Posts © 2011-2012 by Gerald G. Day







Thursday, September 13, 2012

September 13, 2012

One of the passages in Clinton’s speech to the Democratic convention didn’t sound right to me.
"Of course, we need a lot more new jobs. But there are already more than three million jobs open and unfilled in America, mostly because the people who apply for them don’t yet have the required skills to do them." Are there many jobs begging, whatever the exact number, for lack of adequately educated or trained applicants? Is that the root cause of unemployment? Will retraining bring the unemployment number down? I didn’t know the answer to the first question, but, on checking found his estimate of open jobs to be correct, even an understatement. Why there are that many unfilled positions is a mystery to me; statistics show that the number of people becoming employed and the number leaving jobs are about even.80
However, it seemed that the answer to the other two questions must be negative. The economic slump and the consequent rise in unemployment are the result of insufficient demand; businesses without customers do not need additional employees. Retraining and other educational initiatives are important, but they take too long to have any impact in the short run. A technical study confirms my guess.
Ezra Klein, in The Washington Post,81 pointed out the fallacy in Clinton’s analysis and cited a study recently released, "The United States Labor Market: Status Quo or A New Normal?" by Edward P. Lazear and James R. Spletzer.82 Their paper examines the opposing theories, that unemployment is "structural," i.e., the result of permanent changes in the economy, or is "cyclical," the result of the recession. If the problem is structural, if the economy has changed in such a way that there is a mismatch between skills and open jobs, then retraining would be critical. However, the authors reject the view of Clinton and many on the right that the cause is structural.
An analysis of labor market data suggests that there are no structural changes that can explain movements in unemployment rates over recent years. Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment. . . . The patterns observed are consistent with unemployment being caused by cyclic phenomena that are more pronounced during the current recession than in prior recessions.
Cyclical unemployment, the sort to be expected in a recession — although worse this time than usual — will respond to stimulus by the administration or the Fed. Conservatives oppose stimulus, and Clinton helped their cause.
Clinton also said "even as we get Americans more jobs, we have to prepare more Americans for the new jobs that are actually going to be created. The old economy is not coming back. We’ve got to build a new one and educate people to do those jobs." I’m not sure about that either. Does it mean that manufacturing is dead? If we don’t produce goods, how can we straighten out the balance of payments? Can that be done with services alone? I don’t know, but simply saying we have to plan for a different economy without specifying what that is, and how we create it, and whether it’s desirable doesn’t help much, and it gives comfort to the business lobby by turning attention away from repatriating jobs.

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80. http://www.bls.gov/news.release/jolts.nr0.htm
81. http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/11/the-politicians-are-failing-theory-of-unemployment/ . Michael Lind offered similar comments; http://www.salon.com/2012/09/11/obamas_a_supply_sider_too/
82. http://www.kansascityfed.org/publicat/sympos/2012/el-js.pdf

Saturday, September 8, 2012

September 8, 2012
I decided, in a moment of masochism, to read the Republican platform just adopted. I was interested to see whether any of the candidates’ vague promises regarding economic growth or deficit reduction were given more substance. They weren’t. As to growth, "Republicans will pursue free market policies" and rein in government spending; the latter proposal encapsulates their inability to learn from experience. As to the deficit, "Republicans will make hard choices and set priorities;" the Stockman magic asterisk lives.
One could be forgiven for concluding that the Party has run out of ideas. That impression is reenforced by the fact that the platform is a treasure trove of myths, clichés, euphemisms and buzz-words. Even the title and section headings are clichés: "We Believe in America," "Restoring the American Dream," "We the People," "Renewing American Values," and "American Exceptionalism."
I’ll spare you the Preamble. Its relentless banality could turn the strongest stomach. I’ll limit disclosure to this: "Providence has put us at the fork in the road, and we must answer the question: If not us, who? If not now, when?" Even assuming that it was Providence and not Republican policies which put us where we are, the answers are: anyone else; for you folks, never.
"Restoring the American Dream" (the economy)
Among the myths are that Obama’s policies have "destroyed jobs," "created a culture of dependancy," and led to a bloated government. The stimulus plan was a waste of billions "with no payoff in jobs."
The Republicans somewhat grudgingly acknowledge that the Constitution authorizes the government to take care of those who cannot care for themselves, but denounces the "use of taxation to redistribute income." The distinction escapes me; the quoted phrase is just another verbal knee-jerk.
As to the tax system, the principal delusion is "the beneficial budgetary impact of lower tax rates." Taxes should be "fairer," by which is meant easy on the wealthy. Specifically they should be flatter (as if they were really graduated now), marginal tax rates should be reduced 20% across the board, the Bush tax cuts should be made permanent, and there should be no increase in the tax rate on dividends and interest. The "death tax" should be repealed; fairness to heirs, you know.
We are told that "American businesses now face the world’s highest corporate tax rate." Obviously that is true only of corporations, and it’s true only in theory. The federal income tax on corporations is 35%, but the average effective tax rate is about half that, and many large corporations pay no income tax.
The platform alludes to a national sales tax, in this rather odd language: any such tax "must be tied to the simultaneous repeal of the Sixteenth Amendment." I’m not aware of any serious proposal for a sales tax, but of course these folks would welcome any opportunity to be rid of income taxes. After all, as they remind us, "Taxes, by their very nature, reduce a citizen’s freedom." Think of how much freer Mitt Romney would be if the government hadn’t confiscated 13% of his income.
The platform advocates a balanced budget amendment, ignoring the fact that no Republican administration since Eisenhower has achieved a balanced budget, and it’s been a long time since a Republican president proposed one; even the sainted Reagan never did. The argument for the amendment is that the federal government should follow the lead of states with such laws, ignoring the completely different fiscal role and responsibility of the two levels of government.
Obamacare is, of course, a rich source of myth: it will "empower . . . bureaucrats to cut Medicare in ways that will deny care for the elderly." (Apparently "death panels" have been laughed off the stage). Instead, the Republican plan will "empower . . . seniors to control their personal healthcare decisions," aided, of course, by the charitable instincts of insurance companies.
A discussion of inflation led the platform drafters into a brief, coy discussion of the monetary system. They were not quite bold enough to refer in terms to the gold standard, so resorted to euphemism. "President Reagan . . . established a commission to consider the feasibility of a metallic basis for U.S. currency. The commission advised against such a move." Undaunted, "we propose a similar commission to investigate possible ways to set a fixed value for the dollar."
The Party which aims to turn back the clock by decades or centuries, depending on the subject, has coined a term to attack New Deal programs: "antiquated." It aims that weapon at labor law, although piously describing pro-business policies as "the rule of law." It will bring "freedom" to the workplace by prohibiting card check union elections and by enacting a national right-to-work law, thus slipping in an infamously misleading euphemism. The party of the elite takes a shot at "union elites" in — double horror — Washington offices. This section winds up with a salute to states which have avoided fiscal disaster by "reforming their laws governing public employee unions," otherwise known as union-busting.
"We the people" (a miscellany about alleged Constitutional principles)
Our states, we are told, are laboratories of democracy. In what way? By enacting voter ID laws and other measures to suppress minority votes; democracy for the chosen only. The excuse? "Voter fraud is poison." Perhaps it would be, if it existed; no examples are given because apparently there aren’t any. Continuing the theme of avoiding democratic outcomes, the platform rails against any effort to elect the president by popular vote. It would be "a mortal threat to our federal system" and, for reasons not stated, would be "a guarantee of corruption." It also would have meant that George W. Bush would not have been elected, even with a partisan Supreme Court (dare I say activist judges?) ready and willing to help out. Contemplate the difference in the ensuing eight years.
Republicans are, they remind us, the party of the Constitution, unlike the Democrats. The platform’s commitment to the ideals of the Bill of Rights is firm but selective. As to the First and Second Amendments, it supports the Supreme Court’s creative interpretations: more money in politics and more guns. It loves the Tenth Amendment which, though basically a truism without specific content, has become a peg on which to hang states’ rights conservatism.
"America’s Natural Resources: Energy, Agriculture and the Environment"
As to the natural environment, "Experience has shown that, in caring for the land and water, private ownership has been our best guarantee of conscientious stewardship, while the worst instances of environmental degradation have occurred under government control." At this point we have passed from myth to fantasy, and from that to blather: "Liberty must remain the core energy behind America’s environmental improvement." Oh, wait: that refers to the evil EPA; I understand now. That agency and the cap-and-trade plan are denounced under a subsection on coal. Burn more, pollute more. The government has a "job killing punitive mentality." Ah yes, every federal program or action kills jobs.
Under "The Proper Federal Role in Agriculture," we are told that we must limit the interference by activist judges in environmental management.
"Reforming Government to Serve the People"
"We are the party of government reform." That’s a true statement so long as the definition of reform is flexible. In this case it means "reversing the undermining of federalism" and opposing "the expansion, centralization and bureaucracy in an entitlement society." The last term has become the vehicle for selling an abandonment of Social Security and Medicare. The GOP is against massive indebtedness, blaming that, not on the irresponsibility of the Bush years, but on entitlements. But wait! Two paragraphs later, the platform asserts that the Republican Party is "committed to saving Medicare and Medicaid." If that isn’t enough chutzpah for you, read on. Younger workers, we are told, have lost faith in the Social Security System. Might plans to gut it have contributed to that?
The platform applauds initiatives by Republican governors; you know, like the request for more flexibility regarding the welfare work requirements which Obama was denounced for agreeing to. The GOP also is concerned about our health and wants to combat lifestyle evils, such as obesity. Didn’t conservatives denounce the anti-obesity campaign led by Michelle Obama as one, to quote Sarah Palin, that seeks to take away "God-given rights to make our own decisions"? Never mind.
A subsection is captioned "Regulatory Reform: the Key to Economic Growth." Of course: get government out of the way, and all will be well. Here’s a concession: "Many regulations are necessary." However, not all: "no peril justifies the regulatory impact of Obamacare on the practice of medicine, the Dodd-Frank Act on financial services, or the EPA’s and OSHA’s overreaching regulation agenda." Health care, banks and industries are best left alone, so that we can continue to have worse health care at greater expense than other advanced countries, risk another financial collapse, live with pollution and ignore workplace hazards.
"Renewing American Values to Build Healthy Families, Great Schools and Safe Neighborhoods"
The GOP is the party of "independent individuals and the institutions they create," including families, schools, congregations and neighborhoods, but not government. One of Bill Clinton’s most telling lines at the Democratic convention was his reference to the aim of We the People in the Constitution: to create a more perfect union. Republicans view that union in terms not far removed from those of the Confederacy, and no surprise, as this now is a southern party.
Republicans are worried, as they have been for decades, about the threat to the Constitution from activist judges. That seemed to be a myth, but give them credit: they saw it coming. Just look at Citizens United . Oh, apparently that’s not the reference. Requiring people to purchase health insurance — you know, like Mitt Romney did — is "an attack on our Constitution," upheld because of that activist Roberts. They have a point, of course, because the Affordable Care Act "was never really about healthcare." It was about power, expansion of government, control over the economy. It was "the high-water mark of an outdated liberalism," an attempt to impose "a euro-style bureaucracy to manage all aspects of our lives." It was — oh come on, say it — about socialism.
"American Exceptionalism" (foreign policy)
Republicans are, they tell us, the party of peace through strength, an interesting slogan for a party which recently followed a policy of war through lies. To be fair, that occurred under a former president, what’s-his name.

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On the subject of myths and clichés, and in furtherance of my mission to record the daffiness of right-wing authors, here’s the latest from the shelves of the local bookstore:

David Limbaugh, The Great Destroyer: Barack Obama’s War on the Republic;

Michael Savage, Trickle Down Tyranny: Crushing Obama’s Dream of the Socialist States of America;

Dinesh D’Souza, The Roots of Obama’s Rage; and, ironically,

Jonah Goldberg, The Tyranny of Clichés: How Liberals Cheat in the War of Ideas.