Monday, December 6, 2010

We need new economists

Employers added 39,000 jobs in November, far fewer than expected, as budget-strapped local governments continued to lay off workers, and retailers and manufacturers cut payrolls despite recent signals that both sectors have been growing.

The nation's unemployment rate, which is calculated from a different survey, rose to a seven-month high 9.8% from 9.6% in October as the labor pool grew by 103,000, the Bureau of Labor Statistics (BLS) reported Friday. Among their ranks were many discouraged Americans who re-entered the workforce after giving up their job searches in the recession.

The report disappointed economists, many of whom believed the 172,000 increase in jobs last month signaled that the job market would finally shift into a higher gear. Economists surveyed by Bloomberg expected payrolls to grow by 150,000 in November.

It has been noted both here and other places how consistently economists and the media at large are caught off guard by "unexpected" bad economic news. It's getting to be that you can set your first Friday of the month (when the jobs reports come out) clock by any and all bad economic news to be "unexpected".

But why is that? Precisely what actions has the government taken that would be of benefit to the economy and where economists would not express shock, shock, of "unepected" bad news?

Did economists actually think gimmickry like Cash for Clunkers was going to going to provide any sort of long-term growth for the economy instead of merely the illusion of stable growth? And it's been obvious to anyone with a pulse that Porkulus has come nowhere close to delivering on its promise to keep unemployment under 8 percent.

People and businesses don't know what they are going to be paying in taxes next year and a looming regulatory regime which includes ObamaCare have contributed to a chilling of the business environment where these businesses are unwilling to hire new employees.

We'd hate to think that the economists are in the tank for statist government actions but given the fact that this administration has consistently pursued actions that have done harm to this nation's economy with the full knowledge of economists who are supposed to know these things, what else are we to believe?

Enough with the "unexpected". We need new economists.


B-Daddy said...

Apparently not all economists are in the tank, see the HotAir article where economists who prepared a report for the San Francisco Fed conclude that the number of permanent jobs created by Porkulus was statistically zero.

steve said...

The same outmoded models which showed the stimulus created jobs are the same ones that were used to prove that prior tax cuts created some jobs.


Dean said...

I have far more faith that money kept by private citizens and not confiscated by the government is going to go a hell of a lot further in creating jobs than an elaborate income redistribution scheme.

steve said...

Then I assume you are ok with the status quo income redistributions? Most of our future debt comes from entitlement spending, mostly Medicare with some Social Security and Medicaid. This is redistribution to the elderly. As a result of tax policies and deregulation over the last 30 years, income (and wealth) has redistributed to the top 1%.


B-Daddy said...

The assumption behind your commentary is that there is a preferred level of income distribution that government policy should seek to influence. I agree that income redistribution already happens, and I am not happy because it violates my sense of fairness. But let me ask you this, what method should be used to determine how wealth and income would be redistributed? How would we know when we got it right? Pure equality? Gaussian distribution? My only objection to the accumulation of wealth is when it is achieved through the coercive influence of government intervention, think of Fed intervention on behalf of investment bankers.

Why should LeBron James be deprived of his income by our government, for example? What crime did he commit that he should be punished by such forfeiture. He should pay his taxes like everyone else, but the tax code shouldn't be a vehicle to punish him. This whole notion of redistribution seems fundamentally unfair.

Dean said...

Steve, not to pile on but... what would be your idea of a fair tax regime?