan. then we show you a plan, endorsed by a Nobel Prize winning economist, and you say – you’ll ignore it? Can you act that stupid at your job?

Posted by Dollared | Report as abusive
 

What is stupid about it? I employ 28 people, what contribution to the Comrade state do you make?

Posted by racinrick | Report as abusive
 

@racinrick I weep for all 28 of them.

Posted by Ivan_Karamazov | Report as abusive
 

Government’s purposes is to provide services. Only by hiring people directly to provide these services can it create jobs. It can also hire people to dig holes fill them back in, but it does create jobs as the real, non-government economy does. Businesses making and or selling goods or services create jobs. ONLY people producing goods and services for sale are creating wealth. Government is a net consumer of wealth. It COSTS money to provide government services. The wealth to provide government services can ONLY be created by all the people working in the real economy.

To expect the government to ‘solve’ the unemployment issue is delusional. If the government wants see unemployment fall then it should step back and ALLOW the real, non-government wealth creaters (aka average citizens and businesses) to sort things out themselves. ANY government ‘help’ will only delay and retard the organic, ever-growing, self-correcting and self-healing process of a free economy.

The best remedy for unemployment and the economy as a whole: Obama and all 535 legislaters take a 2 year golf vacation.

Posted by BCanuck | Report as abusive
 

racinrick, your Comrade remark make you a lot less believable. So you endorse tax cuts for the rich? You wish to end social benefits because you feel you are paying more then others and there should be no social nets?

How about closing loopholes, tax breaks and credits and benefits for the rich and Corporations and ensuring they pay the actual rates they complain about?

http://economix.blogs.nytimes.com/2011/0 5/31/are-taxes-in-the-u-s-high-or-low/

Last year GE had a profit in the billions but paid no income taxes. Hmm with other benefits… could that mean they actually benefited as well? Yes it could, if you look at these 12 major corporations doing their part “comrade.”

http://tinyurl.com/4x6s9wv

Sometimes it is a big picture then your front door. Tax cuts are not going to get you out of the recession. But hey at least they are hiring !

(in other countries)

Posted by hsvkitty | Report as abusive
 

@spectre855

Agree with you 100%. We not only have structural problems in the US, we also have worker skill / training problems. I work in energy and my company is hiring. The last three hires? All have math or science degrees from state universities. It is very hard to find candidates with strong quantitative skills. My anecdotal evidence is that we as a country are producing too many liberal arts graduates who lack the kind of advanced problem solving and tool building skill the economy needs.

Posted by MattyS | Report as abusive
 

@hsvkitty. When someone praises an imbecile like Krugman, they just spilt their innards out. Why let somebody else do your thinking for you? That’s what he does isn’t it…does your thinking for you. Whether you believe it or not about my employees impresses me not one iota, but just remember I have more people on my payroll than does your Nobelist. You say tax cuts will not get us out of this mess….I assure you it will much more quickly than will tax increases. Want to see how many more jobs I could create if I wasn’t paying 200k a year in income taxes? Quit being so jealous of the wealth of others, that what gives you away as a comrade. Take your class envy somewhere else, it’s not needed and it’s really a hollow argument. Like trying to make oceanic waves with a tuning fork.

@Ivan_Karamazov: You shouldn’t. They all make more than you do. You should learn to surround yourself with good people and good things happen.

@BCanuck: Excellent post. You should have gotten the Nobel prize for economics:)

Posted by racinrick | Report as abusive
 

FELIX,

Excellent blog.
(My first time here.)
Many excellent and clear points on your part.
And in the comments, a really refreshing low density of vitriol. — Even the (Herbert) Hooverians seem to put some effort into delineating their views beyond just scorched-earth rhetoric.
What a difference from the comments sections of WSJ articles (superb journalism in the articles, but deluges of trailer trash mentality and ‘thought’ processes in the comments sections).

Thanks very much.
Taden M.
Treetowne, MI (48105)

Posted by T-EN | Report as abusive
 

Obama just said he would start reviewing regulations to see if they can be made more business/job friendly.

Maybe start with the 3000 pages of new health care regulations which Pelosi said they would have to vote on before finding out what was in it.

Makes Palin look like a genius.

And then move on to the EPA which, under Obama’s direction, is trying to regulate Cap and Trade into existence by administrative fiat – even though Cap and Trade has been specifically turned down by congress TWICE.

CO2 regulation is intended to drive up the cost of oil, gas and coal energy to make noncompetitive green energy more competitive.

Never mind that the huge costs of this hair-brained scheme will hurt low and middle income Americans most (people who worry about monthly gas and electric bills and cannot afford $40,000 electric cars), and American businesses which will have an extra burden of increased energy costs to deal with. No problem. Just lay off more workers.

Posted by Parker1227 | Report as abusive
 

The intent of the current policies has nothing to do with job creation at all. It is designed to bring the country to the cliff and to go over the cliff. Once the country defaults and/or chaos starts, riots, near anarchy etc., etc., you will see Obama and his gang step in and say they have to suspend the Constitution to save the country. Once done, there will be no blocking the communist/socialist dictatorship that is the real goal. But first…they will take away all the guns…they do not believe in the 2nd Amendment..the guns have to be taken away first. Look for this to happen.

Posted by Buglike | Report as abusive
 

“It looked like cyclical was winning,”

Really? When? If the unemployed/underemployed dipped below 15% at any point, I missed it.

We’ve seen massive stimulus efforts for three years now. Trillion-plus dollar deficits, extended unemployment benefits, multiple rounds of quantitative easing, and historically low interest rates. None of that has had appreciable effect.

What is the definition of “liquidity trap”? Could it be described as a situation in which the outlook is so bleak that there is NO (risk-adjusted) profitable use for capital? Isn’t that what we’re seeing?

Possibly a massive direct-hire jobs creation program could get things started again? I don’t see political will for that, however, and we might run into debt trouble if we tried. Moreover, that approach is treating it strictly as a cyclical problem.

If we are truly facing a structural problem, then there are two alternatives:
(1) Retraining and education focusing on skills that CAN profitably be employed.
..or..
(2) Massive wealth destruction. Devalue the currency until our work force is competitive on the global scene. Accept the resulting lower standard of living as brutal fact.

My bet is on the latter, though motivated individuals can perhaps buck the trend through the former. Am giving time this summer to work with a few such students. Whatever jobs are available will go to them first.

Posted by TFF | Report as abusive
 

@TFF, sorry, perhaps I should have said that cyclical was winning the PR battle. Everything I have read over the last year assumed that jobs were coming back as they always had, and the skills mismatch argument seemed to have just about disappeared. It seems like it’s time to dust it off again.

Your (2) seems plausible, but politically dubious. It will take years (a decade or more?) to see unemployment drop to reasonable levels, and it will give the appearance of politicians not doing anything (kind of like we have right now).

Posted by Curmudgeon | Report as abusive
 

Curmudgeon, I think people have been placing too much faith in the stock market as a barometer of the economy. They fail to recognize that a rising stock market is not always a sign of increasing profits — it can also signal decreased expectations for return. When 10-year bonds have a near-zero real return expectation (possibly negative?), there aren’t many alternatives to park the cash that the Fed is passing around.

I obviously prefer my first alternative, but it depends on individual effort and individual initiative. There is always more that the government could do to help, but we don’t truly lack for opportunity. And too many students still aren’t awake to the reality of today — there are decent jobs available for only half the high school graduates. You have to find some way to distinguish yourself if you want to land one of them.

The second alternative isn’t quite as bad as it may sound, because as a nation we are capable of self-sufficiency. A falling dollar might spell the end of our economic empire (US-based multinationals might thrive but only a small portion of that will trickle down to the people), but we can learn to live with less. Most of our national spending is dominated by services and borrowing — and with flat wages and low interest rates, those will ultimately be restrained.

Posted by TFF | Report as abusive
 

@TFF, I agree on the education/training part, too. But there’s a cultural shift that has to take place. Forty years ago my father was laid off from the steel mill frequently, and always called back (until he wasn’t). There is still the culture in some industries that you leave your fortune in the hands of The Man, rather than taking control of your own life and learning and applying new skills.

Good points about the second alternative. As I think a recent discussion here noted, you really don’t feel poor unless you travel internationally and deal with exchange rates (3 times to Europe this year for me, so I see it). If you mean restrained financial services, that’s an interesting perspective. I wonder if it might open the door for more risk-taking to produce ephemeral growth and profit.

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