You Don’t Say: “Job creation is essential to recovery”

So reads the headline for Rep. Carolyn Maloney’s (D-NY) opinion piece in Politico today.  It is a lesson in using gauzy nothingness to say very little of substance with a few of the right words in the hope that the rubes will be satisfied. 

First, it is essential to keep expectations low by declaring the current economic times to be “the Great Recession.”  During the Great Depression, unemployment almost hit 25% in 1933, and it stayed at about 15% for higher or 10 years.  Even Obama hasn’t been able to get us to those levels, though not for lack of meddling in the economy.  In any event, this recession has been a crappy time, but I haven’t seen the top three inches of Oklahoma migrating west along with most of its population.  The economic horrors of the 1930s remain a one-time event that this recession (thankfully) does not approach.

 Second, recognize but dismiss concerns about the deficit: “While political winds have shifted the short-term deficit into the spotlight, we must pass targeted legislation that saves and creates jobs. To do less risks our economic recovery and threatens our long-term budget outlook.”  “Targeted legislation”?  The $800+ Billion spendulous was supposed to be targeted at “shovel-ready” projects that would quickly bring unemployment down to manageable levels.  Yet it failed to “save or create” much other than government jobs that we will never be able to get rid of.  Thanks, but I will pass on a second helping.  This is not based on the whims of the political winds, but a very well-grounded fear that the current Congress and Administration have no idea what they are doing but believe that spending us into penury is the solution to every problem. 

Let’s move on to Rep. Maloney’s prescription for what ails us. 

“First, extend unemployment benefits, which the Congressional Budget Office ranks as one of the most cost-effective tools for boosting growth and employment.” 

Even Paul Krugman admitted (in a textbook, though he seems to have renounced such heresy of late) that generous unemployment benefits provide a disincentive to work.   Compare unemployment rates in Europe with those in the United States, for example.   And the money has to come from somewhere, so any boost is set-off by the drag of additional spendin.  So while unemployment checks soften the blow for the laid off, and that is a good thing for a reasonable period of time, it seems unlikely that they are a net boost to growth or the economy. 

In any event, the Republicans are not against extending benefits in principle; they are against adding yet another $22 Billion to the deficit in doing so.  If it is such a great, painless policy, then perhaps Re. Maloney would consider extending the benefits in a deficit-neutral manner.  But that is what she and the other Dems are refusing to do.

“Second, provide critical temporary aid to state and local governments, to help avoid additional layoffs and service cuts.”

See, spedulous, version 1.  That is what we did once, and the states were merely relieved of the need to make prudent budget cuts and get their fiscal houses in order.  What Rep. Maloney is really talking about is taking more federal tax dollars to bail out states who have given public employees lavish salaries and benefits that far exceed what those in the private labor markets receive.  Please explain why a plumber employed by the state should continue to receive far superior compensation than a privately employed plumber whose taxes pay for his state-employed counterpart.

Third, increase access to credit for small businesses.”  

Rep. Maloney is not much for detail, so we don’t really know what she means by this.  In fact, I am not sure she knows how this would be accomplished.  Part of the problem may be that Rep. Maloney has never really had a non-government job.  She joined the New York City Counsel in 1982, and has been in ploitics since then. 

You see, Rep. Maloney, banks are not holding onto cash because it is fun to swim around in vaults of money like Uncle Scrooge.  Banks are in the business of loaning money, collecting interest, and making a profit.  Like everyone else, they have no idea what new joys of regulation are forthcoming in the wake of the massive financial regulation bill that your party just passed.  They also have no idea how all of the other experiments in interfering in the economy that the Dems have championed will play out.  No lender in its right mind would lend generously during the period of disruption and uncertainty your party has created. 

And any program to increase access to credit that is administered by the government will attempt to distort the marketplace in favor of certain persons (see here) or industries, further disrupting the market’s  ability to select winners and losers by consumer preference rather than government fiat.  Freeing up credit markets to the extent possible is a good thing; government-manipulated or -dictated lending is not.  We can be pretty sure that Rep. Maloney does not favor letting the credit markets decide who to lend money to.

We also need to strengthen job training programs, as well as be more rigorous in the evaluation of these programs, to help unemployed workers rebuild their skills. We can afford to fund only proven, successful programs.” 

Quick, name one.  Gabriel Malor at Ace of Spade HQ notes this story in an obscure left-wing publication.  Apparently, the existing job training programs don’t really help very much:

Even before the recession created the bleakest job market in more than a quarter-century, job training was already producing disappointing results. A study conducted for the Labor Department tracking the experience of 160,000 laid-off workers in 12 states from mid-2003 to mid-2005 — a time of economic expansion — found that those who went through training wound up earning little more than those who did not, even three and four years later. “Over all, it appears possible that ultimate gains from participation are small or nonexistent,” the study concluded.

In the last 18 months, the Obama administration has embraced more promising approaches to training focused on faster-growing areas like renewable energy and health care. But most money has been directed at the same sorts of programs that in past years have largely failed to steer laid-off workers toward new careers, say experts, and now the number of job openings is vastly outnumbered by people out of work.

How about trying something new?  Just stay out of the way.  Stop legislating new programs; stop spending more money; stop increasing taxes; stop trying to push people into favored industries.  Just stop.  See if that works.

Via RealClearPolitics.

Published in: on July 19, 2010 at 3:55 pm  Comments (1)  

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  1. You Don?t Say: ?Job creation is essential to recovery?…

    I found your entry interesting do I’ve added a Trackback to it on my weblog :)…

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