Job Fair Is Below Charlie Dent’s Pay Grade

The real reason to be annoyed at the Charlie Dent job fair is that it’s below his pay grade.

The reason the country has sustained +8% unemployment is not that people aren’t hearing about the jobs that are there. It is not a problem of matching employers and workers.

The real problem – the one that Charlie Dent has done absolutely nothing to fix – is that there is not enough demand in the economy. Too many people don’t have jobs, and they don’t have money to spend.

Getting people more money is not a hard problem for Congress to fix. We know how to give people more money: run a bigger short term deficit.

The actual problem – the real reason we don’t have full employment – is that Charlie Dent and the political party he belongs to don’t want full employment.

They’ve been doing everything they can to oppose full employment policies, because getting the economy back to full employment before November 2012 would mean no President Romney.


  1. I think its fair to say there is room for disagreement on the long term impact of higher “short term debt” (which, if it produces any jobs at all, is probably long term debt anyway). Ask any number of European countries.

    I realize that many in our country have outsourced their economic thinking to blogger Paul Krugman, but there is a more lively debate out there than just that windbag posting a graph.

    • Jon Geeting says:

      Again though, show me where you think Krugman’s been wrong. I’m aware of the competing economic narratives about the recession and I think the structural ones are mostly bogus. Can you locate your preferred explanation on this chart? I feel like we could have a more productive debate about this if I knew where you were listening to on this stuff.

    • Jon Geeting says:

      Basically I just don’t think you could name a debt number too high for me to change my view on the debt/jobs tradeoff. $3 trillion stimulus would not scare me away from continuing to argue that getting 8% unemployment down to 5% unemployment is the most important thing to do right now.

  2. Sure, you wouldn’t mind a 20% ADDITIONAL debt burden because you know politicians will push the hurt mostly past your working years. That’s the debate. Is it worth taking on additional debt to pay some guy’s pension costs or a teacher’s high salary (which is not, as many politicians say “investment”), or is it better to get these to a lower level so that future generations aren’t handicapped and can spend on things besides salaries? I’m not saying it is easy. I’m saying it is an option.

    I would say there is ample evidence from Europe that structural factors make this economic period both more difficult to live with and harder to solve. Your emphasis on fiat currency is kind of weak and temporary, as Asian economies outside China become more attractive.

    I think Krugman is lazy because his blog 1) uses GDP as a benchmark for everything AND 2) his time horizon is too short (3-5 years). I don’t like comparing people and countries, but if you borrowed a lot of money in 1-2 years and bought a whole lot of stuff at Wal Mart, and then returned to something more historical in the following years, if you took your benchmark at the fat years it would look like life had gotten much worse than if you took it when you were living more simply.

    Why not go back 15-20 years and see what the year on year growth is, controlling for the insane years. That to me is a far more defensible use of GDP (from a policy perspective) than a 5 year window. It all depends on what you are trying to do. Making public sector workers comfortable so their salaries “trickle down” is not my priority (and I am one).

    You could read Greg Mankiw. He maintains a pretty good blog.

  3. You know darn well that people do this to Krugman all the time with his textbooks, and in either case it is dumb (even for the most openly partisan “academic” of our times). As the Summers paper demonstrates, at every economic crisis of the last 45 years economists have significantly revised their assumptions about “what works.” I would assume that this financial crisis does the same.

    Their modeling is insufficient because it fails to take into consideration the follow-on costs of fiscal expansion in its “self financing” model. The problem with “stimulus” spending as it is currently constructed is that it is called “investment” when it really is nothing of the kind.

    Sending money to ameliorate the crisis by allowing states to overpay public sector workers (for example 43 year olds on a police pension earning 90% of their salary) puts off the pain but doesn’t solve the issue of revenue generation. When you spend billions on (charitably) a public works construction project with uncertain cost-benefit, like “high speed rail”, you aren’t budgeting for the lifetime of maintenance costs, equipment costs, and pay/pension costs that occur. All of these costs have destroyed the “self financing” models of government expansion of the past–which the rising tide of municipal bankruptcies in the US demonstrate.

    Using fiscal expansion to pay higher pensions and makework schemes simply shifts tomorrow’s money to today’s problem. To the extent they worked in the past, they worked as a policy overlaid on low-debt, low-deficit Economies have recovered from much worse problems than today’s–ask any German or Frenchman who was a child in 1945-46. Starvation and cholera trump any of today’s looming “structural” problems.

    • Jon Geeting says:

      What has changed about Krugman’s positions on macroeconomics?

      “Puts off the pain”. Exactly. We should pay back today’s deficits with higher taxes later, in the future when we are richer and there are more Americans to pay taxes. We should focus exclusively on getting unemployment down today, and NGDP growth back to trend.

      Whatever structural problems you think the US has, they were there in the 2000’s too. The *new* problem we have had since 2007 is a massive drop in aggregate demand. The Fed and Congress can fix this problem easily.

    • Jon Geeting says:

      It’s also not clear to me why you think structural problems would be easier to pass, on the politics, in an environment with insufficient AD, than in an economy utilizing all its idle capacity.

  4. The problem is your benchmark. If you see “where we were” in 2007 as a natural progression of consistent economic growth or as a temporary spike due to several years of accumulation of cheap money and economic distortions in the housing market changes your outlook on what is next. Why not look at GDP growth, on average, since 1991 to get a sense of the deviation of 2007? That to me is Krugman’s laziness–looking back 3 or 4 years at a true economic outlier is just plain dumb.

    Which is to say, I don’t think reaching 2007s level, plus mid-2000s growth, in the next couple of years is possible. And if you goose the system to get there, eventually all that “assistance” is going to have to be replaced by real output.

    I would say there are several significant changes in the United States over the last 10 years, in terms of economic structure. The number of states and cities that are borrowing to pay current costs–not “investing”, and thus on the edge of fiscal collapse, is staggering, and something not seen since the 1970s. The number of municipal and state “authorities” issuing debt and being on the hook for retirement costs. The condition of state and local pension funds and the continued legal expectation of stratospheric asset price growth. All of these things limit our ability to respond to a crisis, because there’s another crisis right down the road that is already needing those “higher taxes in the future” you refer to.

    We’ve averaged about 6 percent unemployment for 60 years. 8 is bad but not catastrophic. As someone whose family lived through the industrial collapse of the Lehigh Valley in the 1980s, I can tell you that those times are tough but with patience and prudence, they do end.

    • Jon Geeting says:

      I would like to see the Fed allow NGDP growth to catch up to the 2007 trend. We could do that if the Fed were willing to allow Reagan levels of inflation for a few years while we repair our housing shortage. I do

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