Our friends on the left seem to think that if a government program isn’t working as advertised, then we obviously need to double the size of the program! Friday’s unemployment numbers will probably “inform” them that we need more and more stimulus spending, ’cause what’s been done so far hasn’t worked. From the editors of :
It Isn’t Working
Three years of spending and monetary stimulus haven’t helped jobs.
Another month, another mediocre jobs report from the Department of Labor. This is consistent with the rest of the economic evidence that this is a lackluster recovery that so far is not turning into a durable expansion.
The economy shed 131,000 jobs in July and the number of jobs created in May and June were revised downward to 221,000 lost jobs. The unemployment rate held steady at 9.5% but that does not reflect the fact that the number of discouraged workers is also up 389,000 from a year ago.
Private employment did inch up in July by 71,000 positions, with a nice 36,000 pick-up in manufacturing jobs, but even that number is deceptive. The vast majority of those jobs were in the auto industry. Alas, not every struggling manufacturing plant in America can have a lifeline to the federal Treasury.
The average work week lengthened by 0.1 hours and wages bumped up by 4 cents an hour in July to $22.59. This means things are getting better if you already have a job. The amazing thing is how weak the recovery remains after so much fiscal and monetary stimulus.
The problem is if you’re still looking for work, because the private sector isn’t feeling confident enough to create new jobs. The declines in the household survey tend to reflect small businesses better than does the payroll survey, and small businesses in particular aren’t creating new jobs the way they have in other recoveries. The shrinking size of the labor force is helping to keep the official jobless rate below 10%, but that’s mostly because some one million workers have dropped out of the labor force since April.
And here’s the most damning paragraph:
So far the Obama team has thrown the entire Keynesian playbook at the economy. We have paid people to buy cars, purchase homes, pay off their mortgages, weatherize their homes and put solar paneling on their roofs. And of course there was the original stimulus package of $862 billion, though some of that remains unspent. None of it has put America back to work.
Much more at the link. But the editors understand what President Obama and his advisors don’t: that economic recovery and job creation in the private sector requires confidence by private entrepreneurs and investors that they can make money by expanding their workforce.
One thing that the editors left out of their article is the health care reform bill. For all of the efforts by the Obama Administration to encourage businesses to expand payrolls, the great unknown is how much the health care plan is really going to cost business. An employee is supposed to be an asset to a company, but the government mandate that companies must provide health insurance, coupled with the restrictions which do not allow insurance companies to deny coverage due to pre-existing conditions, coupled with the Administration’s tilt towards trade unions and laws which might make discharging employees more difficult, also turns every employee into a liability. If companies see additional employees as additional liabilities, they are going to be more reluctant to add employees. Additional efforts by the Administration to encourage private sector hiring would seem to me to be fruitless until employers have a better idea as to what kinds of increased liabilities additional hiring would bring.
If, as the editors wrote, the Obama Administration “has thrown the entire Keynesian playbook at the economy,” and it still hasn’t worked, the answer isn’t to just throw more (borrowed) money into the same Keynesian plays, but to do something else . . . or do nothing at all, and let the economy take care of itself. Politicians have a problem with doing nothing at all — or at least being perceived as doing nothing at all — but that is probably the wiser course. Borrowing more and more money, whether for more fruitless Keynesian attempts or some other method of attack means that there will be less money available for private enterprise once businesses do see an advantage in increasing production and payrolls.