The Bush tax cuts didn’t really do much to “stimulate” the economy, contrary to the claims of many. In fact, they really didn’t do anything other than run up the deficit.
From Angry Bear:
those who thought Bush did a good job and want to repeat his policies sure have some explaining to do. Even Carter created some five times as many jobs as Bush in only four years.
Employment report is out for September 2009. Not good. Granted it’s not the horror show we were seeing early in 2009. The decline of 263,000 in total employment is much better than the 500,000 and 700,000 losses we were seeing earlier this year. But this has been happening a long time now. That’s a lot of accumulated loss. Even if the wound isn’t bleeding profusely, it will still kill you if the bleeding goes on long enough. Graph below is courtesy of Calculated Risk. It shows how this recession (small depression?) has had the largest % loss of jobs since the Great Depression AND it has the makings of the slowest recovery since then also.
But the headline numbers, 273,000 jobs lost and 9.8% unemployment don’t tell the full story.
- Total hours worked continues to decline. (see Angry Bear).
- The U-6 Unemployment rate, which includes some more discouraged workers not counted in the headline rate and also includes workers “marginally attached to the workforce” is now 17.0%.
- Long-term unemployed (more than 26 weeks) is now 3.5% of the workforce, 5.4 million workers.
- the labor force declined 571,000 — the only reason that unemployment didn’t exceed 10.0% [last] month–. This means well over half a million people gave up hope of having a job last month. Of course that’s a rational response given that so many workers have been unemployed so long without finding replacement jobs.
Overall, this tells us that the stimulus has not been enough or big enough. Employment has not stabilized. What’s worse, is the length of time people are being unemployed. The economy is simply not creating replacement/new jobs. Not only does this create a serious economic problem (unemployed people don’t spend much money), but it is of course a tremendous human cost. People, families, and children suffer. Eventually, extended long-term unemployment for large numbers poses a huge social cost and social risk.
People who worry the most about the recent increases in US government borrowing are generally worried about one of two things: crowding out or inflation. They fear that either if The Fed doesn’t “print new money” for the govt to borrow, then the government’s demands for borrowing money will drive up interest rates. This driving up of interest rates would then, in turn, discourage businesses from borrowing/expanding/growing. I’ll deal with the inflation fear in a different post. But right now, it appears there’s little prospect of crowding out. It’s true businesses (and households) aren’t borrowing, but it’s not because of high interest rates.
In the past, when the government became a heavy borrower, there was talk about crowding out private borrowers. But this time, interest rates have remained low and no one seems to be worried about that.
The reason is simple: Rather than crowding out the private sector, Uncle Sam is now standing in for it. Much of the government borrowing went to investments in financial institutions needed to keep them alive. Other hundreds of billions went to a variety of programs aimed at stimulating the private economy, including programs that effectively had the government pick up part of the cost for some home buyers and some auto buyers.
via Off the Charts – A Rich Uncle Picks Up the Borrowing Slack – NYTimes.com.
Yes, patents, copyrights, etc., the intellectual so-called property protections are really profits-protection for existing large corporations. The stronger patents and copyrights are, the weaker is innovation and growth.
…weaker IP protections might actually correlate with economic growth,…
via Scholarly Communications @ Duke » The joy of statistics.
Well, actually it likely wouldn’t save the whales. But, abolishing patents would likely re-invigorate the economy, revive competition, lower costs (particularly healthcare costs), and speed up innovation.
Levine and Boldrin help lay out the case against patents in this piece. An excerpt ( I recommend following the link):
Abolishing so-called intellectual “property” (IP) won’t solve all social ills — and it certainly won’t save the whales. But it would be a big step in the right direction for solving a range of problems from the high cost of health care, to innovating our way out of the current recession. In a series of posts with my co-author Michele Boldrin, we’ll tackle these issues one at a time.
With the exception of Japan, the rest of the world spends only about 60-70% of what we spend for prescription drugs. The European countries’ average is 60%, with some countries at around 55%.That means that simply paying what the rest of the world pays would reduce our health care bill by at least 4% – that is about 0.7% of national GDP, or roughly $100 billion.
via David K. Levine: Save the Whales! Abolish Patents!.
Also, it’s worthwhile to go to their blog at